A year after their promise, lawmakers again reform environmental planning. Now Newsom will weigh in

Lawmakers this week made good on a year-old promise, passing a bill to narrow a controversial exemption from California’s environmental review law. The proposal passed both houses of the Legislature and now goes to the governor’s desk. 

Senate Bill 954 follows through on a pledge state legislative leaders made last year, when Gov. Gavin Newsom threatened to withhold approval of a $300 billion spending plan unless lawmakers passed sweeping changes to the California Environmental Quality Act. 

Lawmakers complied by passing Senate Bill 131, which exempted “advanced manufacturing facilities” from environmental review. But more than 30 lawmakers objected to how broad that exemption could be, because it could increase pollution in already vulnerable communities. They pledged to narrow it this year. 

SB 954 does that. It shrinks the number of facilities that can qualify for the environmental review exemption and adds protections for communities near them. The bill passed after several concessions to industry. Environmental groups call the result a workable compromise; business groups say there are still too many restrictions and the legislation will slow economic growth and job creation. 

The bill’s author, Democratic Sen. Catherine Blakespear of Encinitas, said she’s confident Newsom will sign it. 

“The amendments … ensure that the CEQA exemption for advanced manufacturing is workable,” Blakespear said. The legislation  “adds important protections for air quality, disadvantaged communities and California’s environment in general.” 

Protecting residents from industrial pollution  

The debate over the legislation has played out against at least one real-world example. 

In May, a chemical tank overheated  at the GKN Aerospace manufacturing facility in Garden Grove,  prompting evacuation orders for 50,000 area residents as officials worked to prevent the tank from exploding.  

Under last year’s bill, a facility like GKN’s would qualify as an advanced manufacturing site and could bypass environmental review entirely. Supporters of SB 954 said that’s exactly the kind of site — close to homes and schools — that should face rigorous review. 

“For more than 50 years, CEQA has allowed community members and workers to participate in planning decisions when facilities like these are proposed,” said Gabriel Tolson, with the Planning and Conservation League, in a June Assembly hearing. 

He said CEQA reviews historically have produced mitigation measures such as requiring air filters, safer chemical substitutes,  and funding for local responders. 

Tolson said lawmakers need to restore those safeguards for facilities like GKN, along with the other hazardous project categories that lost review requirements last year.

Under Blakespear’s bill, a facility like GKN would have to go through environmental review if built today, because it sits near schools and homes. The proposal blocks the exemption for businesses located close to disadvantaged communities or areas where people live and work. 

The bill also limits the exemption to “final-tier” manufacturing — the last step in producing a product. 

Supporters say the tiering preserves the exemption for a broad range of manufacturers while excluding those that make components containing harmful chemicals, like PFAS, a group of chemicals linked to cancer and water contamination.

The language also excludes data centers. 

Sen. Mike McGuire, who as Senate president pro tem last year promised CEQA reform, said the bill delivers on that promise without blocking development. 

“Eliminating CEQA for heavy industrial projects like mining and chemical manufacturing will not result in economic progress, it will only poison our communities and leave taxpayers footing the bill for generations of clean up,” McGuire, a Santa Rosa Democrat,  said in a statement. “SB 954 will make sure that we develop our manufacturing industry without sacrificing public health and environmental protections.” 

Changes weaken environmental protections 

Blakespeare’s legislation changed significantly as it moved through the Legislature this year. 

After Assemblymember Buffy Wicks, an East Bay Democrat who chairs the appropriations committee, raised concerns, Blakespear dropped all provisions related to housing, including a requirement that housing developments undergo environmental review when built on habitat for protected species. 

On the Assembly floor, Blakespear made further changes, including:  

• The bill now lets exempt facilities sit in industrially zoned areas, not just heavy-industrial zones.
• Lawmakers cut the zero-emission backup power requirement from 100% to 50%.
• The bill now requires facilities to be only LEED-eligible, rather than LEED-certified.
• Facilities must go through environmental review if pollution exceeds 50% of local air quality standards. 

Asha Sharma, deputy director of Sierra Club California, called the amendments a trade-off.

“From a policy perspective, Sierra Club California wouldn’t think it’s a good idea for any heavy industrial projects like manufacturing to be getting CEQA exemptions at all,” she said. “But there’s a lot of political considerations. … To make sure that we at least get some level of cleanup to 131 this year, and this was one of the sacrifices that kind of had to be made.”

Industry groups warn of economic consequences

Business groups say the amendments didn’t go far enough to address their concerns. 

Matt Regan, policy director for the Bay Area Council, said the bill is still unworkable and would slow development and job growth in ways that harm the middle class and undercut the state’s clean energy goals. 

“We have created an environment in California where manufacturing is all but impossible to do here anymore,” he added.

Regan pointed to Anthro Energy, an Alameda-based battery developer that chose to build its first manufacturing plant in Kentucky rather than California. 

He said SB 954 still doesn’t permit commercial sites to be rezoned for advanced manufacturing — projects must be sited on land that was  already industrially zoned as of Jan. 1, 2026. 

Air quality and backup-power requirements are unrealistic, he added. “I mean, these are just pie-in-the-sky numbers that have been made up and thrown out there because they know that they’re completely unattainable.” 

Lance Hastings, chief executive of the California Manufacturers & Technology Association, said the late amendments didn’t address industry’s concerns.

“CMTA has spent months requesting dialogue and meeting with staff, only to see these amendments now, with no opportunity for deliberation,” Hastings said in a statement. “The Legislature’s rush to pass laws that are fraught with imbalance, uncertainty and litigation risk is exactly what led to the passage of SB 131 in the first place, and if lawmakers are troubled by how that bill passed, SB 954 is not the remedy.” 

Newsom has not indicated whether he will sign the bill. The governor’s office did not respond to CalMatters’ questions about whether he supports it.