State officials are currently putting together an incentive package for Tesla Motors Inc. in hopes that it will build its massive $5 billion “gigafactory” in California. According to State Senator Ted Gaines, the package could include exemptions to some of California’s strictest environmental regulations.
The regulations under consideration primarily belong to CEQA, the California Environmental Quality Act, which was signed into law by Governor Ronald Reagan in 1970. It requires state and local agencies to identify the environmental impacts of their actions and to avoid or mitigate them when possible. Most physical development in the state is subject to provisions of CEQA, according to the California Natural Resources Agency.
In the five decades since its passage, CEQA has successfully protected many of the state’s natural ecosystems, yet it remains a contentious political issue. Its opponents claim it prevents job creation in the state. And as The New York Times’ Ian Lovett explains, the law “has also been increasingly abused, opening the door to lawsuits — sometimes brought by business competitors or for reasons unrelated to the environment — that, regardless of their merit, can delay even green development projects for years or sometimes kill them completely.”
Recently, lawmakers waived parts of the law to incentivize developers to build pro-football stadiums in Irwindale and downtown Los Angeles. For Tesla, they may be willing to waive a lot more.
According to state officials, Governor Jerry Brown is putting together a sweetheart package for Tesla that could include up to $500 million in tax breaks, or 10 percent of the project’s total cost. Other incentives include doing away with some of CEQA’s environmental review process wherever Tesla might build its factory. “I think that’s a possibility,” Senator Ted Gaines told the Los Angeles Times.
California is competing with four other states for Tesla’s factory. Whoever lands it will snag the cutting edge of automotive innovation, as well as 6,500 new jobs. But Elon Musk, Tesla’s CEO, has said that California isn’t even a consideration. Musk wants the project up and running by 2017, and California’s regulations make that a slim possibility.
“Timing for the gigafactory is very important,” Simon Sproule, a Tesla spokesman, has said. “So all five states in the running for the gigafactory need to demonstrate, among other factors, that they can help us deliver the factory on time.”
Environmentalists say waiving any part of CEQA would be a violation of Tesla’s own green philosophy.
Kathryn Phillips, director of the Sierra Club in California, has said, “It sounds like you’re taking away environmental review and taking away citizen enforcement…for a single project.”
David Pettit, a lawyer for the Natural Resources Defense Council, says the incentive package is “a terrible idea.”
“For one thing,” he explains, “it does indicate that we have two systems of law in California — one for the super rich, and one for the developer doing multifamily housing.”
Tesla Motors has already begun preparing a site near Reno, Nevada for its new factory, but it claims sites in Arizona, New Mexico and Texas are still under evaluation.