SB 7 Revives CEQA Streamlining for Mega Projects Meeting Stringent Greenhouse Gas Emission and Labor Standards.

June 15th, 2021

By: Sam Bacal-Graves

On May 20, 2021, Governor Newsom signed the Jobs and Economic Improvement Through Environmental Leadership Act of 2021 (SB 7) into law, reviving AB 900’s CEQA streamlining process enacted a decade ago. SB 7 is closely modeled after AB 900, as modified by SB 743 (2013) and AB 246 (2017), which expired under a sunset provision in January of this year. SB 7 offers streamlining benefits for mega projects certified by the Governor which meet stringent requirements related to greenhouse gas emissions, labor, waste management, and economic investment. The new law is also subject to a sunset provision: qualifying projects must be certified by the Governor by January 1, 2024, and must be approved by the applicable lead agency by January 1, 2025, unless these deadlines are extended by the legislature. SB 7 also provides that prior AB 900 projects that had been certified by the Governor before January 1, 2020 may make use of streamlining as it existed at the time if they are approved by the applicable lead agency by January 1, 2022.

The following is a summary of the benefits of SB 7 streamlining and the requirements to qualify under the law.

Stremlining Benefits
As with its predecessor, SB 7 offers streamlining for legal challenges to qualifying projects in order to resolve them expeditiously. Like the former law, SB 7 limits the total time for such legal challenges to 270 days, to the extent feasible, with the new law additionally specifying that this includes appeals to the Supreme Court. A forthcoming rule from the Judicial Council will establish procedures to accomplish this expeditious litigation timeline. SB 7 also retains the requirement that the lead agency prepare the administrative record concurrently throughout the administrative process and certify it within 5 days of project approval to further expedite legal challenges.

Qualifying Projects
SB 7 retains the categories of projects eligible for streamlining under AB 900 and adds housing development projects. These categories are described below.

1) Renewable Energy Projects

Wind and solar energy generation projects as well as clean energy manufacturing projects may qualify under SB 7. “Clean energy manufacturing project” is expansively defined, and includes projects that manufacture either products, equipment, or components that are used in either renewable energy generation, energy efficiency, or for the production of clean alternative fuels. Thus, a wide range of manufacturing and industrial facilities related to the “green economy” will be potentially eligible for SB 7 streamlining.

2) Housing Development Projects

Housing development projects may also make use of SB 7. The term employs the same meaning as it does in the Housing Accountability Act (see Gov. Code, § 65589.5(h)(2)), and includes projects that are either wholly residential, mixed-use with at least 2/3 residential, or transitional/supportive housing. In order to qualify, these projects must meet with the following requirements:

• must be located on an infill site as it is defined in Public Resources Code section 21061.3;
• must be consistent with any applicable CARB-approved sustainable communities strategy or alternative planning strategy;
• must be composed of at least 15% affordable units, although if the local agency has an inclusionary ordinance which requires more than 15%, then the project must meet that ordinance’s standard;
• generally, cannot include short-term housing (hotels, motels, etc.), with limited exceptions; and
• no part may be used for manufacturing or industrial uses.

3) Other Projects

Lastly, residential, retail, commercial, sports, cultural, entertainment, or recreational projects may qualify. Projects in this category:

• must be on an infill site as it is defined in Public Resources Code section 21061.3;
• must be at least LEED gold certified;
• must achieve 15% greater transportation efficiency than for comparable projects; and
• must be consistent with any applicable CARB-approved sustainable communities strategy or alternative planning strategy.

Additional Requirements
In addition to the aforementioned requirements for each category, all qualifying projects are required to meet the following standards:

Investment threshold: Projects must invest at least $100,000,000 in the state upon completion of the project. However, for Housing Development Projects, an investment of between $15,000,000 and $100,000,000 is required.
Labor-related requirements: Projects must create high-wage, highly skilled jobs that pay prevailing wages and living wages. For public projects, this requires a project labor agreement binding the agency, as well as contractors and subcontractors, to use a “skilled and trained workforce” (see Pub. Contract Code, § 2601(d)) for every tier of position within apprenticeable occupations. For private and public-private projects, prevailing wages (see Lab. Code, §§ 1773, 1773.9) are required for all workers, including employees of contractors and subcontractors, except for apprentices.
No net GHG increase: Projects must not result in a net increase of GHG emissions. SB 7 further specifies how GHG emissions are to be quantified and mitigated for all projects except housing development projects. It requires projects to prioritize direct emission reductions by implementing measures that also reduce toxic and criteria air pollutants before relying on offsets. Such measures would include installing renewable energy generation, increasing energy efficiency, and reducing VMT. Since these provisions do not apply to housing development projects, it appears they may more easily rely on GHG offsets.
Recycling of solid and organic wastes: Projects must comply with statutes governing the recycling of solid and organic waste (see Pub. Resources Code, §§ 42649-42649.87).
Governor approval: As with AB 900, the Governor must sign off on all projects to certify them for streamlining under SB 7. The Governor is also empowered to certify an alternative identified in a project’s EIR upon application of the applicant.

Lastly, project applicants are held to additional requirements – they must agree to be bound by project mitigation measures as conditions of approval, pay the costs of the trial court and court of appeal, and pay the costs of record preparation.

Key Points: As with AB 900, SB 7 provides litigation streamlining benefits for qualifying projects and project alternatives that meet its stringent requirements. To encourage housing, SB 7 allows housing development projects to qualify under a lower investment threshold and subjects such projects to slightly relaxed GHG requirements. SB 7 also gives projects certified by the Governor under AB 900 a renewed opportunity to be approved with streamlining benefits if approved by the lead agency by January 1, 2022.

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