Building an Affordable California Act: CEQA Reform for “Essential Projects”

The November elections are around the corner and an important voter initiative will be on the ballot: Building an Affordable California Act (BACA, also known as Proposition 45). BACA would fundamentally change how environmental review under the California Environmental Quality Act (CEQA) is conducted for qualifying “essential projects” by (i) providing for greater predictability via vested CEQA standards, (ii) establishing accelerated CEQA review timelines, and (iii) reducing CEQA litigation risks.

BACA would not create a new CEQA exemption or limit a public agency’s authority to approve or disapprove a qualifying project. Rather, it would establish a streamlining mechanism that would expedite CEQA review and entitlement processing for qualifying projects.

BACA, which is sponsored by the California Chamber of Commerce, requires approval by a majority of the voters. Recent polling shows that approximately 73% of likely voters support this initiative.

Which Projects Would Qualify?

BACA would apply to a broad range of “essential projects,” including:

• Most housing developments, including student and senior housing
• Public streets and highways
• Solar, wind, and geothermal energy facilities
• Public water system infrastructure
• Educational facilities
• Broadband internet access projects

The essential project categories also include any ancillary public, private, and utility infrastructure and public service facilities, such as electric, telecommunication, gas, water, wastewater, stormwater, transit, police, fire, and transportation improvements. BACA would also expressly allow for phased project applications. If a project application was submitted prior to BACA’s effective date and has not yet been approved, it could be withdrawn and resubmitted to invoke BACA’s benefits.

Because the statutory definition of “essential project” is broad, questions remain regarding the scope of qualifying projects.

Labor and Tribal Consultation Requirements

Generally, essential projects that utilize BACA would be subject to prevailing wage requirements, with the exception of housing development projects at or below 85 feet in height. Essential projects would also be subject to specified tribal consultation requirements.

Significant Changes

1. CEQA Standards Would be Vested

BACA would effectively freeze the applicable CEQA standards for essential projects. Public agencies would be required to evaluate and mitigate impacts based on compliance with standards that “existed and were in effect on the date an application for an essential project was submitted.”

2. CEQA Review Would be Based on “Existing Laws”

BACA would require public agencies to evaluate and mitigate environmental impacts for essential projects based on “existing laws,” which include formally adopted legal requirements contained in statutes, regulations, rules, standards, or ordinances. As discussed below, judicial review of essential projects would be based on compliance with “objective existing laws.” Therefore, it is expected that public agencies would be limited to imposing existing laws that are objective in the first instance, even though that is not specified. “Objective” laws involve no personal or subjective judgment and are uniformly verifiable by reference to an external and uniform benchmark or criterion.

Currently, public agencies often rely on guidance documents, scientific standards, technical studies, and agency expertise that are subjective and/or uncodified, meaning they likely would not qualify as “existing laws” under BACA. If BACA passes, we anticipate that public agencies will codify their preferred objective environmental standards, including thresholds of significance, to ensure they are enforceable under this new framework. The “existing laws” standard may reduce the scope of available significance thresholds and potential environmental impacts under CEQA for essential projects.

3. Project Review and Judicial Timelines Would be Accelerated

BACA would establish and reinforce mandatory timelines for CEQA compliance, some of which are already codified under existing law:

• Certification of an Environmental Impact Report (EIR) within 365 business days after an application is deemed complete.
• Adoption of a Negative Declaration (ND) or Mitigated Negative Declaration (MND) within 180 business days after an application is deemed complete.
• Completion of other CEQA compliance (e.g., exemption determination) within 90 business days after an application is deemed complete.

If these deadlines are not met, BACA provides that the applicant must have the option to request a review meeting or hearing, which must be held within 60 days. Importantly, the public agency would be required to approve or deny the project – not just the CEQA document for the project – during that meeting or hearing. BACA also provides that any failure to meet the foregoing deadlines could be challenged in court.

Other applicable timelines include the following:

• Application completeness determination within 30 calendar days of submission. If that deadline is missed, the project application would automatically be deemed complete. This requirement should also benefit essential projects not subject to CEQA compliance (e.g., projects approved ministerially).
• Preliminary CEQA scoping within 60 calendar days.
• Determine whether a project requires an EIR, ND, MND, CEQA exemption, or other CEQA document within 30 days after the application is deemed complete.
• Public comment periods for an ND/MND and EIR would be fixed at 20 days and 45 days, respectively, with no opportunity for extensions or tolling.
• Legal actions challenging an essential project would need to be completed within 270 days, including both original and appellate proceedings.

4. The EIR Alternatives Analysis Would be Narrowed

BACA would substantially narrow the required alternatives analysis for essential projects. Typically, CEQA requires that an EIR address a reasonable range of alternatives. Under BACA, applicants could opt into a preliminary scoping process, after which they would be able to develop a single project alternative that is “compatible with the proposed essential project’s fundamental purpose.” The EIR would only need to analyze the project, the no-project alternative, and the alternative developed by the applicant.

5. Judicial Review Would be Narrowed

Under BACA, a petitioner challenging an essential project may only assert claims relating to noncompliance with “objective existing laws,” and a court may only evaluate whether the project approvals comply with such laws. This requirement is expected to reduce the range of CEQA claims available to project opponents by focusing litigation on objective legal compliance rather than public agency judgment or subjective environmental standards.

Additionally, BACA provides that a court may only evaluate whether an essential project “is supported by substantial evidence in light of the whole record.” This appears to supplant the less-deferential fair argument standard for a ND/MND.

6. Judicial Remedies Would be Significantly Limited

BACA would also substantially reduce the remedies available to CEQA petitioners. Most notably, courts would no longer be authorized to rescind project approvals for essential projects in the event of a successful legal challenge. Instead, judges would only be able to direct public agencies to correct the deficiencies in the project approvals. The “noncomplying part, phase, or activity” would be prohibited from moving forward while the public agency takes remedial action, but the remainder of the project would technically be allowed to proceed.

This represents a major departure from the current state of affairs, where courts often set aside project approvals due to CEQA noncompliance. By eliminating that possibility, BACA would likely reduce the effectiveness of CEQA challenges to essential projects.

7. The Administrative Record Would be Limited

BACA would also narrow the scope of the administrative record for legal challenges to essential projects. “Late hit” electronic and written comments received less than 48 hours before the public hearing would not be included in the administrative record, meaning those comments could not serve as a basis for legal claims against the essential project. Verbal testimony made at a public hearing would still be included.

What this Means for Developers

If approved, BACA would be one of the most consequential reforms to CEQA in decades. It would provide developers with greater certainty during the entitlement and CEQA compliance phases of the development cycle.

Notably, BACA contains many provisions that are subject to interpretation. The breadth of the “essential project” categories, the scope of the “existing laws” framework, and the interaction between BACA and existing land use and environmental statutes are expected to generate ambiguity regarding the reach of the initiative. These topics will need to be vetted and may be the subject of future litigation. BACA provides that it should be interpreted “to afford the fullest possible weight to the interest of, and the approval and realization of, essential projects.” Additionally, courts may not interpret BACA to impose additional procedural or substantive requirements upon essential projects that are not enumerated in the text of the initiative itself.

Developers should evaluate how BACA could affect their entitlement strategy, application timing, and CEQA compliance. Our land use and environmental attorneys are closely monitoring BACA and are available to advise developers, property owners, and investors regarding the initiative’s potential impact on pending and future development projects.