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California Democrat Governor Gavin Newsom took a page out of Donald Trump’s playbook late in June by approving an overhaul of his state’s costly and unnecessary environmental regulations.
Newsom’s signature updated the California Environmental Quality Act (CEQA), a 1970s-era law that forces developers and homeowners to undergo an absurdly expensive and long environmental review before starting any building project. Among other things, the update streamlines the review process and exempts huge swaths of the state’s infrastructure construction from the ancient regulatory statutes.
Critics and the homebuilding industry have long blamed this cumbersome policy for California’s long-running housing shortage, sky-high real estate prices, and even the state’s infamous homelessness problem. As a free-market economist, I applaud Newsom for defanging some of his state’s most burdensome measures – but he should go much further to a) help his constituents and b) shore up his national moderate bona fides as he likely runs for president in 2028.
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For example, his signature left the "CEQA abuse" loophole untouched. This is a regulation which allows labor unions and NIMBY (Not in My Backyard) activists to file frivolous environmental lawsuits that delay projects and run up development costs. Environmentalists often pretend these suits are about protecting animals and trees, but they’re primarily a means of harming companies these radicals don’t like.

Gov. Gavin Newsom made a good start on housing rules, but environmental lawsuits still pose a big problem. FILE: Newsom speaks at a news conference in Oakland, Calif. (AP Photo/Jeff Chiu, File)
And the radicals aren’t just holding up signs. They’re in elected offices, abusing their power for the sake of their agendas instead of serving constituents. That’s what a court ruled in 2022 after two local governments stopped "much-needed housing" for decades. The court also said that CEQA was intended for narrow use, and that its abuse was holding up progress within the state, especially related to easing the problem of low housing supply.
Those lawsuits impact more than the rich company owners. They prevent young families from achieving the American Dream by making first homes too expensive to own and maintain. That’s another piece of low-hanging regulatory fruit for Newsom, because his CEQA reform focused on urban apartments and large infrastructure projects – important to millions of Californians, but also ignoring more structural reforms to the issue of expensive housing.
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Since one of the primary drivers of California’s population decline is the high cost of living, allowing developers to build more single-family homes would encourage more people to rent or buy the type of home they want to flee to – or did end up fleeing to. Many former California residents might even return from affordable states like Texas, Arizona and Tennessee.
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Finally, there’s trash collection. This one doesn’t earn the same flashy headlines as environmental policy, crime or homelessness, but California has quietly (and expensively) been struggling in this area, too.
The California Department of Resources Recycling and Recovery (CalRecycle) currently employs a Byzantine system of greenhouse gas emissions standards and penalty schemes that squeeze privately owned landfills without reducing the amount of trash to process.
Not only does this force California taxpayers to cover the higher cost of transporting their garbage to faraway landfills, but it’s put some landfills out of business. Late last year, the Chiquita Canyon Landfill announced that it would no longer be accepting waste, eliminating a critical option for Angelenos’ trash disposal.
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Newsom can’t solve the entire landfill problem by himself, as many counties employ their own ridiculous landfill and environmental regulations. But his bully pulpit and influence with local and county lawmakers could get those entities to fall into line and create affordable waste disposal services for all those new homes.
People vote with their feet, and millions of people have voted against California in recent decades by moving to more affordable states. Governor Gavin Newsom should be commended for getting his party to accept reforms to California’s notoriously burdensome environmental review laws. However, there is much more work to be done to stem the California exodus … not to mention to elevate a 2028 Newsom presidential run.
Michael Feuz is a key member of ITR Economics’ team of expert economists and consultants. Michael majored in business administration at Franciscan University of Steubenville and earned his master’s degree in economics from George Mason University.