CEQA Lawsuit News: AB 130 Reforms, Rulings, and Costs

Recent CEQA lawsuit news centers on three threads: a state employees’ union is suing California over Governor Newsom’s return-to-office mandate under the California Environmental Quality Act, the Legislature passed the largest package of CEQA exemptions in the law’s history in mid-2025, and appellate courts have issued decisions reshaping how greenhouse gas emissions, tribal consultation, and serial lawsuits are handled. Together they mark one of the most active periods for CEQA litigation and reform since the statute was enacted in 1970.

Union Sues Over Newsom’s Return-to-Office Order

California Attorneys, Administrative Law Judges and Hearing Officers in State Employment, known as CASE, filed a CEQA petition in Alameda County Superior Court on or around June 5, 2026, under case number 26CV192463.¹ The suit challenges Executive Order N-22-25, issued by Governor Newsom on March 3, 2025, which requires state agencies to adopt a hybrid telework policy with employees in the office at least four days per week.² The mandate was set to take full effect July 1, 2026.

CASE’s argument is that requiring tens of thousands of previously remote workers to commute four days a week is a “project” under CEQA, which should have triggered an Environmental Impact Report. The union cites a California State Auditor estimate that the mandate would generate roughly 15,115 additional metric tons of carbon dioxide emissions per month from increased commuting.³⁴ CASE argues the correct environmental baseline is the current telework status quo, not pre-pandemic commuting patterns.

Before suing, CASE sent CEQA exhaustion letters to 96 state agencies asking for voluntary environmental review. When those went unanswered, the union retained Richard Drury of Lozeau Drury LLP.³ As of early June 2026, the state had acknowledged the complaint but had not publicly responded on the merits.⁴

Other unions have challenged the mandate on labor grounds. SEIU Local 1000 filed an unfair labor practice charge in May 2026, and the Professional Engineers in California Government negotiated a side letter delaying implementation until July 2026 in exchange for withdrawing earlier complaints.⁵⁶ CASE’s suit is the first to frame the return-to-office policy as an environmental review failure.

AB 130 and SB 131 Rewrote Big Parts of CEQA

On June 30, 2025, Governor Newsom signed AB 130 and SB 131, a pair of budget trailer bills that significantly narrow CEQA’s reach.⁷ These reforms shape which future projects can even be sued under CEQA.

AB 130 creates a statutory CEQA exemption for infill housing on sites up to 20 acres in urbanized areas that meet minimum density thresholds and complete a Phase I environmental site assessment. Projects taller than 85 feet must meet prevailing wage and skilled workforce standards. The law also revives and expands the Environmental Leadership Development Project program, which provides a 270-day window for CEQA litigation to be resolved, extending it to smaller infill housing developments that invest at least $15 million and dedicate 15 percent of units to low-income households.⁸

SB 131 reaches a wider range of project types. It exempts local rezonings done to implement approved housing elements, wildfire fuel-reduction projects like prescribed burns and thinning, farmworker housing, small health clinics, child care centers, broadband deployment in local road rights-of-way, and disadvantaged-community water and sewer projects.⁷ Both bills introduce a “near-miss” review process: when a housing project qualifies for a CEQA exemption except for one condition, environmental review is limited strictly to the effects of that condition, with no requirement to analyze alternatives or growth-inducing impacts.⁸

SB 131 also limits the CEQA administrative record by excluding most internal agency staff communications unless reviewed by a supervisor or executive. Oil and gas infrastructure and large distribution centers are carved out from that limit.⁸ The legislation establishes a statewide VMT Mitigation Bank, allowing developers to pay fees that fund transit-oriented affordable housing and infrastructure instead of handling vehicle miles traveled mitigation project by project.⁷ Implementation guidance from the Governor’s Office of Land Use and Climate Innovation is not required until July 2026.

Appellate Rulings Shaping CEQA in 2025 and 2026

Cap-and-Trade Credits Rejected at Tejon Ranch

In Center for Biological Diversity v. County of Los Angeles, decided June 2025, the Second District Court of Appeal struck down the EIR for the Centennial Specific Plan, a 12,000-acre mixed-use development at Tejon Ranch that included more than 19,000 residential units. The EIR claimed that 96 percent of the project’s unmitigated emissions would be offset through cap-and-trade compliance. Because the project is not a “covered entity” under the state’s cap-and-trade program, the court found that the county could not credit the emissions reductions of upstream energy and fuel providers against the project’s own greenhouse gas footprint. The court called the approach “improper and misleading” and an example of “impermissible double counting,” ordering the county to decertify the EIR and set aside all project approvals.⁹ The ruling effectively bars treating other entities’ regulatory compliance as project-specific mitigation unless the reductions are genuinely additional.

Tribal Consultation Must Be More Than Perfunctory

In Koi Nation of Northern California v. City of Clearlake, decided March 2025, the First District reversed city approval of a 75-room hotel and road extension in a culturally sensitive area. The court found that Clearlake’s consultation with the Koi Nation under Assembly Bill 52 was “perfunctory.” The city accepted information about tribal cultural resources but never properly analyzed it, failed to give notice before closing consultation, and declined the tribe’s requests for cultural monitors and construction worker training.¹⁰ The ruling established that AB 52 consultation must continue until the parties agree on mitigation measures or reach a good-faith impasse. Construction remained stayed pending the outcome.¹¹

Water Supply Analysis Upheld in American Canyon

In January 2026, the Third District upheld the EIR for the 2.4-million-square-foot Giovannioni Logistics Project in American Canyon, rejecting Vallejo’s argument that the environmental document failed to adequately disclose water supply risks. The court found that American Canyon’s water entitlements under a 1996 agreement were not rendered speculative by the city’s history of purchasing less than its full contractual allotment.¹²

Repeat Challenges Blocked by Res Judicata

Two 2026 First District rulings cut off serial CEQA litigation. In Mark Baker v. Bay Area Toll Authority, decided June 2026, the court held that a second CEQA challenge to the “Bay Lights 360” bridge illumination project was both time-barred and precluded by a prior unappealed judgment.¹³ In Bess Bair v. Caltrans, decided March 2026, the same court held that res judicata barred a third CEQA challenge to the Richardson Grove State Park highway improvement project after two prior unappealed final orders.¹⁴

UC Berkeley Enrollment Case Resolved

A 2023 appellate ruling in Make UC A Good Neighbor v. Regents of University of California had ordered UC Berkeley to roll back undergraduate enrollment, citing “social noise” from partying students as a CEQA impact. The California Supreme Court upheld the university’s long-range development plan EIR in June 2024, rejecting the noise and alternative-location claims. A University of California report found that CEQA litigation had delayed seven student housing projects across the system since 2018, projects that collectively could have housed 4,100 students.¹⁵

Who Files CEQA Lawsuits, and Against What

Housing projects remain the dominant target. A Holland & Knight study of CEQA lawsuits filed between 2019 and 2021 reported that in 2020 alone, CEQA suits sought to block roughly 48,000 approved housing units. The study said filing a lawsuit can freeze a project for 18 to 24 months because lenders and investors refuse to fund developments while cases are pending, and that litigation and appeals typically take four to five years to resolve.¹⁶ A separate analysis of Southern California cited by the firm found that 78 percent of challenged housing units were in “whiter, wealthier, and healthier areas,” and 70 percent were within half a mile of transit.¹⁷

A Rose Foundation and Housing Workshop study published in 2023 reached different conclusions. It found CEQA lawsuits averaged 192 per year between 2002 and 2021 with no overall increase, that only 23.8 percent of CEQA cases filed between 2019 and 2021 challenged projects involving new housing, and that housing units subject to CEQA litigation in 2019 represented about 9.9 percent of total housing permits issued statewide. The report found no evidence of any housing project being permanently scrapped as a result of CEQA litigation and said community groups filed 217 of 508 cases, traditional environmental organizations 70, and labor unions 13 during the 2019–2021 period.¹⁸

Labor’s Use of CEQA as Leverage

Building trades unions have used CEQA objections to press developers for union labor agreements. A San Francisco Chronicle report described “East Bay Residents for Responsible Development,” an association of four building trade unions, challenging housing projects near BART stations. In a 167-unit project in San Lorenzo, the developer eventually agreed to hire some union trades after the unions raised environmental objections, increasing total costs by an estimated 10 to 20 percent. A 222-unit project at the West Oakland BART station that the Oakland Planning Commission had unanimously approved was delayed after unions appealed, alleging inadequate soil contamination analysis.¹⁹ In Southern California, the Southwest Regional Council of Carpenters targeted at least 12 projects between 2017 and 2019, including three large Los Angeles developments totaling more than 1,800 units, alleging CEQA violations tied to greenhouse gas emissions. Some developers have responded by filing racketeering counterclaims against project opponents.²⁰

Neighborhood Opposition and the Lafayette Case

The Save Lafayette v. City of Lafayette litigation ran for more than a decade. The 315-unit “Terraces of Lafayette” apartment project had an application deemed complete in 2011. After the city certified an EIR in 2013 and approved the project, Save Lafayette sued on CEQA and Housing Accountability Act grounds. A unanimous Court of Appeal opinion upheld the project approvals, and the California Supreme Court declined review on March 17, 2023, ending the challenge.¹⁵

What a CEQA Suit Costs the Project

When a project is sued, the developer, as the real party in interest, typically pays its own legal bills and the lead agency’s cost of defending the environmental document. If the challenge succeeds, the developer or agency is also usually responsible for the petitioner’s attorney fees. When a CEQA document is upheld, neither the developer nor the agency can recover its legal costs.²¹

Preparing an EIR can take a year or longer and cost hundreds of thousands of dollars, occasionally exceeding $1 million, before any litigation begins.²² A Habitat for Humanity affordable housing project in Redwood City saw total development costs rise roughly 30 percent, from $13 million to $17 million, due to years of CEQA-related delay.²¹ Holland & Knight reported that filing a CEQA lawsuit can halt construction loans for 95 percent of privately funded housing projects.²³ Vehicle miles traveled mitigation in many non-transit locations can add $50,000 or more per housing unit, a cost the new statewide VMT Mitigation Bank is meant to reduce once implementation guidance is issued.⁸

1
Bloomberg Law. California Union Leans on Newsom’s Climate Record to Fight RTO
2
ACSED Online. Letter to CalHR Regarding Return-to-Office Executive Order N-22-25
3
Davis Vanguard. Lawsuit California Telework Policy
4
CBS News San Francisco. Union Files CEQA Lawsuit California In-Person Work Requirement
5
SEIU Local 1000. RTO
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PECG. Sideletter 27
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Office of the Governor. Governor Newsom Signs Into Law Groundbreaking Reforms to Build More Housing Affordability
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CEQA Developments. State Budget Bill Includes Landmark CEQA and Housing Law Changes
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Alston & Bird. Land Use Matters July 2025
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Koi Nation of Sonoma. Koi Nation Announces Landmark Legal Victory Protecting Tribal Cultural Resources
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FindLaw. Koi Nation of Northern California v. City of Clearlake
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CEQA Developments. Third District Affirms Judgment Upholding American Canyon’s EIR
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CEQA Developments. Mark Baker v. Bay Area Toll Authority
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CEQA Developments. CEQA Developments
15
Bay Area Council. About Time: CA Supreme Court Tosses Abusive CEQA Lawsuit, Clears Way for Lafayette Housing
16
Holland & Knight. CEQA Lawsuits Remain a Roadblock to Housing
17
Holland & Knight. Linking CEQA to California’s Housing Crisis
18
Rose Foundation. CEQA by the Numbers: Myths and Facts
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San Francisco Chronicle. California Unions Environmental Law
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Reason. How California Environmental Law Makes It Easy for Labor Unions to Shake Down Developers
21
Pacific Research Institute. CEQA Report
22
Little Hoover Commission. Report 279
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Holland & Knight. Getting in Its Own Way: Behind California’s CEQA Curtain