California's CEQA Shake-Up: What the Sweeping 2025 Reform Means for Housing Projects

SACRAMENTO — California’s landmark California Environmental Quality Act (CEQA) is on the cusp of its most sweeping rewrite in decades as Governor Gavin Newsom and legislative leaders finalize a 2025-26 budget package that includes multiple “trailer” bills aimed at accelerating housing construction and green-energy infrastructure while shielding many projects from lengthy environmental lawsuits. Key elements of the deal • Housing fast-track: Assembly Bill 131 allows multi-family projects in urbanized areas to bypass traditional CEQA reviews if they meet local zoning, pay prevailing wages and set aside a percentage of units for low-income renters. • Streamlined record: State courts must resolve any CEQA challenge to qualifying projects within 270 days, cutting potential litigation delays by years. • Climate infrastructure carve-outs: Solar, wind and transmission upgrades that meet new labor and wildlife-mitigation standards will be categorically exempt from project-by-project CEQA analysis, a change supporters say is critical for hitting California’s 100 percent clean-energy mandate. • Digital filing mandate: Developers will be required to post environmental documents in a centralized online portal, ending the days of paper filings and easing public searchability. Why lawmakers say change is urgent Sponsors argue that CEQA, enacted in 1970, has been “weaponized” by special-interest lawsuits that stall affordable housing and climate projects even when environmental impacts are minimal. A recent Terner Center study found the average CEQA case delays construction more than 2.5 years, inflating costs by roughly 30 percent—an expense ultimately borne by renters and homebuyers. Opposition stays fierce Environmental justice groups warn that broad exemptions risk siting dense housing and industrial projects near low-income communities already burdened by pollution. “We need reform, not a rollback,” said Maya Golden-Krasner of the Center for Biological Diversity in a committee hearing streamed last week. Labor unions secured last-minute amendments requiring union-scale wages and apprenticeship hiring, but remain divided over how far exemptions should reach. What happens next Both chambers plan to vote on the budget trailer bills before the July 1 constitutional deadline; Newsom is expected to sign the package immediately. Because the measures amend a voter-approved statute, opponents are already preparing a 2026 ballot referendum. If they gather roughly 620,000 valid signatures within 90 days, the reforms would be frozen pending voter approval. Bottom line For developers, the 2025 CEQA overhaul promises faster approvals and clearer timelines. For environmental advocates, it represents the most significant test yet of California’s ability to balance climate, housing and equity priorities under mounting economic and political pressure. As the Legislature races the clock, the future of the state’s signature environmental law—and the shape of California’s housing market—hangs in the balance.