In a surprising move, California's Democratic Governor Gavin Newsom has taken a leaf out of President Donald Trump's book.
Late in June, he approved a significant revamp of the state's costly and redundant environmental regulations, a move that has been seen as a nod towards the conservative values of limited government and free-market economics.
According to Fox News, Newsom's approval has led to an update of the California Environmental Quality Act (CEQA), a law from the 1970s that mandates developers and homeowners to undertake an expensive and lengthy environmental review before initiating any construction project. The update simplifies the review process and exempts a large portion of the state's infrastructure construction from the outdated regulatory statutes.
The homebuilding industry and critics have consistently blamed this burdensome policy for California's persistent housing shortage, exorbitant real estate prices, and even the state's notorious homelessness problem. As a free-market economist, I commend Newsom for mitigating some of his state's most onerous measures. However, to truly assist his constituents and bolster his national moderate credentials for a potential 2028 presidential run, he needs to go much further.
Regrettably, Newsom's signature left the "CEQA abuse" loophole intact. This regulation permits labor unions and NIMBY (Not in My Backyard) activists to file baseless environmental lawsuits that delay projects and escalate development costs. Environmentalists often masquerade these suits as efforts to protect wildlife and vegetation, but they are primarily a tool to harm companies that these radicals find objectionable.
These radicals are not merely protesting on the streets; they are in elected offices, misusing their power to further their agendas rather than serving constituents. In 2022, a court ruled that two local governments had obstructed "much-needed housing" for decades. The court also stated that CEQA was intended for narrow use, and its abuse was impeding progress within the state, particularly in addressing the issue of low housing supply.
These lawsuits affect more than just wealthy company owners. They hinder young families from realizing the American Dream by making first homes too costly to own and maintain. Newsom's CEQA reform, which focused on urban apartments and large infrastructure projects, overlooked more structural reforms to the issue of expensive housing.
Given that the high cost of living is one of the main factors driving California's population decline, enabling developers to construct more single-family homes could entice more people to rent or buy the type of home they desire. This might even prompt former California residents to return from more affordable states like Texas, Arizona, and Tennessee.
Another overlooked issue is trash collection. The California Department of Resources Recycling and Recovery (CalRecycle) currently employs a complex system of greenhouse gas emissions standards and penalty schemes that burden privately owned landfills without reducing the amount of trash to process.
This not only forces California taxpayers to bear the higher cost of transporting their garbage to distant landfills but has also put some landfills out of business. Last year, the Chiquita Canyon Landfill announced that it would no longer be accepting waste, eliminating a crucial option for Angelenos' trash disposal.
While Newsom cannot single-handedly solve the entire landfill problem due to the individual landfill and environmental regulations employed by many counties, his influence with local and county lawmakers could encourage these entities to create affordable waste disposal services for all the new homes.
Millions of people have voted against California in recent decades by relocating to more affordable states. Governor Gavin Newsom deserves recognition for persuading his party to accept reforms to California's notoriously burdensome environmental review laws. However, there is still a significant amount of work to be done to halt the California exodus and potentially boost a 2028 Newsom presidential run.
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