California Dismantles Landmark Environmental Law to Tackle Housing Crisis

OMG, what's going to happen to the spotted owl?

California Dismantles Landmark Environmental Law to Tackle Housing Crisis

Democratic Gov. Gavin Newsom pushed to roll back a 50-year-old law blamed for blocking development and reducing affordability

By Jim Carlton, WSJ

Updated July 1, 2025

California lawmakers on Monday night rolled back one of the most stringent environmental laws in the country, after Gov. Gavin Newsom muscled through the effort in a dramatic move to combat the state’s affordability crisis.

The Democratic governor—widely viewed as a 2028 presidential contender—made passage of two bills addressing an acute housing shortage a condition of his signing the 2025-2026 budget. A cornerstone of the legislation reins in the California Environmental Quality Act, which for more than a half-century has been used by opponents to block almost any kind of development project.

The abuses of the law have spread so widely that opponents used it to block some bicycle-lane expansions when Newsom served as San Francisco’s mayor, he said during a signing ceremony at the Sacramento capital. Democratic leaders of the Assembly and Senate, who had steered the bills to bipartisan passage earlier Monday, flanked him.

“We have seen this abuse over and over and over again,” the governor said. “We have fallen prey to a strategy of delay. As a result of that, we have too much demand chasing too little supply. This is not complicated, it is Econ 101.”

Some environmentalists and other defenders of the longstanding law were furious, and warned that developers will now go unchecked. “Who needs Trump when we have a wolf in sheep clothing negotiating backroom deals while he and his oligarch donors score big,” one critic wrote on X.

The lack of affordable housing has climbed to the top of voter concerns in other coastal blue strongholds. New York City’s brutal rental market became a flashpoint in the city’s recent Democratic primary for mayor, and helped propel Zohran Mamdani to victory.

Zohran Mamdani declares victory in the New York City Democratic mayoral primary as former Gov. Andrew Cuomo concedes, but says he may still run in November’s general election. Photo: Christian Monterrosa/Bloomberg News

But California sits at the epicenter of America’s home shortage. The state has faced a homelessness crisis. Nine of the 10 least affordable cities in the country are located there, according to a May 20 report by WalletHub, a personal-finance company. And the heart of the problem, say housing experts, are the regulatory barriers to construction. The state needs 3.5 million units, but only about 100,000 are built annually.

“We have turned off the spigot on housing for the last 20 to 30 years,” said Michael Lens, a professor of urban planning and policy at the University of California, Los Angeles.

The California Environmental Quality Act was signed into law in 1970 by then-Gov. Ronald Reagan, at a time when Republicans were at the forefront of the nation’s burgeoning green movement. President Richard Nixon also signed groundbreaking protections, including the Endangered Species Act.

CEQA, as it is known, requires state and local agencies to review environmental impacts of planned projects and to take action to avoid or lower any negative effects. Opponents of projects have used the law to delay them by years.

Over time, CEQA became such a thorn in the side of developers that governors, beginning in 1983, kept talking about reforming it.

Newsom, who has been criticized for homeless encampments and people leaving the state, has made housing affordability one of his top issues, and during his tenure he has signed numerous bills aimed at getting more homes built. None, though, promise to be more consequential than these two, which streamline the regulatory process for housing, most notably by exempting many projects altogether from the law’s review—particularly ones within densely built cities.

“We are living in a crisis that has priced out working families, made it harder for people to be able to live where they work,” Senate President Pro Tem Mike McGuire said as the bills were about to be signed. “We need to move and that’s exactly what happened here today.”