Newsom’s CEQA “Reform” — A Win for Unions, Not a Fix for Housing
On July 1st, Governor Gavin Newsom signed legislation that he hailed as “the most game-changing housing reforms in recent California history.” The bills, bundled into a budget trailer package, include selective exemptions from California’s destructive environmental law, CEQA — a bureaucratic nightmare widely blamed for strangling housing development and deepening the state’s affordability crisis.
But despite the celebratory headlines, many housing experts are pushing back against the governor’s framing. What Newsom has signed is not broad reform. It’s a narrow carveout that benefits a politically favored few.
What Is CEQA?
The California Environmental Quality Act (CEQA) was passed in 1970 ostensibly to ensure that state and local agencies evaluate the environmental impacts of major projects before their approval. But over time, it’s become a major roadblock to building homes, schools, and infrastructure. Developers face long delays, costly reports, and frequent lawsuits, often from unions or NIMBY (Not In My Back Yard) groups who use the law to stall or kill projects. CEQA now does more to block housing than to protect the environment.
What Did Newsom Sign?
Among the budget bills signed by the governor to provide for more CEQA exemptions is AB 130, which creates new CEQA exemptions for infill housing projects that already meet local zoning and planning standards. In theory, this could expedite housing development by cutting down on costly and time-consuming environmental reviews.
However, the exemptions only apply if developers agree to a set of labor mandates, including mandated wages and skilled labor requirements.
But AB 130 doesn’t just require union-level wages. It actively rewrites how those wages are calculated to ensure unions maintain dominance, as noted by political commentator Jon Fleischman, “Section 26 further rigs the system by manipulating prevailing wage calculations to exclude non-union data, guaranteeing that union-negotiated rates become the mandatory standard.”
These restrictions effectively limit the benefits to union-built projects, thus excluding an estimated 87% of the state’s private construction workforce, who are not unionized according to ABC Southern California. As a result, the vast majority of California builders will not benefit from these CEQA exemptions, and neither will the Californians hoping for an affordable place to live.
If expedited reviews are good for a few urban projects, they should be good for all projects across the state.
But accelerating environmental reviews won’t fix the real problems, which are lawsuits and greenmail (extortion) tactics by environmental groups and unions that use CEQA litigation to block housing projects before they even break ground. Unless litigation reform is part of the package, AB 130 will not deliver meaningful housing production.
A Long History of Empty Promises
This latest episode fits a long-running pattern in Sacramento of bills that promise reform, but instead deliver narrower exemptions — often for politically-connected interests. CEQA exemptions are often handed out for high-profile urban developments like sports stadiums rather than as part of a consistent or fair statewide reform strategy.
Newsom’s new union carveout echoes past efforts, such as SB 743 in 2013, the Darrell Steinberg bill that carved out CEQA exemptions for the Sacramento Kings arena, or the 2011 CEQA exemptions fast-tracked for the (never-built) downtown Los Angeles football stadium.
A Missed Opportunity for True Reform
Many in California, across party lines, have long called for real CEQA reform to address ballooning housing costs. Assemblyman James Gallagher (R-Yuba City) and others have repeatedly introduced serious CEQA overhaul bills, only to see them die in committee.
During a recent floor debate on the housing package, Assembly Republican Leader James Gallagher offered a pointed reminder: CEQA reform didn’t begin with the current administration, and it certainly wasn’t driven by it. Gallagher recounted how, as a freshman legislator in 2015, he and other Republicans introduced CEQA reform bills on wildfire, water infrastructure, and housing that were swiftly killed in committee. “The philosophy was that CEQA was sacrosanct and you don’t change anything,” he said.
A decade later, Gallagher argued, the legislature, not the governor, finally made progress: “It’s the legislature that has been doing the hard work… standing up against the interest groups.”
He credited Republicans and a bipartisan coalition for moving the needle on CEQA, and criticized Governor Newsom for trying to take credit after years of inaction: “He’s a lazy governor… Now he wants to take credit for our work.”
As noted by Lance Christensen, Vice President of Government Affairs at California Policy Center, “Dozens of real CEQA reforms are dead in the house of origin because they were authored by Republicans.”
The last Democrat to seriously attempt comprehensive reform, former Sen. Michael Rubio of Kern County, resigned in 2013 after being sidelined by his own party.
There is an urgent need for more housing, especially for working Californians being priced out of their own communities. Environmental oversight matters, but so does the ability to build homes in a timely and cost-effective manner.
Newsom’s latest package may ease construction for a limited set of union-backed projects. But it’s not the kind of broad, balanced CEQA modernization that many local leaders have been calling for.
That reform is still waiting.
Andrew Davenport is the Manager of Strategic Initiatives with California Policy Center.