Environmentalists and labor unions in California are joining forces to roll back a major overhaul of the state’s environmental permitting law.
Their goal is at odds with Gov. Gavin Newsom’s (D) efforts to address affordability concerns by shortening the time and lowering the cost of constructing projects as he weighs a run for president in 2028.
Legislation in the state Senate would narrow an exemption for advanced manufacturing facilities that lawmakers approved last year, and attach conditions for companies hoping to use it to bypass some environmental reviews. The debate could dissuade manufacturers from trying to use the new provision and push them to build facilities in other states, opponents of the rollback say.
“Nobody’s going to make a large, generational investment based on the current exemption if there’s a pretty big head of steam in the legislature to repeal it,” Matt Regan, senior vice president of public policy at the Bay Area Council, said. The business association, which includes
While the fight centers on just one element of a complex California law, it points to a broader debate pitting environmentalists and labor unions—powerful constituencies in the state capitol—against the ascendant “abundance” wing of the Democratic Party that has embraced deregulation in an effort to speed up construction of everything from homes to energy infrastructure.
Embracing the label “Yes in My Back Yard,” or YIMBY, the movement worked with Newsom’s support last year to pass new exemptions to the state’s landmark environmental review law.
Critics say the law, the California Environmental Quality Act, has stifled housing construction, pushing up home prices and the state’s high cost of living. The argument has resonated with Democrats looking to campaign on affordability this year.
Environmentalists, who have struggled to defend the law, contend the new exemption reduces oversight of industrial construction projects. Pointing to President Donald Trump’s efforts to undercut various California environmental laws, they say now is the time for the state to bolster—not weaken—its ecological protections.
“With a federal administration that continues to take the hatchet to environmental and health protections, it’s vital California hold the line,” Chloe Hsieh, legislative advocate for California Environmental Voters, told reporters during a press conference March 25.
The new proposal (SB 954) to scale back last year’s overhaul faces a long road to passage before state lawmakers adjourn for the year at the end of August.
Housing Crunch
The California Environmental Quality Act requires the state and local governments to study the potential environmental effects of construction before approving permits for those projects. The rules are partly to blame for the state’s housing shortage, critics say. The median price of a home in California now is more than $800,000, and the state needs between 1.8 million and 3.5 million homes, the nonpartisan Little Hoover Commission reported in 2022.
Last year’s overhaul of the law created new CEQA exemptions for housing, such as for certain projects in urban neighborhoods, and for other facilities, such as day cares. Newsom championed the changes as helping make housing more accessible.
The measure went further, though, providing an exemption for advanced manufacturing, such as semiconductor plants and industrial biotechnology facilities.
Proponents said the exemption would help California boost green energy production as the state aims to reach carbon neutrality in 2045, and compete for other projects as both major political parties are seeking to boost domestic production of high-tech products.
“We now have bipartisan agreement on an industrial policy in this country where we increase manufacturing, which is great. I don’t want that to skip over California,” state Sen. Scott Wiener (D), a major backer of the changes to CEQA, told reporters last year.
Narrower Exemption
Lawmakers who are now seeking to change the advanced manufacturing exemption say they don’t want to undo the entire overhaul of the permitting law.
“Many of these CEQA exemptions are sensible,” state Sen. Catherine Blakespear (D), the new proposal’s author, told reporters March 25. But Blakespear said provisions on advanced manufacturing were “jammed through the legislature” in a broader package that was also part of the state budget, leaving opponents waiting until this year to revisit the issue.
The new proposal would create a long list of new requirements for projects to receive the exemption. Projects qualifying for the exemption would need at least a gold certification from the US Green Building Council in addition to meeting certain emission limits and abide by particular labor standards. The latter requirement won support from the state’s influential federation of labor unions.
Setback requirements would apply, too, requiring a facility to be at least 1,600 feet from facilities such as day cares and nursing homes, and 1,000 feet from communities the state has defined as disadvantaged.
The proposal remains unfinished, with its authors yet to specify exactly what types of manufacturing would qualify for the exemption.
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