On May 20, 2021, Governor Newsom signed Senate Bill (SB) 7 into law, which reenacts the Jobs and Economic Improvement Through Environmental Leadership Act (the Act) and extends the date of repeal to January 1, 2026. The Act requires expedited judicial review for California Environmental Quality Act (CEQA) and other legal challenges for certified Environmental Leadership Development Projects. Among other things, SB 7 includes more robust labor-related requirements and expands certification eligibility to smaller housing projects. SB 7 is an emergency statute that went into effect immediately.

EXPEDITED JUDICIAL REVIEW

Environmental Leadership Development Project (ELDP) certification has the potential to reduce the length of litigation by years. It limits the timeframe –to the extent feasible– for the resolution of lawsuits related to the CEQA Environmental Impact Report (EIR) and other project approvals to 270 days from the filing of record of proceedings for the project with the court. SB 7 clarifies that the 270-day timeframe includes any appeals to the court of appeal or California Supreme Court.

DEADLINES

To qualify for expedited judicial review, the following deadlines under SB 7 must be met: (i) certification of the project before the Final EIR is certified and before January 1, 2024; (ii) public notification within 10 days of certification; (iii) approval of the project before January 1, 2025. Again, the Act will be automatically repealed on January 1, 2026, unless that date is later extended.

BASE CERTIFICATION REQUIREMENTS

To qualify as a certified ELDP, all projects (with the exception of clean energy projects) must:

• create high-wage, highly skilled jobs that pay prevailing wages and living wages, as now specified in the Act (e.g., all contractors and subcontractors at every tier must pay all construction workers, except registered apprentices, at least the general rate of per diem wages);

• help reduce unemployment, in part by providing construction and permanent jobs and promoting apprenticeship training;

• be located on an infill site;

• be consistent with any applicable sustainable communities strategy (SCS) or alternative planning strategy (APS), including general use designation, density and building intensity, if the California Air Resources Board (CARB) has accepted a determination that the SCS or APS would achieve Greenhouse Gas (GHG) reduction targets;

• not result in any net new GHG emissions, including from employee transportation;

• implement a CEQA Mitigation Monitoring and Reporting Program (MMRP);

• comply with state requirements for recycling commercial solid waste and organic waste; and

• provide unbundled parking for residential units in a multi-family residential project, unless provided for certain affordable units.

ADDITIONAL CERTIFICATION REQUIREMENTS FOR SMALLER HOUSING PROJECTS

Smaller residential and mixed-use projects are now eligible for ELDP certification under SB 7. To qualify, in addition to the “base” requirements above, those projects must also:

• result in an investment of between $15 and $100 million in the state upon completion of the project;

• limit any non-residential uses to one-third of the total square footage;

• designate the higher of 15% of the residential units as lower-income units or the percentage required under the applicable local inclusionary housing ordinance;

• comply with specified prohibitions on short-term rental uses; and

• not include any manufacturing or industrial uses.

ADDITIONAL CERTIFICATION REQUIREMENTS FOR LARGER PROJECTS

To qualify, in addition to the “base” requirements above, larger ELDP projects must also:

• result in a minimum investment of $100 million in the state upon completion of construction;

• include residential, retail, commercial, sports, cultural, entertainment, and/or recreational uses;

• achieve LEED Gold certification or better; and

• achieve at least a 15% greater standard for “transportation efficiency” than for comparable projects, as specified in the Act.

CERTIFICATION REQUIREMENTS FOR CLEAN ENERGY PROJECTS

To qualify, clean energy projects must, along with other specified requirements in the Act, generate energy through wind or solar or manufacture products, equipment, or components used for renewable energy generation, energy efficiency, or for the production of clean alternative fuel vehicles.

RELATED COSTS

To qualify for expedited judicial review, the project sponsor must pay for the costs of:

• preparing the record of proceedings for the project;

• the trial court and court of appeal hearings, including costs associated with preparing the decisions; and

• appointment of a special master, if deemed appropriate by the reviewing court.

EXEMPTION

An ELDP certified before January 1, 2020, and approved on or before January 1, 2022, is exempt from the new requirements imposed under SB 7.