Why California Can’t Build Anymore: Part 1- CEQA
A story of the richest state the world has ever seen shooting itself in the foot and creating a toxic and unsustainable way of living.
Stuck
California is paralyzed.
A housing crisis has seeped into every facet of the state’s economy—from inflation to homelessness to its inability to construct major infrastructure that could uplift the lives of millions, especially lower-income residents.
And while the need to act grows more urgent, the state keeps spending. And spending. And spending. Now, many fear the state is staring down the edge of a massive budget shortfall that will not go away.
California’s biggest barrier to solving its housing and infrastructure crisis isn’t a lack of money or ideas. It’s a well-intended law that’s now being abused.
But why?
What’s behind this dysfunction?
Well, it’s complicated.
Roots of the Crisis
One of the best parts of California is the fact that anyone who lives here can go back less than 6 generations (except for natives, which is a whole other topic) to find someone who left their existing life in pursuit of this idea of the California dream. A land filled with opportunity, bliss, and a place to reinvent yourself.
This dreamer’s mindset shaped the state’s philosophy, believing paradise would take care of itself. It has long been idealized as the end goal. A place where we get to bask in the fruits of our hard work as a species. But the thing about life is that if you stagnate, you die. And in California, stagnation is starting to look like decay.
There isn’t a single cause of the budget shortfalls and inability to build. There isn’t one cause. There is a multitude that includes:
Proposition 13, passed in 1978, limits annual property tax growth to 1%. This disincentivizes selling land and encourages hoarding scarce urban property.[]
High Impact Fees, or fees that are required by new development to ensure the construction of new infrastructure and services. This is a downstream effect of Prop 13 handcuffing of local tax bases.
Extreme sprawl—especially in the state’s most desirable regions—pushes development into high-risk, hard-to-serve areas.
More Extensive Development Has Left Limited Vacant Land. Another constraint on development in California’s coastal metros is the extent to which land has already been developed.
And of course, wildfires, coastal erosion, and drought continue to shape where and how we can build.
But the biggest issue facing California—the most direct obstacle to solving any of these—is simple:
The state can’t build.
In one word? CEQA.
Well… four words: California Environmental Quality Act.
The Law That Changed Everything: CEQA
In the 1960s and 70s, the United States was quickly becoming cognizant of the environmental damage that modern life was perpetuating. Cities, such as LA, were choked in smog, and rivers literally caught on fire.
In 1963, the Clean Air Act was enacted by Congress as a law authorizing the EPA to establish National Ambient Air Quality Standards (NAAQS) to protect public health and public welfare and to regulate emissions of hazardous air pollutants.
As with most things in their initial groundbreaking phases, the act lacked firepower and was not sturdy. By 1970, fewer than three dozen air quality regions had been designated, as compared to an anticipated number in excess of 100. Moreover, not a single state had developed a full pollution control program. In the 1970s, the CAA was amended to beef up the Act’s powers.
Also in 1970, President Nixon signed into law NEPA. NEPA requires federal agencies to assess the environmental effects of their proposed actions prior to making decisions. The range of actions covered by NEPA is broad and includes:
making decisions on permit applications,
adopting federal land management actions, and
constructing highways and other publicly-owned facilities.
The California Environmental Quality Act (CEQA) was signed into law in 1970 by then-Governor Ronald Reagan.
The idea was straightforward: require state and local agencies to analyze and disclose the environmental impacts of any major project. If those impacts are significant, the developer must either avoid, reduce, or mitigate them.
Even California’s Office of Planning and Research (OPR) cites this as the purpose of CEQA
“CEQA is intended to inform government decision-makers and the public about the potential environmental effects of proposed activities, and to prevent significant, avoidable environmental damage.”1
In theory, this was a law about transparency and stewardship.
But in practice, it has become something else entirely.
This is because of one major difference between CEQA and NEPA:
“to prevent significant, avoidable environmental damage.”
CEQA vs NEPA: A Crucial Difference
Projects subject to NEPA—which are those receiving federal funding or requiring federal permits—can still proceed even with serious environmental shortcomings. The only requirement is that they be transparent and forthcoming about their damaging effects, through their environmental impact statement.
CEQA has similar requirements. But it makes it easier for projects that show potentially harmful environmental impacts to be stopped. Governmental entities can bring lawsuits to stop developments under CEQA, but so can private persons and groups. The latter provision has caused what many consider to be big problems with CEQA. 2
Even if the lawsuit ultimately fails, the mere act of filing it can pause permitting, trigger new environmental reviews, or force costly redesigns, leading to delays of projects simply can’t survive.
It was never meant to stop housing near transit. Or block solar farms. Or freeze a project for five years over how much shade it casts.
So, how does that happen?
Here’s the mechanism:
CEQA includes 18 major environmental categories—everything from noise to air quality to aesthetics. Any proposed project must evaluate, disclose, and, where possible, mitigate its impact in each category.
But here’s the catch—CEQA also mandates a public comment period, during which anyone can claim the report missed something. If they’re not satisfied with the response, they can sue. Even if they don’t live nearby. Even if the environmental concern is thin.
And every lawsuit, every delay, adds months, even years, to the project timeline—and hundreds of thousands in legal and consulting costs.
Who Really Benefits?
Environmental groups argue that without CEQA, we’d see unchecked development, habitat destruction, and pollution. And they’re not wrong—California has a history of bulldozing for profit. But today’s biggest threat to sustainability isn’t overbuilding—it’s underbuilding in the right places.
So who benefits from the CEQA? It’s mainly those who are more likely to not want change. Affluent homeowners, particularly in well-established neighborhoods, often use CEQA to block projects that would bring change.
One study found that roughly 80% of the state’s CEQA lawsuits target infill projects in existing communities. 3
70% of the LA Region’s CEQA lawsuits target transit-oriented, higher-density housing. 78% of Challenged housing units are disproportionately located in whiter, wealthier, healthier areas of the LA Region.
More transit projects were challenged than roadway and highway projects combined. Transit and Regional Rail projects are being prevented, defunded, and are harder to develop. These projects would benefit lower-income individuals, as the cost of owning and operating a vehicle is $12,297. Additionally, as studies show, lower-income folks are less likely to own a car. Meaning they have more of a reliance on transit. With fewer opportunities for quality transportation, this limits their ability to access jobs, education, and other services.
Case Study: High Speed Rail
For those of you who are not into policy and the theory of the way it works, let’s look at a real example. California High Speed Rail. The most notorious example of bureaucracy is slowing down and adding delays to a project. In 2008, voters across the state passed Proposition 1A, which provided the California High Speed Rail Commission 9.95 billion in bonds for financing and setting up legal guidelines for research, planning, and engineering of the rail. 4
18 years later, and this is what the current constructed areas as of... look like.
Let’s look at some of the legal hurdles this project has had to face.
Three lawsuits from farmers in Madera and Merced counties resulted in the rail authority promising to consider alternative routes, creating a $5 million fund to buy agricultural “conservation easements,” and coughing up $1 million in legal fees.
In another, the City of Shafter, a town of 16,988 in rural Kern County, sued. To settle, the rail authority agreed to put the railroad on its own elevated track, so that it would not interrupt traffic when passing through town. 5
CEQA has emboldened every person to object to any aspect of a project they deem “environmentally concerning”. Allowing anyone to slow down a project, add legal costs, and potentially get a project completely stopped.
What It Costs Us
There are many consequences of CEQA. Some of them are a benefit to certain people, such as fewer housing units being built and higher costs for housing. These are great if you are someone who owns property. The other consequences, still not fully borne by existing homeowners, such as higher inflation and stunted growth of the economy.
The cost of building has become so high due to delays, lawsuits, and excessive documentation that those costs are passed on to end consumers.
And that leads to a vicious cycle: Higher housing costs → higher wage demands → inflation → more strain on public budgets → fewer projects completed.
California’s housing shortage doesn’t just affect renters and the squeezing out of buyers. It limits where workers can live, how companies grow, and how cities plan for the future.
It’s a drag on productivity, mobility, and innovation.6
What Needs to Change
California is one of the most beautiful places in the world. A place of unmatched diversity—of plants, animals, economy, and people.
But beauty alone can’t solve a crisis. We need environmental laws. But we also need to build. Reforming CEQA doesn’t mean destroying the environment. It means removing abuse, streamlining reviews, and prioritizing the projects we desperately need—housing, transit, and clean energy.
There are two approaches the current state legislature can and is taking to reforming CEQA. The first is poking holes where the legislature thinks we should prioritize our efforts. Infill housing, affordable housing, and transit and bike infrastructure exemptions. This is known as the swiss cheese method. It seems good, but how long will it last? How many parties are going to be upset when their ticket wasn’t punched? Though we can poke holes, there are still structural issues at play that will slow down development elsewhere.
The second is structurally changing CEQA. This would be reforms such as requiring petitioners to provide concrete, science-based data, rather than speculative harms from a project. Another is setting up specific CEQA courts that handle the nuances of CEQA case law instead of general trial courts taking the cases. Or require petitioners to post a financial bond that’s only refundable if the case prevails, to discourage lawsuits as a stall tactic.
SB 607 Raises the standard of evidence required to bring a CEQA lawsuit. Petitioners must provide more concrete, science-based data, rather than speculative harms.
AB 900 (2011, expired in 2020) Set 270-day deadlines for court resolution of CEQA lawsuits related to high-priority infrastructure (e.g., clean energy, transportation, large housing).
A California Worth Fighting For
For 26 years, I have called this state home. I’ve lived up and down. I have family up and down. East and West. It’s where I fell in love. It’s where so many people wake up and count their blessings at the fact that they get to live here. And so many more who have visited and wish it were possible. The state has a lot of issues, but that doesn’t mean we should just give up. It means we get the opportunity to wake up and make it better. The day is darkest just before the sun rises. Flowers can’t bloom in the sunlight without the cloudy and rainy days that preceded it.
1 https://www.slc.ca.gov/ceqa/#:~:text=If%20the%20project%20may%20cause,of%20alternatives%20to%20the%20project.
2 https://www.csemag.com/understand-the-difference-between-nepa-and-ceqa/
3 https://www.hklaw.com/files/Uploads/Documents/Articles/121317_HELJ_Jennifer_Hernandez.pdf
4 https://hsr.ca.gov/about/high-speed-rail-authority/#:~:text=2008%20%E2%80%93%20Proposition%201A%20was%20approved%20by,system%20was%20poised%20to%20move%20toward%20construction
5 https://www.mercurynews.com/2025/04/20/ceqa-california-high-speed-rail/?share=aft0p2r22rr2itegarfi
6 https://www.tandfonline.com/doi/full/10.1080/10511482.2022.2065328