Sacramento –

California lawmakers gathered around Governor Gavin Newsom on Monday to celebrate the passing of a new budget along with what they described as a “transformative” housing law at the Capitol.

While handshakes and mutual admiration filled the air, little attention was paid to the behind-the-scenes power dynamics at play. It seems that Democrats are once again accommodating the governor’s wishes, likely in anticipation of his forthcoming appointment.

Newsom pointed out that there have been several instances highlighting Congress’s disconnect, particularly regarding bills that passed with overwhelming support but ultimately floundered. “At some point, Congress needs to legislate,” he remarked.

Earlier this year, in a rare move, he publicly backed two bills aimed at expediting California’s housing construction by reducing environmental review standards. Despite his earlier hesitation to fully endorse major changes, the home-building process has been sluggish.

In his recent book, *Abundance*, journalist Ezra Klein argues that California’s prominent environmental regulations are hindering housing progress. With speculation about a presidential run in 2028, it seems Newsom is positioning himself as a key player who can navigate through government gridlock.

A critical bill crafted to simplify housing development faced scrutiny from progressive lawmakers and various interest groups. However, Newsom managed to push it through by including a stipulation in the state budget that required the passing of the Housing Act for budget implementation starting July 1.

He referred to the bill as “the most consequential housing reforms California has seen in modern history.” Newsom expressed concern that a more traditional legislative approach might result in opposition that could derail progress.

For years, Democrats have struggled to navigate the complex regulations under the California Environmental Quality Act (CEQA) and have encountered significant pushback from labor groups. These groups argue that any benefits given to developers should also consider workers’ wages and conditions.

The new law, signed on Monday, largely sidestepped these labor demands. Congressional Bill 130, initiated by Congresswoman Buffy Wicks (D-Oakland), exempts many urban housing projects from CEQA, although it mandates that developers of certain high-rise and low-income buildings pay union-level wages to construction workers.

Senate Bill 131 further refines CEQA for housing construction, minimizing some environmental restrictions related to rezoning. This bill, led by state Senator Scott Wiener (D-San Francisco), not only narrows the scope of CEQA for residential projects but also excludes many non-residential developments like health clinics and food banks.

Experts believe this law could represent one of the most significant reforms to CEQA in its 55-year history, particularly concerning urban housing.

Generally, CEQA compels projects to disclose and mitigate potential environmental impacts, which can be a lengthy and complicated process, often leading to extensive legal battles.

According to Dave Rand, a land use attorney in Southern California, CEQA has posed substantial legal risks for builders and has historically been a barrier. “The worst cog in wheels has always been CEQA,” he remarked, adding that this new legislation offers a clear exemption that many can understand.

He anticipates that clients will swiftly leverage these new regulations. “We’ve probably got over 10 projects ready to go with this exemption on Tuesday,” he noted.

While the changes do not represent a sweeping overhaul for non-residential projects, they are still considered reasonable, according to Bill Fulton, publisher of the California Planning and Development Report.

Previously, state legislators have passed narrow exemptions for specific projects, including the recent changes affecting Berkeley. SB131 continues this trend of selectively exempting certain developments from CEQA.

Fulton commented on the selective nature of the exemptions, labeling it as a “Swiss Cheese CEQA” phenomenon.

Observers noted that Newsom’s actions mark a significant enforcement of housing policies at the congressional level.

Over the years, the governor has made bold commitments, including the promise to construct 3.5 million new homes by year’s end. However, he may be opting to work discreetly behind the scenes instead of publicly driving housing policy, suggested Chris Elmendorf, a law professor at UC Davis.

Elmendorf, who supports the new legislation, expressed that the governor’s willingness to confront established norms is a notable strategy.

Newsom has previously faced mixed results in pushing through policy priorities like climate change regulations and infrastructure initiatives.

Wicks mentioned that Newsom would need to invest significantly in these efforts. “I think he recognizes that we need to address this issue,” she stated, acknowledging the importance of tackling fundamental regulations like CEQA.

Wicks also emphasized that the intent behind her legislation was to prompt lawmakers to quickly approve the bill before it became entangled in budget discussions. Expressing cautious optimism, she noted that her team understood the need for reform.

Discussions around SB 131 revealed that some lawmakers, like Senator Henry Stern (D-Calabasas), felt the law presented “significant issues,” yet still supported it, believing that these concerns could be addressed later.

“I think nature and abundance can coexist,” Stern said. “We don’t want to live in a barren California; we want something livable.”

Despite mixed feelings, both bills received approval from lawmakers on Monday. However, Gonzalez criticized her peers, equating their decisions to those made in Congress, suggesting they were blindly following a path dictated by the governor.

“California Democrats are crying foul over something they don’t fully understand, just like what often happens with Trump,” Gonzalez remarked. “And that same California lawmaker allows it to continue.”