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Dear John,


Gov. Gavin Newsom unveileda plan ([link removed]) in May to speed up the process for approving energy and infrastructure projects to help achieve his lofty climate goals. He didn’t get too far before environmentalists declared they needed more time to consider the governor’s proposed reforms to the controversial California Environmental Quality Act (CEQA). Now we know why former Gov. Jerry Brown lamented that CEQA reform is "the Lord’s work. ([link removed]) "

The Legislature just sent Newsom SB 149 ([link removed]) , a very narrow part of his proposal to help expedite judicial procedures in certain types of CEQA lawsuits. SB 149 was originally a budget bill, recently gutted and amended to move a bill quickly so the Legislature — and Newsom — can avoid any scrutiny from their environmental supporters. You know it’s a rush job when the bill is not heard in the powerful Senate Environmental Quality policy committee which has a say on all CEQA legislation. While Newsom committed to signing the bill, it is unclear whether its implementation will achieve much.

However, over the last several months, California’s nonpartisan Little Hoover Commission ([link removed]) has been taking its time studying the impact of CEQA (pronounced see-kwa) and soliciting reform suggestions from the public. The Commission has held four public hearings so far that were attended by almost nobody, apart from the people invited to testify. A lack of participation in the Commission’s exercise suggests that insiders know the game is rigged.

What follows is a condensed version of a three-part report by CPC senior fellow Edward Ring, where he spotlights noteworthy observations and recommendations from the Commission hearings, along with ideas solicited from Californians who have had to deal with CEQA over the years, either as attorneys, judges, developers or activists. Ring outlines thoughtful proposals for reform. You can read his full report here ([link removed]) .


** How do you solve a problem like CEQA?
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The California Environmental Quality Act (CEQA), passed by the state Legislature in 1971, was the first legislation of its kind in the nation, if not the world.

Its original intent was to “inform government decisionmakers and the public about the potential environmental effects of proposed activities and to prevent significant, avoidable environmental damage.”

But over the past half-century, CEQA has acquired layers of legislative updates and precedent setting court rulings, warping it into a beast that denies clarity to developers and derails projects. When projects do make it through the CEQA gauntlet, the price of passage adds punitive costs in time and money.

Knowing this deters countless investors and developers from even trying to complete a project in the state.

While CEQA is most often cited as a major obstacle to building more housing in California, it affects any project that has potential environmental impacts. This includes commercial development and all types of infrastructure, including dams, wastewater treatment plants, power plants, ports, rail, land management; anything that changes land use and may cause “significant” environmental damage.

What may inform CEQA judgments has changed over the decades. Climate change impact has become one of the dominant concerns brought in CEQA cases today.

The Labyrinth Called CEQA

If a project may cause “significant impact” to the environment, the CEQA process aims to ensure that either the impact is appropriately mitigated or the project is stopped. There is rarely just one “responsible agency.” If any of these agencies determine there are any flaws or omissions in the required “Environmental Impact Report” (EIR), the process often has to be restarted.

The delays between inter-agency responses can consume months if not years. The “public review period” leaves room for a third party to file a lawsuit right up to the last minute before a project is finally approved.

Exemptions have become the shortcut taken for politically favored projects, a default remedy pursued by the state Legislature whenever they decide it's important to prioritize a project. Anointed projects skip through the exemption portal and are fast-tracked. Meanwhile, all other projects must go through the labyrinth called CEQA.

The Tentacles of CEQA Intersect with Other Regulatory Beasts

CEQA is only part of a consortium of similar regulatory creatures. The Endangered Species Act, the National Environmental Policy Act, the California Global Warming Solutions Act, and seemingly infinite laws, executive orders, agency regulations, and court rulings pursuant to these and others, along with CEQA, have combined to make development in California nearly impossible.

Critics of CEQA have made clear that these laws have created a web of regulatory hurdles that are so unclear and costly that only a small handful of housing developers, government agencies, or civil engineering contractors are big enough to navigate them.

Changing the rules in midstream, conflicting rules depending on the agency, an approval process that takes years if not decades, financing that dries up or is driven up to punitive levels, excessive fees, projects that take so long that when they finally get the green light, the market or the technology has left them far behind. Start over. This is life with CEQA. This is California.

The Use and Abuse of CEQA

Several people addressing the Little Hoover Commission brought up the problem of abuse. Lawsuits without merit often win and meritorious lawsuits often lose. Judges will frequently find just one unforeseeable part of a CEQA report that has fallen short of what they believe is required and send the applicant back to do it all over again.

One of the most articulate critics of CEQA at the hearings was attorney Jennifer Hernandez, who claimed that almost half of California’s production of housing was sued in 2022.

For developers, the almost inevitable arrival of a lawsuit has turned CEQA, as Hernandez described it, into a “litigation defense tool.” The applicant tries to anticipate and answer in advance every conceivable objection to their project — an impossible task. Then so-called bounty hunters pounce as soon as the application is filed. Lawyer trolls identify a crack in the CEQA report and threaten to sue. Settling with these attorneys becomes another cost of doing business.

CEQA invites lawsuits from parties with ulterior motives. Labor unions that want the developer to accept a project labor agreement often file CEQA lawsuits, a practice that has come to be referred to as “greenmail ([link removed]) .” Business interests that compete with a project developer will often file CEQA lawsuits.

Environmental Justice

Along with the relatively new role of climate change impact in the CEQA process, another major concern now considered is “environmental justice,” the alleged disproportionate effect development projects may have in low-income neighborhoods.

This gives rise to a criticism of CEQA that is double-edged. On one hand, CEQA offers people in low-income communities one of the only legal tools available to fight industrial or warehouse development that will create more noise, congestion and pollution in their communities. But at the same time, CEQA is an off-the-shelf, potent weapon in the hands of wealthy residents across town who deploy it at will to keep high-density housing and unwanted commercial development out of their communities.

One solution to this conundrum would be to develop entire new cities on open land in California. It would lower the price of housing everywhere. It is ironic that CEQA and related laws have made it almost impossible to build on “greenfields” — raw undeveloped land on the periphery of cities — and yet the laws are streamlined to fast-track infill development in already densely-populated urban environments.

There is another path to environmental justice, which is to lower the cost-of-living — and the biggest barrier to lowering the cost-of-living is CEQA.

CEQA Reform

Despite objections from environmentalist organizations and some labor union representatives, there is a growing consensus within the state Legislature that something has to be done about CEQA.

What deserves consideration is to simply repeal the entire law. Get rid of it. Every other law to protect the environment would still be in place, including the National Environmental Policy Act, which is the federal counterpart to CEQA and more than adequate to protect the environment.

Another solution to CEQA that might be politically viable would be to restrict third party lawsuits to parties that are specifically concerned about environmental impact and reside in the affected communities.

And, if unions are serious about seeing more workers acquire middle class status, they may want to consider the upside of diminished CEQA statutes. There are two paths to financial security for households. The traditional union solution is the path of higher wages. But an equally effective path with broader benefit is to lower the cost of life’s essentials — housing, water, energy, transportation and food.

Policies that are once again designed to nurture economic growth instead of economic stagnation is a prerequisite for California to recover prosperity for every worker in the state. Unions should recognize this, as should social justice activists and progressives.

It is time to restore balance between what is possible to protect the environment and what is necessary to empower the people living here. Reforming CEQA is the first step in that process.

A full list of more than a dozen recommendations for reforming CEQA can be found here. ([link removed])

SUPPORT CPC ([link removed])
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** Radio Free California #284: Gavin Newsom Goes January 6 on the Supreme Court
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On this week's podcast with CPC president Will Swaim and CPC board member David Bahnsen: Gov. Newsom says recent decisions reveal the Supreme Court’s “willingness to bend the Constitution to favor conservative views.” Vanity Fair asks whether anyone can fix California. Bonus! Will celebrates the birth on July 4, 1883, of San Francisco’s Rube Goldberg. Listen now. ([link removed])

SUPPORT CPC ([link removed])

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