Legal & Legislative Update May 2020

Good afternoon AEP members,

As the summer temperatures start to rise in Sacramento, the heat is also turning up in the Capitol. Governor Newsom and the Legislature must pass a balanced budget by June 15, which could require dramatic cuts across the board. Negotiations are more tense and uncertain than in any point in the last decade, as the state deals with upwards of a $50 billion budget deficit. While much remains up in the air due to the possible Federal stimulus bill that could include funding to support state and local governments, the state is trying to prepare for the worst. Funding cuts are especially dramatic in education, healthcare, public employees, and resources programs.

Furthermore, both the Senate and the Assembly have been full steam ahead processing bills for the past month after returning from over a month of recess due to COVID-19. As always, numerous CEQA bills were introduced among the nearly 2,000 new bills for the year. However, due to a condensed timeline from the shutdown and the dramatic budget crisis facing the state, it is expected that many bills with a fiscal tag will be held in Appropriations Committees to avoid the new costs.

On the Assembly side, the Natural Resources Committee passed several impactful CEQA bills. Each of the bills below passed from the committee and is now awaiting review by the Appropriations Committee:

AB 2323 (Friedman) passed narrowly from committee. The bill is being developed with a working group that includes AEP representatives. The purpose of the bill is to better align the numerous CEQA exemptions and streamlining opportunities and make their elements more objective. While this bill’s purpose is aligning the various existing exemptions and streamlining measures, the bill remains a work in progress and the current text also attempts to allow development on toxic sites that are "cleared" by DTSC. This is a problem for environmental justice groups and labor unions who think this doesn’t allow for appropriate specific review. However, should the bill continue to progress, AEP will be closely involved in the crafting of the eventual bill and hope to help provide clarity to the various infill exemptions.
AB 2991 (Santiago) passed narrowly from committee. The bill would renew the AB 900 program that expired last year, which provides expedited judicial review for “Environmental Leadership Projects” in the state. It has received opposition from environmental organizations who question the point of the program, which has largely benefited large corporate headquarters, office buildings, and upscale hotels.
AB 3279 (Friedman) passed narrowly from committee. It would review CEQA litigation procedures by (1) reducing the deadline for a court to commence hearings from one year to 270 days, (2) providing that a lead agency may decide whether a plaintiff prepares the administrative record, and (3) authorizing a court to issue an interlocutory remand. The bill is receiving opposition from labor and environmental groups, but support from business and developers.

In the other house, the primary CEQA bill in the Senate is SB 950 (Jackson). The bill is sponsored by Planning & Conservation League and aims to make numerous changes to the CEQA statute. It makes over a dozen litigation and process changes, adds environmental justice consideration into CEQA, and encourages the state courts to establish CEQA expert judges who will only focus on such cases as a way to hopefully expedite them.

On the housing front, the Senate has announced a package of bills to address housing production. The Senate Housing Production Package includes five bills, which the body is promoting now in recognition that COVID-19 has exacerbated the preexisting homelessness and affordability crises. The bill package also includes a budget proposal that would create a renter/landlord stabilization program that would enable agreements between renters, landlords, and the state to resolve unpaid rents over a limited time period. The bills being proposed are the following:

SB 902 (Wiener) – This bill allows local governments to pass a zoning ordinance that is not subject to CEQA for projects that allow up to 10 units, if they are located in a transit-rich area, jobs-rich area, or an urban infill site.
SB 995 (Atkins) – This bill would expand the application of streamlining the CEQA process to smaller housing projects that include at least 15 percent affordable housing. It also would broaden application and utilization of the Master Environmental Impact Report (MEIR) process, which allows cities to do upfront planning that streamlines housing approvals on an individual project level. The bill would also extend and expand the AB 900 program.
SB 1085 (Skinner) – This bill would enhance existing Density Bonus Law by increasing the number of incentives provided to developers in exchange for providing more affordable housing units.
SB 1120 (Atkins) – This bill would encourage small-scale neighborhood development by streamlining the process for a homeowner to create a duplex or subdivide an existing lot in all residential areas. Such applications would be required to meet a list of qualifications that ensure protection of local zoning and design standards, historic districts, environmental quality, and existing tenants vulnerable to displacement.
SB 1385 (Caballero) – This bill would unlock existing land zoned for office and retail use and allow housing to become an eligible use on those sites. It also would extend the state’s streamlined ministerial housing approval process to office and retail sites that have been vacant or underutilized for at least three years.

With under three weeks to go before the state budget must be passed, policy bills in the middle of their process, and the state attempting to reopen businesses and commerce, the start of summer is set to be a busy one, made more complicated by physical distancing guidelines, remote participation in legislative processes, and an increased reliance on federal funding.