Attorneys split on impact of Newsom's CEQA overhaul

Gov. Gavin Newsom's signing of AB 130 sparked debate among land use attorneys over whether it streamlines California's environmental review process or merely tweaks it. While the law creates broad new exemptions for midrise infill housing projects, attorneys say CEQA remains very much alive -- and still ripe for litigation.

"This bill will result in new housing development moving forward," Benjamin M. Reznik, a partner with Jeffer Mangels Butler & Mitchell LLP in Los Angeles, said in an email. "I know I have quite a few projects that will take advantage of it. As to whether or not this is an overhaul of CEQA, I wouldn't go so far."

"I'm not concerned too much about a shortage of work," said Sabrina V. Teller, who represents public agencies and other clients in CEQA cases as managing partner of Remy Moose Manley LLP in Sacramento. "I am heartened to see that there is hopefully some progress on removing some of the more cumbersome roadblocks to building housing."

Newsom signed AB 130 on Monday night as part of a package of budget bills and housing bills. It exempts a specific type of housing from California Environmental Quality Act review: multifamily infill housing under 85 feet in height and on lots of less than 20 acres. It could lead to an explosion of so-called midrise housing in cities around the state.

AB 130, along with a companion bill and several related measures Newsom signed, will also streamline permitting, exempting several other types of projects, and attempting to remove redundant procedures from the CEQA process. Attorney Caroline Chase said many of these changes expand existing infill exemptions. For instance, she said, the existing Class 32 exemption previously applied only to developments of less than five acres. Changes will also make it less likely that developers will have to account for factors like traffic or noise.

"Qualifying housing development projects should be processed much more quickly since technical studies should not be required, with the possible exception of a biological resources survey," the partner with Allen Matkins Leck Gamble Mallory & Natsis LLP in San Francisco, said in an email.

"CEQA should never have been required for housing in these urban areas, which is precisely where we want people living, so this bill is only correcting a historic wrong," Victor De la Cruz, a partner with Manatt, Phelps & Phillips, LLP, said in an email. "To the extent that there are issues of concern such as cultural resources or noise, for example, cities already have cultural resource and noise ordinances, which have and will continue to provide more protection in these areas than CEQA ever provided."

But court challenges will follow, including to the new laws themselves. The Senate floor debate on AB 130 began with an exchange between Sen. Roger Niello, R-Fair Oaks, and Sen. Scott Wiener, D-San Francisco, over whether the bill contained unconstitutional provisions. Niello raised concerns the law could ban second mortgages or could cause a crisis of so-called zombie mortgages. This is a term for debt homeowners thought they had paid off, but which comes back to life when debt is sold, or a triggering event occurs.

"We believe that this passes constitutional muster, and anyone who disagrees has every right to exercise their legal remedies," said Wiener, the main Senate backer of the housing package.

"I am not aware right now of what grounds the statute itself could be challenged on," Teller said. "Generally, the California Legislature has broad discretion and latitude to amend its own statutes."

While housing advocates and the self-described YIMBY movement celebrated the changes, some attorneys focused on what the new laws still do not do.

"More changes to CEQA and the Government Code are needed for certain housing types, particularly community care facilities and similar facilities with more than six people, as it is not clear the new exemptions encompass them, and State law does not require agencies to provide for them in their codes," Neill E. Brower, a partner with Jeffer Mangels Butler & Mitchell LLP in Los Angeles, responded in an email. "These facilities represent important sources of both short- and long-term housing for at-risk people."

"I think there will still be tons of litigation," said Ellia M. Thompson, a partner with Venable LLP in Los Angeles. "The problem still remains is that we have a very one-sided private attorneys general statute in our state."

Thompson said she would like to see several other changes. These include changes to prevailing party rules which make it easy for plaintiffs to file low-risk lawsuits. She said plaintiffs will often file 10 or more causes of action, lose on all but one, but still force additional steps and costs on a project. She also said parties who sue under CEQA should have to pay for the other side's expenses when they lose, with limits that enable community groups to still go to court.

"Forcing plaintiffs to have some financial skin in the game if they lose, I think that's really the only way you even a bit of the playing field," she said.