California is home to numerous profitable industries, but many of the state’s residents struggle to survive under the weight of big government. Case in point: excessive regulations have suffocated the state’s housing market and led to some of the nation’s highest rents and most expensive homes.
In contrast, metro areas in the South, particularly in Texas, are leading in the construction of new apartment buildings this year. Austin hosted nearly double the number of new units as Los Angeles, which is larger tin both geographic and population size. One of the reasons for the South’s housing boom is its less-restrictive regulatory environment. According to Doug Ressler, a senior analyst and manager of business at Yardi Matrix, a real estate data firm, “Southern metros typically offer streamlined approval processes and fewer regulatory hurdles, making it easier to bring multi-family projects to market.” Notably, Texas lawmakers further relaxed the state’s land zoning laws earlier this year to allow for more housing construction.
Californians have long been victims of government overreach. Has the tide begun to turn?
Earlier this summer, members of the heavily Democratic state legislature voted to roll back CEQA, the California Environmental Quality Act, for certain building projects. The law, passed in 1970 and signed by then-Governor Ronald Reagan, mandates that developers consider environmental impacts when proposing construction projects. CEQA requires government agencies tasked with approving building projects to conduct reviews based on potential environmental threats, including those to nearby water, air, flora, and fauna. CEQA also allows members of the public to file lawsuits to block projects based on environmental concerns.
The law has faced widespread criticism, as builders say it contributes to making housing construction too expensive and time-consuming. But faced with staggering housing shortages and skyrocketing costs, the Democrat-dominated state legislature and Governor Gavin Newsom instituted unprecedented reforms at the end of June.
The reforms removed the CEQA review for certain types of developments, effectively “exempting or streamlining infrastructure projects, including high-speed rail; community water and sewer systems; certain types of daycare centers, health clinics and food banks, wildfire risk reduction projects; and ‘advanced manufacturing’ located in industrial zones,” Deborah Sivas, co-director of Stanford University’s Environmental Law Clinic, told ABC News.
Perhaps most significantly, the reforms grant an exemption for “infill” housing construction projects. Infill housing generally refers to urban housing built in and around existing developments. CEQA restrictions previously created a huge hurdle to building infill housing in densely populated areas where it is most needed. The reformed CEQA will unblock most new infill housing developments, which is expected to expand the state’s housing supply.
CEQA advocates have argued the law is not a significant impediment to the housing supply, claiming few CEQA lawsuits actually target housing projects. But others disagree with this assessment.
Nick and Daniel Yost, a father and son who are both environmental attorneys and activists, have pointed out that “The mere threat of a CEQA lawsuit is enough to stifle new housing developments since such suits can add substantial time, cost and risk for builders who already face daunting construction costs.” Lawsuits don’t actually have to be filed to disincentivize developers from starting new projects.
Further, according to a 2018 analysis by veteran attorney Jennifer Hernandez published in the University of California Law Environmental Journal, the most frequent targets of CEQA lawsuits have been housing projects — specifically multifamily construction projects in urban areas. Referring to her previous research on the effects of the law, she wrote that “CEQA lawsuits were most often aimed at infill housing (especially multifamily apartments in urbanized areas).”
She also noted that projects generally viewed as good for the environment often become CEQA targets, as “more transit projects were challenged than roadway and highway projects combined, and that the most frequent ‘industrial’ targets challenged were clean energy facilities like solar and wind projects.” Additionally, even some environmental advocates have taken issue with CEQA’s detrimental effects on the environment. As Nick and Daniel Yost noted, CEQA restrictions on infill housing can force construction projects into open and agricultural spaces.
Further, many CEQA lawsuits are actually efforts to weaponize the law for non-environmental interests. A 2022 paper by attorney Noah DeWitt published in Pepperdine University’s law journal argued that “the wrong people have discovered the right ways to make CEQA serve their own interests — interests that demote the environment to a secondary concern.” Developers seek to stymie projects that may compete with their own business. Unions are also known to threaten CEQA suits if developers do not hire their workers.
NIMBYs (“Not In My Backyard”) also leverage CEQA — not to protect the environment but to limit new housing developments in their communities. Such applications of the law have harmed the poor and minorities, who suffer the most from rampant housing shortages. As DeWitt notes, CEQA tactics are used to keep such groups out of certain areas, and bear a “strange resemblance to the sorts of racially based tactics used to keep minorities out of white communities in the 1960s.”
CEQA perfectly encapsulates a key flaw of progressive governance: the “fix” for one problem often creates another. An ideology attempting to serve many high-minded ideals will quickly damage some cherished cause by seeking another. CEQA’s costs have become so high that some Democrats are willing to compromise. Even so, others in the legislature staunchly opposed these CEQA reforms, insisting that reforms should also prioritize the construction of low-income housing. The endless appetite for controlling and tinkering — in this case, in the name of helping the disadvantaged — has virtually ensured such dire, if unintended, outcomes.
This fracture within the California legislature highlights an emerging attitude in left-leaning ideology: the “abundance agenda.”
The term aligns with the popular book, Abundance, by authors Ezra Klein and Derek Thompson. This mindset acknowledges that bureaucracy and administrative excesses have created serious barriers to prosperity and innovation, from housing to infrastructure and energy. Klein called out progressives in a New York Times piece earlier this year, writing:
It has become too hard to build, and too expensive to live, in the places where Democrats govern. It is too hard to build homes. It is too hard to build clean energy. It is too hard to build mass transit. The problem isn’t technical: We know how to build apartment complexes and solar panel arrays and train lines. The problem is the rules and the laws and political cultures that govern construction in many blue states.
Unsurprisingly, a 2024 UC Berkeley survey found more than half of California voters agreed that “it is difficult to access at least some essential goods and services.” Limiting the question to finding suitable housing at an affordable price, almost half said they strongly agree, reflecting, the scholars summarized, “the severity of the state’s decades-in-the-making housing crisis.”
Some skeptics of the CEQA rollback are not defenders of the law, but worry rolling it back may not have much effect. Some builders have said the reforms may provide more freedom and speed up timelines, but that “plenty of barriers to home construction remain in California,” citing “bureaucratic delays, high labor and materials costs, strict liability laws, and environmental regulations.” Further, while the Pacific Research Institute, a free-market research organization, praised the reforms, it highlighted new instances of bureaucratic red tape built into them.
The state’s CEQA rollback is a vital step toward solving at least some of the many problems California’s big government has created. But there is a long way to go, if legislators intend to help the people most hurt by decades of excessive regulation.
