Breaking Through the Red Tape: What LA Developers Need to Know About CEQA Reforms

For decades, the California Environmental Quality Act—known as CEQA—has stood as both a cornerstone of environmental oversight and a source of profound frustration for housing advocates and developers alike. Originally passed in 1970 to ensure that new construction projects took environmental impacts into account, CEQA evolved into one of the most complex, time-consuming, and frequently litigated pieces of land-use regulation in the state.

In recent years, CEQA has been increasingly criticized for doing more to obstruct housing than protect the environment. Urban infill projects—particularly those near public transit—have faced years-long delays, cost inflation, and frequent lawsuits, often for procedural technicalities rather than substantive environmental concerns. While the law was meant to safeguard the state’s ecological integrity, it became a powerful tool for opposing development of all kinds—including the type of multifamily housing urgently needed in high-demand cities like Los Angeles.

That status quo has now been upended.

This summer, Governor Gavin Newsom signed Assembly Bill 130, a sweeping reform bill that significantly limits CEQA's applicability to many urban housing projects. The legislation effectively exempts most infill developments located near transit from CEQA review, so long as they meet a set of baseline criteria. Projects that comply with existing zoning, do not displace vulnerable tenants, and are located outside of environmentally sensitive areas may now proceed without undergoing a full Environmental Impact Report—once a major barrier to housing construction.

The implications for Los Angeles are significant. The city has struggled to meet its housing production goals under the state’s Regional Housing Needs Allocation (RHNA), falling far short of targets for both market-rate and affordable units. With CEQA no longer acting as a regulatory bottleneck for many urban sites, developers may be able to move faster and more cost-effectively—particularly in neighborhoods near subway lines, major bus corridors, and designated transit-oriented districts.

Supporters of the bill see it as a long-overdue correction. They argue that the housing crisis—driven by severe underproduction and rising construction costs—requires the state to remove outdated obstacles to new supply. By streamlining approvals for housing in areas that are already urbanized, the legislation encourages density where infrastructure already exists, while preserving open space and undeveloped land elsewhere.

Not everyone agrees. Some local officials have voiced concerns about the erosion of municipal control over land use decisions. Environmental groups have warned that even infill projects can pose risks if not carefully evaluated. Still, the overwhelming consensus in Sacramento is that the scale of the crisis demands bold action—and that CEQA, in its previous form, was no longer fit for purpose in a state struggling to house its population.

It’s important to note that AB 130 does not mandate housing; it simply clears the way for it. Developers must still contend with zoning codes, local permitting, and financing realities. But the removal of CEQA as a barrier for qualified projects could mark the beginning of a new era in California land use—one where cities like Los Angeles can pursue smart growth without being paralyzed by red tape.

Whether these changes will lead to measurable increases in housing production remains to be seen. But what’s clear is that the policy landscape has shifted. For stakeholders across the housing spectrum—whether developers, preservationists, public agencies, or residents—understanding these reforms will be essential to navigating what comes next.