After Berkeley drama, Newsom eyes change to California environmental law. It won’t be easy

A crisis was looming, and the Legislature responded quickly.

A neighborhood group had seized on California’s signature environmental law to block a student-housing project at UC Berkeley, prompting the university to threaten to cut off enrollment to an estimated 2,600 incoming students.

Days after the state Supreme Court ruled earlier this month in favor of the challenge by Save Berkeley’s Neighborhoods, lawmakers sent Gov. Gavin Newsom a bill to remedy the problem. The bill effectively countermanded the court’s decision and gave UC another 18 months to comply with CEQA, the California Environmental Quality Act.

“California won’t let lawsuits get in the way of the education and dreams of thousands of students, our future leaders and innovators,” Newsom declared after signing the legislation.

The centerpiece of California’s decades-long crusade to protect the environment, CEQA is under attack like never before.

Prominent Democrats — including Newsom — say it’s time for the Legislature to take a hard look at CEQA, as a housing shortage plagues much of the state.

“I think the Berkeley decision might be a tipping point in terms of people’s willingness to take this on,” said Sacramento developer Phil Angelides, the former Democratic state treasurer whose McKinley Village housing project in Sacramento was delayed for years by court fights with neighborhood activists using CEQA.

But calls to substantially reform CEQA (pronounced “SEE-kwah”) have fizzled out plenty of times before. Enacted during Ronald Reagan’s governorship, it’s proven to be one of California’s sturdiest pieces of legislation, thanks to broad support from influential environmentalists and California’s network of neighborhood activists. There’s also an army of well-paid CEQA lawyers and consultants who have a vested interest in the status quo.

The state’s powerful labor unions don’t want CEQA to change either. They’ve raised environmental objections to pressure employers into hiring union workers on power plants and other big energy projects that require government approval. Groups affiliated with labor have filed CEQA lawsuits to fight non-union retailers such as Walmart when they try to build new stores.

With an array of well-funded special interests opposing CEQA reform, William Fulton, publisher of a newsletter called the California Planning & Development Report, isn’t particularly optimistic the uproar over student housing in Berkeley will lead to significant change.

“The reason it’s such a lift is the labor unions and the environmental groups and the neighborhood groups prefer … to have CEQA available so they can have leverage,” Fulton said. “In particular, the labor unions are tough to overcome.”

Fulton added that the emergency legislation Newsom signed to bail out UC Berkeley could slow whatever momentum exists for more substantive reform.

“Politically the governor and the Legislature can go home and say, ‘We fixed the problem,’” Fulton said.

The bill Newsom signed, AB 118, essentially exempts from CEQA a development at a public college and university designed to expand the student population. There are limits: In the case of a major expansion, a judge could order the school to conduct a rigorous CEQA environmental review — and could halt the project if the review isn’t wrapped up in 18 months.

Despite the inevitable battle he’d face, Newsom’s open to substantive changes to CEQA.

“For all the good,” his spokeswoman, Erin Mellon, told The Bee, “we often see it used for purposes that go beyond the environmental impacts of a project.”

Newsom has already enacted some reforms. Last year, he signed a bill that exempts certain infill developments from CEQA, and another that fast-tracks environmentally-friendly developments through the courts if they get hit with a lawsuit.

He also signed legislation that allows his administration in certain circumstances to waive the often years-long CEQA reviews before officials can start work on fish and wildlife habitat projects.

Jeff Mount of the Public Policy Institute of California called it a good start, but he said the bureaucratic barriers created by the law still stand too frequently in the way of California moving to restore its environment.

“It was intended to prevent bad things from happening,” said Mount, who specializes in water policy. “Now, it’s being used to prevent good things from happening.”

Some environmentalists agree that CEQA sometimes gets misused — which makes the law politically vulnerable. “Because CEQA is complicated, it often becomes the punching bag that it doesn’t necessarily have to be,” said Howard Penn, executive director of the Planning & Conservation League.

Prison closures and wildfires

When it comes to building, CEQA is still being used to challenge projects across California — sometimes by state officials themselves.

In January the state, teaming up with environmentalists, persuaded a judge to put a hold on a $1 billion resort development in impoverished Lake County over concerns it would create evacuation problems in a deadly wildfire zone. It was the first time that wildfire danger had been used successfully to prompt a judge’s rebuke under CEQA.

The Newsom administration also recently learned the power of CEQA cuts both ways.

When Newsom announced last summer he would close a 4,000-inmate state prison in Lassen County, the state didn’t bother conducting any environmental reviews ahead of time.

Soon after, the city of Susanville sued Newsom, saying CEQA required a thorough investigation of the environmental impacts.

Among other things, the lawsuit said, the closure would gut Susanville’s economic base and cause a “blight on community conditions” — an impermissible environmental sin under CEQA.

A judge agreed, ordering the state to begin the laborious process of studying the environmental implications. The shutdown, scheduled for this year, is on hold while the state begins its CEQA review.

Leaders in the Susanville area note the irony of their conservative community, whose residents bristle at bureaucratic environmental regulations, using liberals’ beloved eco law to fight Newsom.

“The governor and his minions would take full advantage of CEQA (to oppose) a project that didn’t fit their narrative or that they didn’t like,” said Richard Egan, chief administrative officer of Lassen County. “And so it is a little bit ironic that the tables are now turned on Gov. Newsom and his people.

“It’ll just be morbid curiosity to see how the governor and his team respond to this and how they wiggle their way out of it.”

How CEQA became a force

When Reagan signed CEQA into law in 1970, he thought it would apply only to government-funded projects, such as dams or highways.

Then a modest housing project in Mammoth Lakes turned CEQA into the colossus it is today.

A group called Friends of Mammoth challenged a 184-unit condominium project — a development that Mono County officials approved without so much as a glance at CEQA. California’s attorney general, Reagan’s fellow Republican Evelle Younger, joined the case, arguing on behalf of Friends of Mammoth.

On Sept. 21, 1972, the state Supreme Court sided with the environmentalists: CEQA applied to projects, like a condo development, that required a government agency’s approval.

An entire industry of lawyers and consultants and a new layer of government bureaucracy were born.

CEQA requires an exhaustive review, called an environmental impact report, be conducted before a government agency decides the fate of a significant development proposal.

The analyses often cover potential impacts to wildlife, traffic, recreation, blight, air pollution and climate change.

Members of the public are allowed to weigh in at different points along the process.

While the agency conducts the review, the developer generally pays the costs. The process can take a year or longer and consume hundreds of thousands of dollars.

CEQA reviews can generate huge stacks of paperwork filled with pages of impenetrable bureaucratic legalese and dense scientific analyses.

If the agency approves the project, the law allows opponents to go through the reams of documentation and look for flaws and then use them as the basis of a lawsuit — potentially putting the development on hold for months or even years, and adding to the expense of hiring attorneys for the developer.

“The best (law)firms are very expensive, and the best lawyers are expensive, and there’s a lot of people coming at you who are smart,” said Jim Moose, a partner in the Remy Moose Manley law firm in Sacramento and co-author of “The Guide to the California Environmental Quality Act,” a 2007 book on the law’s nuts and bolts.

“It has a paralyzing effect,” said Moose, who represents developers.

Moose said CEQA’s biggest flaw is that it’s vague. He said the law requires developers to address significant environmental impacts, and take feasible steps to mitigate these problems — but it’s left to a judge to decide what’s significant and what’s feasible.

“Because it’s vague,” Moose said, “it invites a lot of litigation.”

‘Screw nature and screw neighborhoods’

Angelides’ hope that CEQA gets a facelift is grounded in his experience with McKinley Village.

A group called East Sacramento Partnerships for a Livable City challenged the 50-acre residential development proposed by the former state treasurer, saying it would bring massive traffic congestion to the quiet McKinley Park neighborhood.

Angelides, though, said the lawsuit was the work of a single homeowner opposed to the project who used CEQA to throw “a bunch of spaghetti against the wall, hoping something would stick.”

The project got built, but not after being tied up in court for four years. Angelides said the legal fight added $1.5 million to the project’s expense, and “several thousand dollars” to the cost of each home at McKinley Village. The first of the 335 homes was finished in 2016.

“This was pure and simple NIMBYism, with no transparency around the litigation,” said Angelides, who was the Democratic nominee for governor in 2004. “And I think that’s all too common.”

As for McKinley Village, a group called East Sacramento Preservation disputes Angelides’ assertion that the opposition consisted of a single property owner.

The group’s treasurer, Will Green, said the 50-acre site once consisted of a peach orchard and seasonal natural ponds called vernal pools, teeming with salamanders and other native species. Neighbors, he said, were justifiably worried the development would snarl traffic and overwhelm the sewage system.

He said CEQA needs to be left alone. To him, calls to reform the law are just cover for developers looking to pocket quick and easy cash at the expense of the environment.

“Is there ever not a good time,” he said, “for developers to make money, and screw nature and screw neighborhoods?”

An average of 214 lawsuits were filed annually under CEQA between 2018 and 2020, according to the California attorney general’s office, which by law must keep count. By contrast, the number of projects subjected to environmental review averages more than 6,000 a year, according to a study released last year by Oakland-based nonprofit the Rose Foundation for Communities & the Environment.

In other words, most projects get through the CEQA process without facing lawsuits.

“CEQA,” the organization concluded, “is not a major impediment to housing production.”

Former Gov. Jerry Brown once said remaking CEQA was “the Lord’s work,” and he tried in vain to get the Legislature on board with significant changes.

In 2011, he pushed through a partial reform measure that gave the governor’s office the right to certify certain projects for special treatment: They’d have to undergo the normal environmental reviews, but any lawsuits would have to bypass Superior Court and go directly to the Court of Appeal — a way of fast-tracking the litigation. (The law had expired but was revived and expanded by the Legislature last year).

The Legislature has also approved CEQA carve-outs for some sports developments, including the Sacramento Kings’ Golden 1 Center. Legislation carried by Mayor Darrell Steinberg, who was president of the California Senate at the time, said the courts had to process CEQA challenges to the Kings’ arena within 270 days.

“You’d think the most important part of the California economy is basketball,” Moose said dryly.

Even as Brown tried to streamline CEQA, he also oversaw an expansion of the law. In 2012 he signed a bill that requires developers and government agencies to take wildfire risk into account when conducting their environmental reviews. This legislation allowed judges to put a hold on two housing projects already this year, one in Lake County and the other near San Diego.

Reforms a tough sell

Two years ago the Planning & Conservation League worked with developers and others to propose a series of CEQA reforms.

It was a fairly bold step, given the influential environmental group’s history; it helped draft the original legislation a half-century ago.

The reforms outlined in 2020 were fairly modest. They would have exempted certain projects, such as emergency shelters and transitional housing, from CEQA review. They would have forbidden 11th-hour challenges to a project by requiring a development’s opponents to file their objections at least 10 days before the government agency was scheduled to vote.

Overall, the reforms weren’t intended to strip CEQA of its power, said Penn, the environmental group’s executive director.

“We don’t think CEQA’s broken,” he said. “But we do think it can be updated.”

But in 2020, the Legislature’s appetite for such a bill was nonexistent. The Planning & Conservation League’s reform package, introduced as SB 950 by now-retired Sen. Hannah-Beth Jackson, quickly died.

Penn said the COVID-19 pandemic made it nearly impossible for lawmakers to focus on a weighty, non-pandemic issue such as CEQA. The bill was “extremely complicated and meaty,” he said.

Moose, though, said other factors were at work.

“My impression is that the labor unions deep-sixed it,” the developers’ lawyer said. “And I heard later that (it was) because the (legislative) leadership wasn’t involved.”

How unions use CEQA to stymie Walmart

In the early 2000s, Walmart set out to dominate California’s supermarket industry.

The famously nonunion retailer began opening a string of Supercenters, a new form of big-box retailing that combined the traditional Walmart department store with a full line of groceries, served up inexpensively.

The United Food and Commercial Workers, which represents workers at unionized grocers such as Safeway and Raley’s, was determined to slow the incursion.

In Chico, a retired union butcher named John Shannon, alarmed that Walmart was planning two Supercenters in the area, founded a group called Chico Advocates for a Responsible Economy with the union’s help.

“As a long-time Union man, I couldn‘t sit back and do nothing,” Shannon said in a 2010 blog post on the website of the union’s Roseville-based local, UFCW 8-Golden State, which covers much of Northern California.

The Chico “environmental” group mustered enough political support to get elected officials to block both projects. But in 2015, one of the projects was revived, when the Chico City Council reversed an earlier decision and OK’d the retailer’s plan to convert an ordinary Walmart into a Supercenter.

Enter Stockton lawyer Brett Jolley, one of the state’s leading practitioners of CEQA litigation.

Jolley said he’s never been hired by the UFCW, but his lawsuits have served the union’s purpose. In 2004 he won a landmark case that delayed the opening of two Walmart Supercenters in Bakersfield. The court’s ruling for the first time meant the “blight” effect — what happens when a development project results in empty storefronts — was a weapon to be used in CEQA protests.

The giant retailer was irate with Jolley’s work, calling it a “misuse of environmental laws.”

Jolley, though, said there’s nothing wrong with deploying CEQA in the fight against Walmart’s expansion across California.

“CEQA says people who have an interest in the effects of a project have standing to bring challenges,” he said in a recent interview.

On behalf of the Chico environmental group, Jolley took the city to court over the Supercenter proposal. This time he lost.

In 2019, four years after the council green-lit the project, the Court of Appeal rejected the Chico group’s challenge, allowing the project to go forward.

Walmart, however, hasn’t yet begun the expansion. Company officials didn’t return calls seeking comment. Officials with the UFCW also didn’t respond to requests for comment.

CEQA, energy and the fight over union labor

The Roseville City Council was in a lather.

It was July 2004, and the council was making plans for a new $150 million gas-fired power plant for city-owned Roseville Electric.

The hangup: A group called California Unions for Reliable Energy, or CURE, was threatening to hold up the licensing process at the California Energy Commission over environmental concerns.

The group, which was created by the State Building & Construction Trades Council of California, was willing to compromise — as long as the council went along with a “project labor agreement.” The PLA would ensure that the project would be built with union labor.

The council felt it had little choice.

“Do I stand on principle and refuse to be greenmailed … or do I make a logical business decision that is in the best interests of the people of Roseville?” said the late Jim Gray, a councilman at the time. He and his colleagues voted 4-1 to approve the deal.

Labor unions and their affiliates such as CURE have intervened in dozens of power plant cases at the Energy Commission and other venues over the years. Critics have called it a blatant misuse of the environmental law.

Just last fall, a labor-backed group called Citizens for Responsible Industry tried to thwart approval of a biomass plant in an old lumber mill in the Calaveras County community of Wilseyville. The group charged that the project, designed to generate electricity from timber, would violate CEQA by generating “toxic air contaminants.”

County supervisors OK’d the project. But the experience infuriated Steve Wilensky, the head of a nonprofit group attempting to build the plant.

The labor group “wanted to run the mill, taking it out of the hands of the locals,” said Wilensky, a one-time union organizer who considers himself sympathetic to labor. “We’re trying to rebuild the forest economy.”

Labor leaders, though, say there’s nothing wrong with unions bringing CEQA concerns into an energy project.

“Our members live and work in these communities,” said Andrew Meredith, president of the state building trades council. “They take interest in the environmental impacts of these projects.”

And with climate change intensifying, Meredith is adamant that the Legislature shouldn’t rewrite CEQA.

“It’s really not the time,” he said, “to weaken a law that has made projects more responsive to climate change.”

Yet it remains clear that the Legislature and governor will be under pressure to make changes to the law — especially as California’s housing crisis remains unresolved.

‘“The housing crunch — the UC lawsuit dramatizes the issue,” said V. John White, an environmental consultant and former legislative staffer in Sacramento. “To the extent there’s going to be lasting streamlining and reform, it’s going to be the need for housing.”

This story was originally published March 22, 2022 at 5:00 AM with the headline "After Berkeley drama, Newsom eyes change to California environmental law. It won’t be easy."