California has made significant changes to a 1970s land-use law that was once regarded as landmark legislation for protecting the environment, but is now viewed as a barrier to development in a state plagued by an ongoing housing crisis. Gov. Gavin Newsom and state lawmakers say the changes will help them get a better handle on the housing and homelessness issues.

California Environmental Quality Act

The California Environmental Quality Act, or CEQA, was signed into law by former Governor Ronald Reagan in 1970. At the time, it was seen as a partner to the National Environmental Policy Act, or NEPA, signed by former President Richard Nixon.

That law essentially requires a thorough examination of any new developments in the state for their environmental impact. Newsom said CEQA is a well-intentioned law, but it puts up major red tape when it comes to building housing.

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Changes to CEQA

Among the changes being made, new housing in urban infill areas will be exempt from CEQA. These changes will also streamline CEQA’s processes overall, thereby accelerating housing development and infrastructure projects.

CalMatters reports that developers will now be able to proceed without conducting studies or making predictions on how new developments could impact air pollution, flora and fauna, groundwater quality, and other factors.

Newsom threatened to reject the state budget unless changes were made to CEQA.

“We have too much demand chasing too little supply. It’s not complicated, this is econ 101, supply/demand imbalance,” Newsom said. “I’ve said it before, I’ll repeat it. This issue of housing explains more things in more ways and more days than any other issue to explain the challenges and the plight of so many Californians.”

Some environmental groups have criticized the changes to CEQA, arguing that requiring environmental review for development is beneficial for both the environment and public transparency.

“CEQA is essentially our environmental bill of rights, it ensures decision-makers and the public have the opportunity to understand the effects of projects big and small,” Nick Jensen with the California Native Plant Society told KCRA. “We do a great disservice to communities and biodiversity when you choose to silence their voices.”

Recent CEQA exemptions

Earlier this year, Newsom suspended CEQA regulations as well as other laws to expedite rebuilding in Southern California following January’s wildfires.

Another recent exemption came in 2022 when Newsom issued an executive order to suspend CEQA requirements to bolster regional water conservation efforts.

Several stadium projects, including SoFi Stadium in Inglewood in 2015 and the Golden 1 Center in Sacramento in 2016, utilized loopholes or targeted legislation to circumvent CEQA requirements and expedite construction.

California housing issue

California is the most populous state in the United States, with a population of nearly 40 million.

The housing crisis continues to intensify in the state, according to the Los Angeles Daily News. A recent report shows the population is growing faster than developers can build housing, driving up rent prices.

The Harvard Joint Center for Housing Studies says more than half of renters in California are rent-burdened, meaning they spend more than 30% of their income on rent.

The average rent price in California is now $2,800 per month, 33% higher than the national average of $2,100 per month.

The governor and state lawmakers hope that making development easier will ease those prices.

“This is, and I can humbly say this as someone who’s been a student of this and practitioner of sorts in the last six plus years, the most consequential housing reform that we’ve seen in modern history in California,” Newsom said. “Long overdue? Absolutely.”

From CalMatters Capitol reporter Alexei Koseff:

Newsom, ‘Yes In My Backyard’ lawmakers and the carpenters union took a victory lap Monday evening as Newsom signed a pair of bills that will streamline environmental reviews for many housing and infrastructure projects in California. The governor demanded that the state’s entire $321 billion budget — which he signed on Friday — could not take effect without the proposals.

They received his approval just hours before the start of the new fiscal year on July 1, at a signing conference where Newsom touted the changes as necessary to get California building again or risk losing the trust of the public: “We needed to go bold and big on this Holy Grail reform,” he said.

More budget news: As part of labor deal negotiations with some public employee unions this year, Newsom’s office is pausing state spending toward health care benefits these workers receive in retirement, reports CalMatters’ Adam Ashton.

With the price tag of $85 billion, retirement health care benefits serve as one of the state’s largest long-term debts. By pausing pre-funding payments for two years for current workers, the state would save more than $700 million in the new budget year, according to Newsom’s office.

Since workers in these unions also won’t have to contribute toward their retirement health care for that time period, the move would also boost their take home pay by as much as 4.5%.

Read more here.