California Blew a Hole in Environmental Planning Law. Now, Lawmakers are Trying to Fix It

Just south of downtown Los Angeles, the Exide battery recycling facility ??spent decades leaking lead and arsenic into the soil — sickening children, causing cancer, and creating a nearly billion-dollar liability for the state of California.

A flurry of last-minute reforms to the California Environmental Quality Act at the end of last year’s legislative session exempted a broad, poorly defined category of industrial facilities from environmental review – so broad that if Exide were proposed now, it might get a pass, critics say.

Now lawmakers are trying to figure out what they actually meant when they approved those exemptions.

State Sen. Catherine Blakespear, a Democrat who represents coastal San Diego and Orange counties, introduced a bill this week seeking to more narrowly define what kinds of facilities are exempt from environmental review and to add protections for communities near developments.

But the bill deliberately leaves the hardest question unanswered: It doesn’t specify which facilities qualify. Instead it’s a signal that this year’s negotiations are beginning — and that last year’s reforms may not stand.

The fight will pit environmental justice groups, who want maximum protection for communities near industrial sites, against industry leaders who say California can’t meet its clean energy goals if every new manufacturing facility faces years of regulatory review.

Co-authors for Senate Bill 954 include former Senate President Pro Tem Mike McGuire, a Democrat from Santa Rosa who promised the fixes at the end of the last session, and Democratic Assemblymember Damon Connolly from San Rafael, who is working on a similar Assembly bill. Blakespear said the bill’s authors are “trying to do the balanced approach that we should have done, but we didn’t.”

A last-minute oversight

Last year, Gov. Gavin Newsom gave legislators an ultimatum: pass sweeping reforms of the state’s environmental review law or he would withhold approval of the state’s $321 billion spending plan. 

Legislators rushed to pass proposals exempting developments from environmental review, including housing, health clinics, food banks and advanced manufacturing.

The idea was to incentivize innovative, clean energy businesses that would advance the state’s climate goals. But in the rush, legislators pulled the definition of “advanced manufacturing” from the California Resource Code. The language was meant to identify businesses eligible for tax incentives, not to define environmental policy.

The definition includes everything from aerospace and electric vehicle manufacturing to stripmining and chemical recycling.

Amid concern from legislators about the environmental impacts, McGuire promised fixes, and the proposals passed. But before the session ended, McGuire and Assembly Speaker Robert Rivas, a Salinas Democrat, could not agree on how to address those concerns.

Connolly proposed a narrower measure – exempting only semiconductor facilities – before the legislative recess. It was shelved late last year.

Under Blakespear’s proposal, only facilities at the final stages of product manufacturing would qualify for the exemption. The bill would exclude raw materials processing and intermediate production. That includes the manufacturing of PFAS, a group of toxic chemicals linked to cancer and water contamination. Exempt facilities would have to advance certain climate, environmental and workforce goals.

The bill would block the exemption for businesses located too close to a disadvantaged community or places where vulnerable people live and work. Where air pollution is already excessive, facilities would still go through full environmental review.

The proposal also reinstates some classic CEQA requirements for exempt facilities. Those that will affect tribal resources will have to consult tribes on their developments.

Last year’s reforms also exempted day care centers in industrial areas from environmental review — the opposite of what legislators intended. Blakespear’s proposal would limit the exemption to day care centers proposed in residential areas instead.

So far, two advanced manufacturing facilities have qualified for the current law’s CEQA exemption: a Google facility for quantum computing in Goleta and a research and development facility in Livermore testing fusion power as a clean energy source. Both facilities requested the advanced manufacturing exemption; it’s not clear whether they would have gone through a more involved environmental review before last year’s reforms.

But industry and environmental groups disagree sharply over how broadly the exemption should apply going forward.

Incentivizing innovation 

“We’re trying to chart toward having advanced manufacturing be in that category of one of the things we want to be incentivizing, particularly around the energy transition and the green energy future,” Blakespear said.

Lance Hastings, chief executive of the California Manufacturing and Technology Association, said streamlining the process for advanced manufacturing would keep investment, innovation and jobs in California.

“Facilities classified as advanced manufacturing already operate under some of the most stringent environmental, workplace safety, and public health regulations in the world, even with the CEQA streamlining adopted last year,” Hastings said in an email. “We have serious concerns about proposals that would undermine last year’s reforms.”

Raquel Mason, senior legislative manager at the California Environmental Justice Alliance, said that while California has strong environmental regulations already, CEQA gives communities a formal role in deciding whether and how a facility is built near them.

“It allows us to be on the same playing field as these projects that have so much more money and so much more political capital than environmental justice communities do,” Mason said. “CEQA says ‘My voice matters just as much as yours does.’”

Adrian Covert, senior vice president of public policy for the Bay Area Council, which represents businesses in the region, said California needs to become more competitive in manufacturing if it wants to meet climate goals.

“We have an opportunity to decarbonize manufacturing in the United States by bringing manufacturing into California and by making it easier to build manufacturing (facilities) in California,” he said.

One example of a company choosing to leave the state is Resynergi, a chemical recycling company that presented its technology as a solution to California’s plastic waste problem. The company claims it can chemically heat plastic to make an oil that can be used to make new plastic, a process that researchers say generates toxic emissions. Resynergi chose to move to Texas after community pushback and questions from air regulators.

For Covert, that proves California is driving away innovation. For environmental justice groups, however, the legacy of poorly scrutinized facilities like Exide weighs heavily.

“It’s unclear if the net good of bringing these projects online immediately without any review will outweigh the huge negative health impacts they could have,” Mason said.

The state’s environmental review law is overwhelmingly popular with voters. A recent poll of 600 Californians from political research firm FM3 Research, found that 72% of voters approve of it, and  two in every three people polled opposed exempting advanced manufacturing facilities from its requirements. Almost as many – 64% – said they’d be less likely to support a state legislator who backed such exemptions.

The bill has a long road through the Legislature with all sides saying they’re open to compromise — but far apart on details.

“How do we land this in a place that is as protective to communities and workers as possible?” Mason said. “Because we want economic development in the state too. It just can’t be a free open season on our environmental review.”

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.