California Takes Significant Step Towards Reforming CEQA and Streamlining Infrastructure Projects

On May 19, 2023, California Governor Gavin Newsom unveiled a significant legislative package and signed an executive order aimed at reforming the California Environmental Quality Act ("CEQA") and streamlining infrastructure projects across the state.

According to Governor Newsom's office, the legislative package of 11 bills will seek to reform CEQA with the goal of cutting project timelines by more than three years. The proposal is also intended to maximize California's share of federal money under the Infrastructure Investment and Jobs Act ("IIJA") and Inflation Reduction Act ("IRA"), so that California can invest up to $180 billion over the next decade in clean infrastructure.

The legislative proposal seeks to accomplish these objectives by exempting specific categories of projects from the full CEQA process, such as water infrastructure and semiconductor manufacturing. For these projects, the legislation proposes to accelerate the time to obtain a final decision by limiting court review for environmental challenges to nine months, as well as streamlining permitting and approval for infrastructure projects. 

While the governor's office has yet to publicly release the 11 bills, Governor Newsom's press release identified the following as key features: 

  • Maximize federal dollars: The proposal intends to establish a "Green Bank Financing Program" within California's Climate Catalyst Fund so that the state can leverage federal dollars under the IIJA and IRA to support clean infrastructure projects, such as solar, wind, and battery storage projects. Governor Newsom's Executive Order N-8-23 also indicated that the state is looking at funding projects in the areas of hydrogen, zero-emission vehicles, and semiconductors (specifically projects under the CHIPS and Science Act).
  • Expedited court review: The proposal would be a significant step forward in expediting judicial review of legal challenges under CEQA, which have historically tied up projects and dramatically increased project costs. Under the proposal, judicial review would be limited to nine months for projects in water, clean energy, transportation, semiconductor, and microelectronics sectors. This expedited judicial review process already applies to certain projects, such as renewable energy, some housing, and major sports stadiums.
  • Reduce regulatory red tape: The proposal would reduce regulatory red tape by streamlining procedures around document retention and review in order to minimize the number of documents that are required to be included in the administrative record for a project. The proposal also aims to streamline the permitting process for certain categories of projects by amending existing law.

Industry participants should carefully monitor the progress of the proposal as it has the potential to be an ambitious step forward in reducing the regulatory red tape that has stymied infrastructure projects in California since CEQA's enactment.

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