What is CEQA?
CEQA stands for the California Environmental Quality Act. According to the California Governor’s Office of Land Use and Climate Innovation, CEQA “requires government agencies to consider the environmental consequences of their actions before approving plans and policies or committing to a course of action on a project.”
Put simply, before any major project gets approved—like a new housing development, infrastructure, or commercial building—CEQA requires a thorough review of how that project might affect the environment.
Why Was CEQA Created? What’s Its Purpose?
CEQA’s main goals are to:
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Inform government decision-makers and the public about possible environmental impacts of a proposed project.
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Identify ways to avoid or reduce environmental damage through changes or alternatives.
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Prevent significant, avoidable environmental harm by requiring mitigation measures or project changes.
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Explain to the public why a project was approved, even if it has unavoidable environmental impacts.
This process promotes transparency and public involvement in projects that could affect the environment.
How Does CEQA Affect Real Estate and Development?
CEQA applies to projects that require approval, funding, or permits from public agencies. This means many private developments—like housing projects—also fall under CEQA because they need government permission to move forward.
The environmental review under CEQA can take several forms:
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Exemption: Some projects are exempt because they won’t have significant environmental impact.
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Negative Declaration (ND) or Mitigated Negative Declaration (MND): If a project may have some effects, but they’re minor or can be reduced through agreed-upon mitigation.
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Environmental Impact Report (EIR): A detailed study is required if a project could cause significant environmental harm that cannot be fully mitigated.
The EIR is often the most time-consuming and expensive part of the process. It analyzes impacts like air quality, traffic, noise, wildlife disruption, and more.
Why CEQA Is Both Helpful and Controversial
CEQA has played a critical role in protecting California’s environment for over 50 years. It forces transparency and holds developers accountable for environmental impacts.
But it also has critics. Over time, CEQA lawsuits have been used by some parties to delay or block projects, sometimes for reasons unrelated to genuine environmental concerns. These challenges can add months or years to project timelines and increase costs.
For example, as SF News reports, courts have seen challenges about “shadows” or even “people as pollution.” This broad use of CEQA has slowed many housing projects, contributing to California’s housing shortage.
Recent Changes: Governor Newsom’s CEQA Reform
Governor Gavin Newsom signed a budget bill that significantly weakens CEQA’s scope for many urban housing projects. Newsom calls it the “most consequential housing reform in modern history” and aims to remove CEQA as a tool for project delays.
Here’s what changed, according to SF News and CalMatters:
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Most urban housing projects are now exempt from environmental review under CEQA.
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The budget also rolls back CEQA rules for developments like childcare centers, health clinics, food banks, farmworker housing, broadband, wildfire prevention, water infrastructure, public parks, trails, and advanced manufacturing.
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The reforms lower labor requirements for housing projects, reducing costs and red tape.
The rationale? Newsom and supporters say CEQA abuse has contributed to California’s housing crisis by delaying projects and driving up costs. Newsom said, “We’ve fallen prey to litigation as a strategy, delay as a strategy,” creating too much demand chasing too little supply.
Controversy Over Environmental Justice and Equity
While these reforms aim to speed up housing and infrastructure, environmental justice advocates are concerned. As CalMatters reports, exemptions for “advanced manufacturing” raise worries about industrial projects moving into vulnerable, low-income communities.
So, while the reforms may ease housing production, they risk increasing environmental harm and health disparities in already burdened areas.
Will These Changes Solve California’s Housing Crisis?
This remains to be seen. Critics and housing advocates agree that CEQA reform removes a key barrier. But other issues like rising construction costs, insurance rates, and high interest rates also slow housing production.
As the New York Times analysis notes, income inequality plays a larger role in homelessness than CEQA alone. And despite past promises to reduce red tape, California’s housing production hasn’t kept pace with demand.
The question is: will these latest changes deliver real results or just shift the problem?
Final Thoughts
CEQA is a complex but important part of California’s land use and environmental landscape. The recent reforms reflect a shift toward prioritizing housing supply but raise questions about protecting vulnerable communities.
Staying informed about CEQA changes helps everyone—from buyers to builders—make better decisions in California’s evolving real estate market.
Sources:
California Governor’s Office of Land Use and Climate Innovation, CEQA: The California Environmental Quality Act
SF News, “Newsom Signs Major Rollback of CEQA Reviews, With a Big Carve-Out for Big Tech” (2025)
CalMatters, “Huge changes to CA’s landmark environmental law, CEQA” (2025)
New York Times, “California Rolls Back Its Landmark Environmental Law” (2025)
