CEQA Reform, The 'Third Rail' Of California Politics, Moving Fast Through State Legislature

Two bills aimed at sidestepping the hurdles the California Environmental Quality Act poses to new development projects are quickly moving through the adoption process at the state legislature. 

There are some hurdles ahead, but the fact that these bills have come this far is a testament to the severity of California’s housing affordability issues and how much pressure is bearing down on elected officials to fix them, land use professionals say. 

If approved as written, the bills could be some of the most significant changes to CEQA the state has seen since the law was enacted in 1970. 

“The ultimate third rail of California development politics has been CEQA, and many of us thought that CEQA would never be reformed because the politics could never come into alignment to allow for it to happen,” said Dave Rand, a partner at land use and environmental law firm Rand Paster Nelson. 

“And we are now potentially on the precipice of the most consequential land use reform in 20 years,” Rand said. 

Rand, who testified to legislators in Sacramento on behalf of Assembly Bill 609, saw the sea change firsthand at the bill’s first committee vote. The vote was in the assembly’s Natural Resources Committee, a place that Rand said “had historically been the place in the legislature where all meaningful CEQA reform bills went to die.” 

But instead of blocking, the committee voted unanimously to advance the bill. 

“A lot of the commentary was some degree of concern about, ‘Maybe, is this bill going too far? Are we doing the right thing? But for God's sake, we have to do something. What we've been doing hasn't been working. We need to go bigger. We need to be bolder.’” 

Many in the development community and decision-makers at the state level draw a line connecting CEQA and the housing affordability crisis in California. They cite the time it takes to complete environmental reviews and the exposure to legal challenges, which are sometimes brought by people who oppose new development.

But others in the development community and beyond say there are myriad factors that make housing in California expensive, including high costs of construction and land, a chasm between wages and rents, and the intense market demand to live in the state. 

Opponents of the bills include environmental organizations and some labor organizations, including Los Angeles-based Unite Here Local 11. Some opponents have argued that CEQA is a “scapegoat” for the complex and multifaceted housing affordability crisis that Californians face.

Still, the political tides appear to have turned in favor of CEQA reform in a big way, Holland & Knight partner Daniel Golub said.  

“I think that the game has really changed in a lot of ways when you have people within the Democratic coalition looking at themselves and saying, ‘To govern, we need to be able to show that we can govern effectively and we can move projects forward and that we can not elevate process over substance,’” Golub said. 

Despite the boost afforded them by being included in the governor’s proposed budget, the two bills aren't yet across the finish line. Senate Bill 607, sponsored by state Sen. Scott Wiener and aimed at changing what types of projects are eligible for CEQA, was picked apart in a committee, leaving its future uncertain, CalMatters reported in late May. 

The other, AB 609, which would exempt infill multifamily projects from CEQA, is in negotiations now on labor agreements, which could be critical to its passage but also to its ultimate efficacy at boosting housing production, land use attorneys said.

The latter could get passed and signed by Newsom in as little as two weeks. SB 607’s path forward is less clear.  

Because so many CEQA reform bills have been proposed and failed or been strapped with regulations and requirements that blunt the impact the development community would hope to see from their passage, many developers are waiting to see what comes of the bills before taking action. But land use attorneys say that they anticipate the bills’ passage could send a positive message to developers.

“I've got clients and former clients who've basically told me that they just won't develop in the city of Los Angeles because of the uncertainty, and a large part of that uncertainty has to do with CEQA,” Holland & Knight partner Ryan Leaderman said. 

“If these bills do get passed, especially [AB 609], it really takes away a lot of the risk for these projects and a lot of that uncertainty,” Leaderman said.