California finally passed CEQA reform. Will it stop housing roadblocks?

San Francisco Chronicle​

02-07-2025

The titanic shift in California housing policy orchestrated by Gov. Gavin Newsom on Monday night, resulting in the rewriting of large parts of the California Environmental Quality Act, will allow him to spend the final 18 months in office trying to correct one of his biggest policy failures unencumbered by what he views as a key roadblock.
Newsom and housing advocates have long blamed the CEQA environmental review process for the state's inability to keep up with growing housing demand. But with the legislation passed Monday those reviews have been severely curtailed.
As pro-housing advocates celebrated one of their biggest victories in years and environmentalists decried the potential damage from the new laws, one question went largely unasked: Will they work?
While CEQA lawsuits from environmental groups and neighbors across California — often a single neighbor — have protected open space, thwarted polluters and spared pristine coastlines from luxury resorts, Newsom and housing advocates believe they have also been weaponized to bog down and kill badly needed housing, and in doing so, have helped make housing more expensive and less accessible.
But plenty of obstacles to home-building remain — including construction costs and interest rates — meaning it's unclear just how big of an impact the CEQA reforms will have and how quickly Californians will feel them.
Proponents of the legislation saw some quick victories. After a five-year period in which the slow pandemic recovery and high costs clogged the pipeline of new projects, a much improved regulatory landscape awaits builders as soon as conditions improve.
'It will absolutely speed up project approvals in infill locations with no or low litigation risk under CEQA,' said land use attorney Jennifer Hernandez. 'And it will make the application cheaper for sure.'
Labor unions will no longer be able to use CEQA lawsuits to extract better wages and other concessions from developers on individual projects, sometimes without any clear benefit to the environment, according to Oakland-based real estate attorney Robert Selna.
'The unions have gone astray in this regard — they use environmental law as leverage to extort contracts for their members, which has been a significant impediment to building housing,' Selna said. He pointed to a former client's project in San Lorenzo, which faced heavy opposition from organized labor after its developer declined to commit to exclusively using union labor. The project was never built.
'This is the first time I have seen a CEQA reform really have a chance to make a difference,' Selna said.
Union representatives contacted by the Chronicle were reluctant to speak on the record. But the general sentiment was that not all were neutral about the provisions of the reform.
In San Francisco the laws won't make a huge impact because the majority of infill housing developments already take advantage of state programs that exempt them from CEQA review. The problem in the city remains challenging market conditions.
Nonetheless, Mark MacDonald of DM Development, one of the city's most prolific buildings over the last 12 years, said that the streamlining bills have been a game-changer, cutting at least a year off the approval process — and sometimes more.
'In San Francisco, best case you are looking at 18 months and worst case you are looking at years, or never,' he said. 'It's certain and it's fast and that is why S.F. has tens of thousands of units entitled. If market conditions were different we would be building a lot of housing now. That time will come.'
The new laws were spearheaded by two Bay Area housing reform advocates, Assembly Member Buffy Wicks, D-Oakland, and Sen. Scott Wiener, D-San Francisco. But by making the state budget contingent on the reforms' passage, Newsom employed all his political clout in what was for him an unusual foray into the legislative process.
In a statement after he signed the measures, Newsom called them 'transformative' and 'the most consequential housing and infrastructure reform in recent state history.'
Sam Oliker-Friedland, executive director of Institute of Responsive Government, agreed, calling the new laws 'one of the most important housing reforms in a generation.'
But environmentalists, who said CEQA is not to blame for California's housing crisis, predicted that relaxing the law will provide a gaping loophole for developers willing to damage the environment in pursuit of a profit.
Bradley Angel, of Greenaction for Health and Environmental Justice, said its reform comes 'under the false guise of promoting affordable housing' and weakens an 'incredibly important' tool for advocates to 'challenge bad decisions that pose a threat to public health.'
'Any weakening of CEQA will make it easier for dirty industries to pollute communities,' he said.
Longtime environmental law and land use attorney Stu Flashman agreed.
'They are telling untruths and they are telling them on purpose. The fraud is: if we get rid of CEQA, we get much more affordable housing,' Flashman said. 'It's a minor factor in the cost of housing in California.'
Flashman credits the law with preventing a Chiron biotech manufacturing plant from encroaching on a residential neighborhood in Emeryville in the 1980s.
'The city of Emeryville was going to approve it under a negative declaration,' said Flashman, referring to a determination under CEQA that a proposed project will not have a significant negative impact on the environment.
Flahsman, who lived two blocks away from the planned project, was part of a lawsuit against the city to thwart the massive development.
A settlement between the parties required the city to conduct a full blown environmental impact analysis for the project. The plan ultimately unraveled.
Flashman is as certain today as he was then that Emeryville was 'the winner of that fight.'
'There is still biotech going on in the city, but it's not manufacturing. It's much more contained. Part of the area (where the plant was planned) later on became Pixar Studios,' he said. 'Development still happened, jobs still came, but the risks of building a huge biotech plant weren't there, and other (growth) happened instead.'
Flashman referred to the present attempt at reforming the law as 'horrifying,'
The fact that CEQA legal process is 'complaint based' has long meant that the more urban the location, the more vulnerable a developer is to being challenged in court. That means that the 100-acre subdivision in an exurb often flies through the approval process while the 100-unit apartment building next to a rail station gets bogged down, and often killed, in appeals.
'If you don't have any neighbors, if you are building in a green field, a place that is by definition the least sustainable, then you are going to have an easier time with CEQA than if you build in a place where people already live,' said Sonya Trauss, who founded the YIMBY movement in 2015 and is the executive director of the group YIMBY Law.
As the housing crisis has tightened its grip on the state, pressure to make building housing easier has ratcheted up. Still, instead of major reforms, lawmakers over the last few years took a piecemeal approach — carving out so many projects for exemptions that critics have called it 'Swiss cheese CEQA.'
But the bills Newsom signed Monday grant broad exemptions to CEQA for homes and other buildings in already developed areas. The list of projects that are now exempt includes mostly categories that would hardly be seen as environmental scofflaws: childcare centers, food banks, farmworker housing, health clinics, advanced manufacturing sites, and infill housing complexes less than 85 feet.
And the list of exemptions is not exactly random. From a food bank in Alameda to a plan to add 34 bike lanes in San Francisco to farmworker housing in downtown Half Moon Bay, the list includes types of projects that have been targeted by opponents using CEQA.
As he was failing to meet his goals for building new housing, Newsom tried, among other things, forcing cities to rezone for bigger buildings and denser neighborhoods and punishing towns that blocked development.
But those steps didn't work, leading to Monday's drastic actions.
Trauss attributed CEQA reform passing with such a lopsided vote to the fact that so little housing is being built at the moment. She compared it to the years after the Great Recession when San Francisco lowered affordability requirements with the support of groups normally on the opposite sides of the political spectrum.
'This is a similar moment,' she said. 'People are surprised that politics lined up to facilitate homebuilding without doing all these exactions for labor or affordability. It makes sense. We are not seeing applications, stuff is not being built. When things dry up that much everybody starts to realize what an emergency it is and they are more open to solving the problem.'
Trauss said the CEQA reforms 'really zero in on where the action is.'
'It's definitely the new environmentalism,' she said.
Melissa Romero, policy advocacy director for California Environmental voters, disagrees, predicting that public health and community safety will suffer under the new laws.
'The quiet but dangerous rollback of California's core health and safety protections paves the way for industrial projects to move forward without proper review and creates a long list of exemptions from endangered species habitat protection,' Romero said.