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When it comes to reforming CEQA, Assembly Speaker John Perez, D-Los Angeles, left, and Senate President Pro Tem Darrell Steinberg, D-Sacramento, are at odds with each other. (AP Photo/Rich Pedroncelli)

California's economy is crawling back, but the state still suffers from a national reputation for being anti-business.

It's a high-tax state. But even worse for entrepreneurs and investors, California is known as a "no build" zone because of an agonizing maze of regulatory red tape.

"A number of companies do not invest in California because of the regulatory environment," says Gary Toebben, president and chief executive of the Los Angeles Area Chamber of Commerce.

"I've also heard companies say they're not going to build any more here because they've recently done something in Nevada or Texas or Colorado and, 'Wow, it took me six months there when it would have taken six years in California.' "

A particularly annoying speed bump is the California Environmental Quality Act, or CEQA, signed by Gov. Ronald Reagan in 1970. It requires developers to undergo a long public process of detailing their projects' potential environmental effects.

Supporters credit the landmark law with significantly helping to clear the air, keep the water clean and, among other pluses, prevent greedy developers from building on ominous earthquake faults. All true.

But CEQA also has been blatantly abused by union blackmailers -- "greenmailers" -- who threaten to derail a project with an environmental lawsuit unless the developer caves in to their labor demands.

Private enterprise likewise has dirty hands. Businesses try to drive off competitors with lengthy, costly suits that make a development financially unfeasible.

And the law is a handy tool for NIMBYs ("not in my backyard") fighting local projects. It's understandable that they'd battle an oil refinery. But maybe they shouldn't be allowed to use environmental protection as a guise for thwarting low-income senior housing.

Now there's pressure on the governor and state lawmakers to eliminate the worst CEQA abuses before the Legislature adjourns for the year Sept. 13. But there's not a lot of optimism.

"If you were a betting person, I'd put the odds at a little less than 50-50," says Toebben, who's co-chairman of a CEQA reform coalition.

Problem is, most labor and environmental lobbies resist any meaningful change. And die-hard CEQA reformers, including Toebben, are aiming for the moon without the political thrust to get there.

Democrats, who dominate the Capitol, are beholden to labor for campaign cash and enjoy being buddy-buddy with environmentalists.

Gov. Jerry Brown, meanwhile, has talked a good game about CEQA reform. "The Lord's work," he has called it. But he seemingly has been waiting for the Lord to do it.

In April, Brown opined that the issue was too difficult for the Legislature. "The appetite for CEQA reform is much stronger outside the state Capitol than it is inside," he said.

Recently, however, the governor has ordered his Office of Planning and Research to work with Senate leader Darrell Steinberg, D-Sacramento, who's trying to negotiate a compromise among warring interests.

Oh, yes, there's also another problem: Steinberg and Assembly Speaker John A. Perez, D-Los Angeles, don't get along very well.

Last year about this time, Steinberg scuttled a CEQA reform being pushed by Perez, who's still irked about it. "This law is far too important to rewrite in the last days of the session," the Senate leader said then. But that's what Steinberg is trying to do now, although he'd point out that -- unlike Perez -- he has been pecking away at the task for months.

Perez recently expressed doubt that anything significant would be passed. "I don't think there's a vehicle" -- bill -- "yet in place that's substantive," he told reporters. "There's a lot of discussion, but not a lot of movement. I'm not optimistic."

Steinberg -- an eternal optimist -- insists there is, too, movement. "It's coming together," he asserts.

Basically, Steinberg is focusing primarily on urban "infill" projects, those that reduce sprawl and shorten long carbon-burning commutes. That has been his crusade for years.

But now the senator also has an added incentive: He promised the National Basketball Association that if the league kept the Kings in Sacramento, which it did, he'd make sure CEQA was streamlined to expedite construction of a modern downtown arena.

"CEQA needs serious updating, but I don't believe it's fundamentally broken," Steinberg told me. "We don't need regulatory streamlining for every project. Refineries, big boxes, auto malls -- the law works in those incidences.

"Reform ought to be about incentivizing the kinds of projects that our public policy calls for and the people of California want. More infill. More downtown revitalization. More renewable energy... ."

Brown apparently would go further than Steinberg but has been quiet publicly.

Steinberg is proposing that parking and aesthetic issues -- view-blocking -- be eliminated as litigation hooks on infill projects. City councils would settle those disputes. Traffic congestion would be removed as litigation issues on all projects, whether downtown or in the boonies.

Under the senator's proposal, judges could allow noncontroversial parts of a project to proceed rather than stopping the whole shebang as now happens.

Business interests contend that Steinberg's bill not only doesn't go far enough, it takes a step backward by offering new opportunities for frivolous suits. The senator shakes his head.

"I'm standing a little bit alone," he says. "Enviros and labor are uncomfortable with the whole concept. They like things the way they are."

The bill, SB731, has passed the Senate and is expected to clear the last Assembly committee Friday. But intense negotiating won't occur until after Labor Day. And fighting probably will continue until the final night of the session.

Politics is the art of the possible. And what's possible on CEQA reform is something like what Steinberg is offering -- unless Brown flexes his muscle.

Contact George Skelton at george.skelton@latimes.com.