Gov. Gavin Newsom (D-CA) rammed two bills through the state legislature overhauling the California Environmental Quality Act, a 1970s-era law viewed by critics as spurring a housing shortage due to being one of the biggest roadblocks to “building anything.” 

Although he faced fierce opposition from environmental groups, Newsom was able to sign the bills into law Monday evening by tying the legislation to the state’s 2025-2026 budget legislation. A provision conditioning the governor’s final approval of the spending plan on whether the legislature passed the CEQA reforms was inserted into the budget agreement. Faced with the prospect of the governor refusing to sign off on the budget agreement by a July 1 deadline if they didn’t wave through Democratic state Sen. Scott Wiener’s Senate Bill 131 and Democratic Assemblymember Buffy Wicks Assembly Bill 130, lawmakers in both chambers voted to approve the measures, which Newsom hopes will spur development and alleviate the state’s dire housing shortage.

Recommended Stories

• Gas prices: Fuel costs continue to fall, hitting lowest June price point since 2021
• US to set tariff rates by sending letters to other countries, Trump says: 'Dear Mr. Japan'
• Gas prices: Decrease at the pumps heading into the weekend

“This was too important to play chance,” Newsom said during a signing ceremony at the Sacramento capital, where he called the bills the “most consequential housing reform that we’ve seen in modern history in the state of California.” 

“We have fallen prey to a strategy of delay. As a result of that, we have too much demand chasing too little supply. This is not complicated, it is Econ 101,” he added. “This was too urgent, too important, to allow the process to unfold as it has for the last generation.” 

The bills mean most new apartment buildings will no longer face the open threat of environmental litigation. Proponents believe CEQA’s overhaul will help relieve the housing shortage in California, which has some of the most expensive housing markets in the country and the highest homeless rates in the nation. 

“There’s over 10 projects we’re going to push the go button on with this exemption, probably Tuesday,” Dave Rand, a prominent Southern California land-use attorney, said in comments to the Los Angeles Times. 

Assembly Bill 130 exempts most housing projects from CEQA, requiring only developers of high-rise, or buildings taller than 85 feet, and low-income developments to pay union-level wages for construction laborers. 

Senate Bill 131 narrows CEQA mandates for housing construction and further waives the environmental restrictions for some residential rezoning changes, streamlining approvals for nonresidential projects such as child care centers, health clinics, and advanced manufacturing facilities. 

CEQA, historically one of the country’s strictest state-level regulatory frameworks affecting housing projects and other crucial development, was first signed into law by then-California Gov. Ronald Reagan over five decades ago. 

The law “applies to any discretionary approval that a project may need,” David Blackwell, a land use and zoning attorney in San Francisco, noted in comments to Super Lawyers. “Pretty much any development project in California is going to require a discretionary approval from the city or the county where the project is located. And because of that, then that triggers CEQA review.”

Critics have long blamed the regulations in part for the state’s struggles with vast housing shortages and homelessness. The Golden State, which has some of the strictest housing zoning regulations in the U.S., has struggled to match demand for housing with supply, leading to a growing shortage. 

Newsom has softened some of CEQA’s most stringent provisions in recent years. However, although he signed legislation into law in 2023, making several changes to the CEQA, the governor in the past stopped far short of completely overhauling the controversial environmental legislation. 

In January, he rolled out an executive order that suspended permitting and environmental reviews under CEQA in order to “expedite” the rebuilding of Los Angeles, which was devastated by sweeping fires. Later the same month, Newsom blasted the California Coastal Commission, a powerful state bureaucracy, for releasing guidance suggesting residents still needed to comply with CEQA, ordering the agency to stand down through an additional executive order and condemning it for bringing “confusion and delay” to rebuilding efforts in Los Angeles.

NEWSOM CALLS OUT CALIFORNIA AGENCY FOR ‘ERRONEOUS’ REGULATIONS DELAYING REBUILDING IN LA

At the time, Newsom suggested the environmental rules could hamper fire victims’ ability to build back their homes and businesses destroyed during the crisis, drawing criticism from residents who argued his position was an admission that the stringent regulations were never necessary in the first place. 

“I’m worried about issues of rebuilding as it relates to … scarcity of resources, materials, personnel. I’m worried about time to getting these projects done. So we want to fast-track by eliminating any CEQA requirements,” he said.