October 5, 2026
Recently, the law firm Holland & Knight released a report analyzing appellate court decisions involving the California Environmental Quality Act (CEQA) from 2013 to 2023. Among its key findings, housing remains the most common target of CEQA litigation reaching the appellate courts. This data provides further evidence that the way that the law is used has drifted far from its original purpose of environmental protection.
CEQA, enacted in 1970, requires state and local agencies to evaluate the potential environmental impacts of certain projects before approving them. As stated by the Governor’s Office of Land Use and Climate Innovation, the law’s intended purpose is to “inform government decision makers and the public about the potential environmental effects of proposed activities and to prevent significant, avoidable environmental damage.”
That goal may sound reasonable on paper. In practice, CEQA has increasingly become a tool for obstructing housing development, exacerbating California’s housing shortage and keeping costs stubbornly high.
Under CEQA, the default standard for environmental review is to produce an environmental impact report (EIR). EIRs are meant for projects that may have a substantial unmitigated impact on the environment. These reports are extraordinarily expensive and time-intensive, routinely costing anywhere from $200,000 to several million dollars and taking a year or more to complete.
Many projects qualify for exemptions or less intensive forms of review. Yet individuals and organizations seeking to block a development can still challenge an agency’s decision to exempt a project or approve it without a full EIR. If a court agrees that further review is required, it can set aside the project’s approval, subjecting it to substantial new costs and lengthy delays.
This dynamic creates significant regulatory uncertainty. Developers considering projects in California often cannot predict how long or costly the CEQA process will be—or whether a project will ultimately receive approval at all. That uncertainty makes the state less attractive relative to jurisdictions where permitting is faster and more predictable.
According to the Office of Governor Gavin Newsom, California needs to build 2.5 million homes by 2030. Meeting that target and stabilizing the housing market requires new development, and it requires it quickly. While recent reforms such as AB 130 represent meaningful progress, further changes are needed if the state is serious about tackling its housing shortage.
Voters will soon have the chance to decide whether they support “the biggest reform to CEQA in decades.” Proposition 45 would make several critical changes, including a new evidentiary standard for environmental impacts and an alternative opt-in review process with strict “shot clocks” for certain essential project types.
The first step in restoring the California Dream is lowering housing prices. The median two-bedroom apartment in San Francisco now costs more than $6,000 per month. By reducing the regulatory burdens associated with CEQA, voters can choose a California where opportunity is available to newcomers, not reserved only for those who bought property decades ago.
Kristian Fors is a policy analyst at the Libertas Institute, Utah’s free-market think tank, and a research fellow at the Oakland-based Independent Institute.