For decades, the California Environmental Quality Act has been one of the most significant hurdles to housing and infrastructure in the state. While originally designed to protect the environment, the law allowed lawsuits whenever an environmental review was undertaken. Roughly 80 percent of CEQA lawsuits have targeted infill projects such as housing near transit, renewable energy or bike plans. The result has been years of permitting delays, high litigation costs and a housing production rate that averaged fewer than 80,000 new homes annually despite a need for more than 180,000, according to the California Department of Housing and Community Development.
That reality shifted in June 2025 when Gov. Gavin Newsom signed AB 130 and SB 131, which included the most consequential housing and CEQA reforms in decades. Together they create 10 new exemptions and streamlined pathways for projects such as infill housing, advanced manufacturing, water systems, broadband, wildfire prevention and farmworker housing.
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The laws introduce firm deadlines and limit CEQA review under certain circumstances to relevant issues rather than forcing lengthy, comprehensive studies when only a single factor is in question. Projects that qualify under AB 130, such as multifamily housing in urban areas consistent with local zoning, can bypass CEQA entirely through a statutory exemption. Sensitive lands such as wetlands and high fire zones remain protected, but for critical urban housing and infrastructure, the path forward is now clearer and faster.
Local enforcement
Reform is only part of the story. Courts are now enforcing state housing law with unprecedented force. This year, Cedar Street Partners secured a decisive legal victory in La Cañada Flintridge. Our 600 Foothill project, a five-story mixed-use “housing development project” with 80 condos/apartments (10 percent affordable), office and hospitality units, was initially blocked by the city, which cited zoning and CEQA requirements. Because the city lacked a compliant housing plan, we invoked the state’s builder’s remedy provision that had never been used before.
The court sided with us, ruling that local governments cannot use CEQA or zoning as pretexts to sidestep state housing law. The decision was a first-of-its-kind affirmation that builders’ remedy projects override local vetoes when cities fail to meet state housing obligations. After the court ordered the city to post a $14 million bond to continue its appeal, the appeal was dropped. For developers across California, the message is clear: state law has teeth, and projects aligned with housing mandates will move forward.
Federal alignment
California’s reforms coincide with significant changes at the federal level. In 2024, the Council on Environmental Quality finalized its Phase 2 NEPA rule, imposing page limits and one- to two-year deadlines for environmental reviews. In 2025, agencies including DOT, DOE, DOI, USDA, and the Army Corps updated their procedures to expand categorical exclusions and further streamline permitting.
For developers and investors operating across multiple states, this alignment reduces risk and creates greater predictability. Projects can now move through both state and federal review processes with clearer timelines and fewer duplicative hurdles.
National parallels
The United States is short approximately 4.5 million homes, according to Zillow’s analysis of Census data. While CEQA is unique to California, the housing bottlenecks it has created mirror challenges nationwide.
In New York, the expiration of the 421-a tax abatement caused a sharp decline in multifamily filings. In Chicago, aldermanic prerogative has left many wards issuing fewer than 40 housing permits annually. In Texas, explosive population growth is straining infrastructure, forcing municipalities to weigh approvals against capacity for water, roads and schools.
California’s reforms offer a potential model: retain protections for sensitive lands while streamlining the approval process for projects that meet urgent housing and infrastructure needs. Historically, when California sets a regulatory precedent, other states often follow.
Market response
Capital markets and developers are already responding. Predictable entitlements shorten project timelines and reduce carrying costs, which in turn improves underwriting. Institutional investors seeking stable returns recognize that regulatory risk is one of the biggest factors in project feasibility. If California demonstrates that reforms can deliver more housing without compromising environmental outcomes, it will influence both state policy debates and investor strategies nationwide.
Looking ahead
The coming years will determine whether California’s CEQA overhaul delivers on its promise. For the state, success means unlocking thousands of stalled housing units and moving forward on long-delayed infrastructure. For the nation, it offers a roadmap for balancing environmental protection with the pressing demand for growth.
Our experience at Cedar Street Partners shows that clear rules and decisive enforcement can make a tangible difference. The builder’s remedy case in La Cañada Flintridge confirmed that state housing law prevails when localities fall short. Now, with CEQA reform in place, developers and communities alike have an opportunity to move beyond procedural gridlock and build the housing and infrastructure the country so urgently needs.
What begins in California rarely ends here. CEQA reform has the potential to become the catalyst for a nationwide shift in how we confront housing shortages, modernize infrastructure and shape communities for generations.
Jonathan Curtis spearheads Cedar Street Partners’ legal and development strategy.
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