CEQA: The Surprising Story of the State’s Keystone Environmental Law

The 1960s and early 1970s were the golden era of the United States environmental movement. From the 1962 publication of Rachel Carson’s Silent Spring, to the 1963 passage of the Clean Air Act, to the Water Quality Act two years later and the first Whole Earth Catalog three years after that, consciousness of humanity’s need to take care of the planet exploded. 

Though California’s law was modeled on the federal NEPA, there were significant differences. Perhaps the most important was that the NEPA was purely a procedural law. The CEQA was both procedural and substantive. 

On Jan. 1, 1970, the country’s new environmental consciousness was solidified as federal government policy, when President Richard M. Nixon, a Republican, signed the National Environmental Policy Act (NEPA), for the first time requiring federal agencies to fully determine the environmental effects of any actions they take, and prepare detailed reports, known as “environmental impact statements,” before taking them.

NEPA also required that the president create a Council on Environmental Quality. Later that year, the council recommended that all of the responsibility for the environment now assigned to the federal government’s many and varied agencies should be brought under the jurisdiction of a single, unified Environmental Protection Agency.

By executive order, Nixon created the EPA. The new agency’s first director, William Ruckelshaus, was sworn in on Dec. 4, 1970.

California’s Key Environmental Law Was Signed by Ronald Reagan

Not to be left behind, California quickly followed the federal government’s lead, passing the state’s own Environmental Quality Act. On Sept. 18, 1970, Gov. Ronald Reagan—like Nixon, a Republican—signed the law into existence. And like NEPA, CEQA required the state government as well as county and local governments to perform an environmental impact review for all projects that they plan to carry out.

A 2015 study by the international law firm Holland & Knight found that only 13 percent of lawsuits under CEQA were brought by groups or individuals who had any previous record of environmental advocacy.

Though California’s law was modeled on the federal NEPA, there were significant differences. Perhaps the most important was that the NEPA was purely a procedural law. The CEQA was both procedural and substantive.

What does that mean? Projects subject to NEPA—which are those receiving federal funding or requiring federal permits—can still proceed even with serious environmental shortcomings. The only requirement is they be transparent and forthcoming about their damaging effects, through their environmental impact statement.

CEQA has similar requirements. But it makes it easier for projects that show potentially harmful environmental impacts to be stopped. Governmental entities can bring lawsuits to stop developments under CEQA—but so can private persons and groups. The latter provision has caused what many consider to be big problems with CEQA. The law can be “weaponized” by anyone looking to block any development.

The ‘Weaponization’ of California Environmental Law

A 2015 study by the international law firm Holland & Knight found that only 13 percent of lawsuits under CEQA were brought by groups or individuals who had any previous record of environmental advocacy. The widespread perception that CEQA protects the California’s environment from rapacious business interests is also largely a myth, according to the study.

“CEQA has emerged as an unexpected impediment to California’s going green. Across the Golden State, CEQA lawsuits have imperiled infill housing in Sacramento, solar farms in San Diego, and transit in San Francisco.”

M. NOLAN GRAY, PACIFIC RESEARCH INSTITUTE

Holland & Knight’s research found that half of all CEQA lawsuits target publicly funded projects “with no ‘business’ or private sector sponsor.” In fact, the most frequent targets of CEQA litigation are projects that are specifically designed to promote the state’s environmental policy objectives—meaning that the state’s signature environmental law is used all too frequently to stop environmental progress. 

Transit projects, “the same projects that reduce per capita greenhouse gas emissions and other air pollutants,” are targeted by CEQA lawsuits more than any other type of project, the study found.

“CEQA has emerged as an unexpected impediment to California’s going green. Across the Golden State, CEQA lawsuits have imperiled infill housing in Sacramento, solar farms in San Diego, and transit in San Francisco,” wrote city planner M. Nolan Gray of the Pacific Research Institute, in a 2021 Atlantic article. “The mere threat of a lawsuit is enough to stop small projects—especially housing—from starting in the first place.”

Friends of Mammoth: When CEQA Took a Turn

In Mono County, when a developer in 1971 proposed a large condominium and retail development in the city of Mammoth Lakes, local environmentalists were alarmed. They worried that the sprawling project would create water and sewage problems for the city, and would cut into the available open space in the area.

The court’s decision in Friends of Mammoth v. Board of Supervisors extended the scope of CEQA to cover not only public projects, but any private development as well—that is, private developments that required any kind of a government permit or authorization.

Forming a group called Friends of Mammoth, they filed a lawsuit against the Mono County Board of Supervisors demanding that the developers slow down their project and deliver an environmental impact statement before moving forward.

The following year, the case reached the California Supreme Court. On Sept. 21, 1972, the court handed down a landmark ruling that still today shapes the state’s development and housing policies—and even plays a significant role in perpetuating the state’s housing crisis.

The court’s decision in Friends of Mammoth v. Board of Supervisors extended the scope of CEQA to cover not only public projects, but any private development as well—that is, private developments that required any kind of a government permit or authorization, which is basically all of them (some extremely small construction projects are exempted).

The court said that the intent of the legislature in passing CEQA was that environmental considerations must play a major role in government decision-making. It made no sense, the court reasoned, for only public projects to be subject to environmental review. That would “frustrate the effectiveness of the act.” Private projects must also be covered.

In their decision, the state Supremes said that the new requirements around private projects should apply only to those of “significant” impact. But what counted as significant? The court didn’t say. So local governments erred on the side of caution, holding up building permits almost as a matter of course. As this happened, banks largely stopped issuing loans for significant construction projects, fearing that any new project could get tied up in CEQA litigation for years.

Later in 1972, the court issued a modification to its opinion, clarifying the definition of “significant” to make sure it referred to only a minority of projects. But the damage had been done.

The legislature rushed to pass a new version of CEQA. The rewrite established something lawmakers called the “significance threshold.” While the federal law, NEPA, did not require projects to meet any minimum environmental standard, CEQA as rewritten in 1972 requires the environmental impact of any project to rate as “less than significant.” If it rises above the “threshold of significance,” it must make changes, or be stopped.

CEQA and the California Housing Crisis

CEQA is often cited as the cause, or at least one major cause, of the state’s ongoing housing crisis. Scott Wiener, a state senator from San Francisco and author of numerous pro-housing bills, calls CEQA “the law that swallowed California.” In his Atlantic article, Gray said that “one of the main effects of CEQA has been to exacerbate the state’s crippling housing-affordability crisis.” And in a 2023 editorial, the Los Angeles Times said that CEQA has “too often been used to thwart progress on the state’s most pressing needs by stalling or blocking important projects.”

Units most likely to increase diversity, promote transit use, cut down on greenhouse gas emissions, and create dense, walkable urban environments—all desirable goals from both the pro-housing and environmental perspectives—were the exact types most frequently shot down by CEQA litigation and delays.

In a second 2018 study, Holland & Knight presented data that showed CEQA’s deleterious effect on the housing market. Focusing on a three-year period from 2013 to 2015, the study found that 14,000 housing units faced CEQA legal challenges, and 98 percent of those units were set for existing infill land—that is, unused land of the type often preferred by housing advocates because developing there increases urban density and curtails suburban sprawl. 

Additionally, 78 percent of those 14,000 units stalled by CEQA challenges were in “whiter, wealthier and healthier areas,” and 70 percent were inside a half-mile radius of transit services. In other words, the units most likely to increase diversity within communities, promote transit use and as a result cut down on greenhouse gas emissions, and create dense, walkable urban environments—all desirable goals from both the pro-housing and environmental perspectives—were the exact types most frequently shot down by CEQA litigation and delays.

Not all housing advocates are on the same page when it comes to CEQA, however. Another study—this one by The Housing Workshop, commissioned by the Rose Foundation for Communities and the Environment—downplayed the problems caused by CEQA, saying that, “when one examines the data, it turns out that the arguments for weakening CEQA simply do not hold up.”

The Housing Workshop report also states that “the proportion of cases challenging new housing units (from 2019 to 2021) was far less than stated by CEQA critics.”

Gov. Gavin Newsom, however, appears to side with the CEQA critics. In 2023 Newsom announced a broad plan to scale back CEQA procedures, limiting the time courts take to consider CEQA cases, providing funding to speed up agency environmental reviews under the law, and creating a raft of new exemptions to CEQA that would allow certain projects to skip environmental reviews altogether.

“If we get nothing else done in the next three years, this may be one of the most consequential things that we can actually deliver,” Newsom said, when he announced his CEQA reform plan in May of 2023. Meeting the state’s housing and environmental goals will require a massive building program on a scale not seen in California since the 1960s, Newsom said.

“The question is,” the governor asked, “are we going to screw it up by being consumed by paralysis and process?”