California Lawmakers Revise CEQA, Reshaping Environmental Roles in Housing Advancement

California Governor Gavin Newsom and state legislators have significantly scaled back the California Environmental Quality Act (CEQA), a move aimed at alleviating the state’s persistent housing shortage and homelessness crisis [[1]]. The revisions, enacted on June 30, 2025, introduce exemptions for infill urban development, fundamentally altering the roles of environmental oversight in these projects [[2]].

CEQA’s Evolving Role in California’s Development Landscape

Originally signed into law by then-Governor Ronald Reagan in 1970, CEQA was intended to ensure environmental protection by requiring environmental impact assessments for construction projects. Over time, its role expanded from government and public works projects to include private developments. However, critics argue that CEQA has been increasingly used to delay or block projects, ofen under the guise of environmental concerns, exacerbating the state’s housing crisis.

Did You Know? CEQA lawsuits have increased significantly over the decades, with many challenges not directly related to environmental standards.

The Shift in Urban Development

The new legislation exempts most urban infill projects from CEQA requirements, streamlining the approval process for multi-resident buildings in areas where housing supply is critically low [[2]]. this shift aims to encourage denser urban development,which proponents argue is environmentally kind due to increased transit usage and shorter commutes. Conversely, new suburban developments on undeveloped land will still be subject to CEQA’s rigorous review process.

Labor’s Role and Wage Standards

Building trades unions initially opposed the CEQA reforms due to concerns about wage standards for construction workers. Previous versions of the legislation eliminated requirements for developers to pay “prevailing” (often union-scale) wages on multi-unit housing projects. A compromise was reached, mandating prevailing wages only for housing projects that are entirely affordable and receive public subsidies. Market-rate housing, or developments that are partially market-rate and partially affordable, are not subject to these wage requirements, except for buildings taller than 85 feet, which require union labor for specialized steel and glass work.

Pro Tip: Understanding the nuances of prevailing wage requirements is crucial for developers navigating California’s evolving housing landscape.

The Broader Economic Context

The CEQA reforms are part of a broader effort to address housing affordability in California, which is among the most challenging in the nation. Cities like Los angeles, San Jose, Long Beach, and san Diego have some of the highest ratios of median home price to median income in the United States. Alongside supply-side measures like CEQA reform, cities are also exploring demand-side solutions, such as raising the minimum wage for hotel workers in Los Angeles to $30 per hour by the 2028 Olympics.

Impact of CEQA Reform on California housing

The changes to CEQA are expected to have a notable impact on the pace and type of housing development in California. By reducing regulatory hurdles for urban infill projects, the state hopes to accelerate the construction of much-needed housing units and alleviate the housing shortage. However, the long-term effects of these reforms remain to be seen, and ongoing monitoring will be essential to ensure that environmental protections are not compromised.

What are the potential environmental consequences of reduced CEQA oversight in urban areas? How will these reforms effect housing affordability in the long term?

Do you think these CEQA reforms strike the right balance between environmental protection and housing development? Share your thoughts in the comments below!