What’s Happening at the California Capitol? Another Pass at CEQA and Housing Streamlining
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What’s Happening at the California Capitol? Another Pass at CEQA and Housing Streamlining

Brownstein Client Alert, June 2, 2023

In this alert, Brownstein outlines Gov. Gavin Newsom’s latest swing at the California Environmental Quality Act (CEQA) and provides the updates (and potentially what to expect) regarding two new bills introduced by Sen. Scott Wiener this legislative session.

Gov. Newsom Announces Plan to Streamline CEQA Review

Former Gov. Jerry Brown once called CEQA reform “doing the Lord’s work.” Well, the current governor has committed to that mission. After expressing frustration with the state’s environmental law on Feb. 25 and its use by “NIMBYs who weaponize CEQA” to block much-needed development projects through delay and increased costs, Gov. Newsom introduced his legislative package to tackle two of the primary culprits in the CEQA bottleneck: administrative record preparation and lengthy legal challenges to a project’s environmental review.

The proposal, which borrows from prior CEQA streamlining bills for “environmental leadership projects,” narrows the scope of the administrative record and creates judicial streamlining for certain water, transportation, clean energy and semiconductor or microelectronics projects aimed at climate resiliency, safety and infrastructure maintenance. Below we outline the key provisions of the bill and the issues they attempt to address:

Preparation of the administrative record:

  • Bottleneck: One of the tools project opponents use to string out lawsuits challenging a project’s CEQA compliance is the administrative record. The administrative record is a compilation of the documents, studies and testimony the lead agency relied on in approving a project and certifying an environmental impact report. Under existing law, project opponents can choose to prepare the record on their own and then slow play preparation of the record to delay litigation—oftentimes for several months to over a year. Project opponents can also argue about the scope of the administrative record—i.e., what documents were before the agency when it undertook the challenged action.
  • Legislative fix: To speed up that process, Gov. Newsom has proposed several solutions:
    • For all projects, the bill allows a lead agency to prepare the record notwithstanding the project opponent’s election to prepare it. A lead agency may also assume the responsibility of preparing the record when the project opponents fail to prepare it in a timely manner.
    • For all projects, the bill narrows the scope of the administrative record by clarifying that the administrative record does not include “internal agency communications” that were not presented to the final decision-making body. This is critical as oftentimes record preparation is bogged down in attempting to collect email correspondence between agency staff during the project environmental review and entitlement process.
    • For certain water, transportation, clean energy and semiconductor or microelectronics projects, the bill requires lead agencies for the project to prepare the administrative record while it is processing the project’s application and preparing the environmental impact report. (See, e.g., Public Resources Code Section 21167.6.2, allowing an applicant to request the same but leaving the decision to the lead agency’s discretion.) The lead agency is directed to “certify” the record within five days of approving the project so that if any litigation is filed challenging the project, the record can be lodged with the court and the parties can proceed immediately to briefing the merits of the case.
  • Resolution of CEQA challenges within 270 days:
    • Bottleneck: Project opponents often use a lengthy court process—which in some instances can take several years to complete—to delay project financing and construction.
    • Legislative fix: For certain water, transportation, clean energy and semiconductor or microelectronics projects, the bill attempts to address this delay by requiring all actions to challenge an environmental impact report or the granting of any project approvals for such a project within 270 days of filing the record of proceedings “to the extent feasible.”

While Gov. Newsom has set the stage for CEQA reform this legislative session, the proposals face a panoply of procedural and political challenges. Indeed, his opening thrust has already been rather unceremoniously parried by the legislature, which rejected his proposed “trailer bill language” in a budget subcommittee on May 25. "Trailer bill language” (“TBL” for short) refers to a type of technical bill meant to make policy changes necessary to enact the budget. They are typically crafted through closed-door negotiations between the Senate and Assembly budget committees, legislative leadership, the governor’s office and the Department of Finance, and passed with minimal debate or amendment.

However, in recent years the governor’s office has increasingly used trailer bills to advance more substantial policy proposals, prompting criticism that the administration is bypassing the procedural safeguards inherent in the full legislative process. While it is rare for a trailer bill to fail to receive the votes needed to pass, the risk increases with more controversial policies, of which CEQA is second to none.

While the bills’ failure in the first committee is a setback, negotiations will undoubtedly continue and the proposals are likely to resurface before the end of the legislative session. As the governor’s proposal has the potential to limit critical project opposition litigation tactics, it is an open question whether it can make it through the tenuous path ahead.

Two Housing Bills Are Catching the Eye of Developers and Faith-Based Organizations

This week, two closely watched housing bills cleared a key hurdle, passing off the floor of the California State Senate and moving on to the Assembly. Senate Bill 4, which fast-tracks affordable housing on higher education and religious institutions’ properties, and SB 423, which provides for the streamlined, ministerial approval of specified multifamily housing developments, were both approved with strong bipartisan support. The bills faced opposition from the powerful State Building and Construction Trades Council and a broad coalition of local governments but enjoyed the support of a labor coalition led by the Carpenter’s Union, housing advocates and an array of pro-growth elected officials.

The bills didn’t clear their house of origin unscathed: SB 423 in particular took a slew of amendments in the Appropriations Committee, so many in fact that one senator spoke out, saying that he would withhold his vote until he could review the changes. The amendments attempt to offer a compromise between the two opposing labor camps by providing for strong union representation on larger projects and flexibility for developers on most others. Specifically, the amendments require a skilled and trained workforce (i.e., contractors and subcontractors must utilize a minimum number of apprenticed union laborers) on housing projects that are over 85 feet above grade, while requiring prevailing wage and healthcare for projects below 85 feet.

Essentially, this will mean that all steel-construction projects will be subject to the skilled and trained provisions supported by the State Building and Construction Trades, while timber-construction projects will be subject to the labor standards proposed by the Carpenters Union. It remains to be seen whether these amendments can turn down the heat on the simmering labor conflict that has dominated the housing conversation for the past several years. The bills now head to the State Assembly to begin the committee process once again.

Brownstein anticipates that both bills will continue to advance in the Assembly, with the caveat that they may face stiff resistance in the influential Assembly Local Government Committee. Housing developers and property owners interested in supporting the bill should weigh in when the bills are referred to committee. 

This document is intended to provide you with general information regarding California legislation. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.

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