The Golden State's long-standing reputation as a guardian of the environment was shaken this week when Governor Gavin Newsom signed two sweeping bills that dramatically roll back the California Environmental Quality Act (CEQA), a law that has shaped the state’s landscape for more than half a century. This change could finally break the logjam on desperately needed new housing construction.

For decades, CEQA has been both a shield and a sword: it empowered environmental advocates to challenge suburban sprawl and gave local residents and interest groups a powerful tool to halt unwanted projects. The law, signed by then-Governor Ronald Reagan in 1970, required developers to undergo rigorous environmental reviews and opened the door to lawsuits from anyone who could claim environmental concerns, not just those with economic or property interests. While the law was initially limited to government projects, a 1972 court decision expanded its reach to private development, and over the years, it became a central pillar of California’s environmental policy.

But as the state’s housing shortage deepened and homelessness soared, CEQA’s impact came under increasing scrutiny. Critics, including some environmentalists, argued that the law had been weaponized to block not just environmentally harmful projects, but also those with clear social and environmental benefits—such as solar plants, wind farms, bike lanes and high-density housing in urban areas. According to Governor Newsom, the regulatory hurdles created by CEQA had made it “nearly unfeasible” to build enough homes for California’s nearly 40 million residents, leading to skyrocketing prices and widespread displacement.

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The new legislation, which was folded into the state’s $321 billion budget, takes effect immediately. One bill exempts most urban housing and infrastructure projects from CEQA’s lengthy environmental reviews, provided they are not located on sensitive or hazardous sites. The other bill streamlines the legal review process, creates new exemptions for projects like health clinics and childcare centers, and makes it easier for cities to rezone land for housing. According to ABC7, “most urban housing and infrastructure projects will no longer be required to complete CEQA’s lengthy environmental reviews,” a change that supporters hope will accelerate construction and bring relief to renters and would-be homeowners.

The reforms passed with rare bipartisan support in the State Capitol, reflecting a growing consensus that the housing crisis had become too urgent to ignore. “The cost of housing is outrageous. It is too damn hard to build housing,” said Assemblymember Buffy Wicks, a Democrat from Oakland, at the bill signing ceremony. Governor Newsom, echoing the urgency, told reporters, “If we fail to tackle this situation, we risk losing public trust, and that is simply the reality. This issue transcends its immediate implications; it concerns the reputation not only of Sacramento and its legislative and executive leaders but also of the entire state of California”.

Not everyone is celebrating. Environmental groups, who have long defended CEQA as a bulwark against pollution and unchecked development, condemned the changes as a dangerous rollback. According to the Davis Vanguard, a coalition of environmental justice and conservation groups, called the legislation “the largest rollback of environmental protections in at least the last 25 years,” warning that it could allow toxic projects to proceed in vulnerable communities without adequate scrutiny. Critics also raised concerns about new administrative provisions that could make it harder for residents to challenge projects in court.

Despite the backlash, supporters of the reform argue that CEQA had become a tool for NIMBY lawsuits and special interests, often blocking the very kinds of infill development that could advance both environmental and social goals. As Governor Newsom put it, the state’s regulatory challenges had reached a tipping point, and the time for action had arrived.

With these changes, California is betting that it can finally make a dent in its housing crisis—without abandoning its environmental values. Whether the new laws will strike the right balance remains to be seen, but as Newsom declared, “This is the most consequential housing reform that we’ve seen in modern history in the state of California, long overdue.”

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