Eric Jaffe introduces LOS and its obstructive effect by citing the example of the planning process for the Van Ness BRT project in San Francisco. "The line was a signature project in the half-cent sales tax referendum, Proposition K, that city voters approved in 2003. The original plan called for Van Ness to be up and running by late 2009. The latest timeline has BRT beginning operations in 2018—a full decade and a half after the Prop K vote (which itself came years after the route concept emerged). Big city infrastructure projects get pushed back for countless reasons, but in the case of Van Ness BRT, a major source of the delay was the need to produce this massive report. It didn't receive final approval until late 2013, and was part of a preparatory phase that, all told, took 6 years and cost $7.6 million."
Jaffe explains where LOS goes wrong. "Here's the sad thing about the Van Ness BRT report: The only area where it had an unavoidable negative impact that couldn't be offset under CEQA was traffic...And here's the really sad thing about CEQA traffic impacts: They're determined using a car-friendly metric known as 'level of service' that bases a project's transportation performance on driver delay. In other words, Van Ness BRT required all the trouble of preparing this massive report because, in the twisted eyes of California law, public transit is considered a greater enemy to the environment than car travel."
And to sum up the possibilities for how LOS reform could improve the planning process, a metaphor: "The way it works right now, you might say public projects born into California cities grow up in a broken home. The planning profession, which looks favorably on dense mixed-use environments and multimodal networks, has long since been separated from the environmental law under LOS, which looks favorably on remote development and more road capacity. With VMT as the CEQA traffic metric, the marriage of urban planning and environmental policy should be a more harmonious one."
There are a lot more details in the Jaffe article about how the planning process could improve after LOS review is revised.