California lawmakers this week followed through on a promise made a year ago, sending Gov. Gavin Newsom a bill that tightens a controversial exemption to the state’s environmental review process — one that critics say had opened the door to hazardous industrial projects being built with little oversight near homes and schools.
Senate Bill 954, authored by Sen. Catherine Blakespear, D-Encinitas, cleared both the Assembly and Senate this week and now awaits the governor’s signature. The measure represents the Legislature’s attempt to correct course after last year’s Senate Bill 131, which exempted so-called “advanced manufacturing facilities” from the California Environmental Quality Act, or CEQA, as part of a deal tied to approval of the state’s $300 billion budget.
That exemption drew swift pushback from more than 30 legislators who warned it was written too broadly and could expose already burdened communities to greater pollution risks. Those lawmakers vowed to revisit the issue this year — a promise SB 954 now fulfills.
The new bill narrows which facilities can skip environmental review and builds in new safeguards for nearby residents. It arrives after months of negotiation and several compromises with industry groups. Environmental advocates describe the final product as an imperfect but workable fix, while business organizations argue the bill still imposes too many restrictions that could stifle manufacturing growth and job creation in California.
Blakespear expressed confidence that Newsom will sign the legislation, saying the changes “ensure that the CEQA exemption for advanced manufacturing is workable” while adding “important protections for air quality, disadvantaged communities and California’s environment in general.”
A local example fueled much of the debate
The push for reform gained urgency after a real-world incident in Orange County. In May, a chemical tank overheated at the GKN Aerospace facility in Garden Grove, forcing evacuation orders for roughly 50,000 nearby residents while crews worked to keep the tank from exploding.
Under last year’s law, a facility like GKN’s would have qualified for the advanced manufacturing exemption, bypassing environmental review altogether. Supporters of SB 954 pointed to that incident as proof that sites located near homes and schools need continued oversight.
“For more than 50 years, CEQA has allowed community members and workers to participate in planning decisions when facilities like these are proposed,” Gabriel Tolson of the Planning and Conservation League told lawmakers during a June Assembly hearing. He noted that CEQA reviews have historically resulted in protective measures such as improved air filtration systems, safer chemical alternatives, and funding to support local emergency responders.
Under the new bill, a facility similar to GKN’s would now be required to undergo environmental review if proposed today, since it sits close to residential neighborhoods and schools. SB 954 blocks the exemption for manufacturing operations located near disadvantaged communities or areas where people live and work. It also limits the exemption to “final-tier” manufacturing — meaning the last stage of production — while excluding companies that produce components containing hazardous substances such as PFAS, chemicals linked to cancer and water contamination. Data centers are excluded from the exemption entirely.
Senate President Pro Tem Mike McGuire, D-Santa Rosa, who helped broker last year’s CEQA reform pledge, said the bill strikes the right balance.
“Eliminating CEQA for heavy industrial projects like mining and chemical manufacturing will not result in economic progress, it will only poison our communities and leave taxpayers footing the bill for generations of clean up,” McGuire said in a statement. “SB 954 will make sure that we develop our manufacturing industry without sacrificing public health and environmental protections.”
Concessions along the way
The bill underwent significant revisions as it moved through the Legislature. After Assembly Appropriations Chair Buffy Wicks, D-Oakland, raised objections, Blakespear removed provisions related to housing, including language that would have required environmental review for housing developments built on habitat for protected species.
Additional changes made on the Assembly floor softened some of the bill’s original requirements. Exempt facilities can now be located in industrially zoned areas generally, rather than only in heavy-industrial zones. The requirement for zero-emission backup power was reduced from 100% to 50%. Facilities now only need to be eligible for LEED certification rather than actually certified. And projects must undergo environmental review if their pollution output exceeds 50% of local air quality standards.
Asha Sharma, deputy director of Sierra Club California, acknowledged the trade-offs involved. “From a policy perspective, Sierra Club California wouldn’t think it’s a good idea for any heavy industrial projects like manufacturing to be getting CEQA exemptions at all,” she said. “But there’s a lot of political considerations. … To make sure that we at least get some level of cleanup to 131 this year, and this was one of the sacrifices that kind of had to be made.”
Business groups say the bill still misses the mark
Industry representatives argue the revisions didn’t go nearly far enough to address their concerns about slowing development in California.
Matt Regan, policy director for the Bay Area Council, said the legislation remains impractical and could hinder job growth, undermine middle-class opportunities, and work against the state’s own clean energy goals.
“We have created an environment in California where manufacturing is all but impossible to do here anymore,” Regan said. He pointed to Anthro Energy, an Alameda-based battery manufacturer that opted to build its first production plant in Kentucky instead of California.
Regan also noted that SB 954 still doesn’t allow commercially zoned land to be converted for advanced manufacturing use — projects must be located on property that was already zoned for industrial use as of Jan. 1, 2026. He called the bill’s air quality and backup power standards unrealistic. “I mean, these are just pie-in-the-sky numbers that have been made up and thrown out there because they know that they’re completely unattainable,” he said.
Lance Hastings, chief executive of the California Manufacturers & Technology Association, criticized the pace of the negotiations, saying his organization had sought dialogue for months without meaningful engagement.
“CMTA has spent months requesting dialogue and meeting with staff, only to see these amendments now, with no opportunity for deliberation,” Hastings said in a statement. “The Legislature’s rush to pass laws that are fraught with imbalance, uncertainty and litigation risk is exactly what led to the passage of SB 131 in the first place, and if lawmakers are troubled by how that bill passed, SB 954 is not the remedy.”
As of now, Newsom has not signaled whether he intends to sign the bill. His office did not respond to questions about his position on the legislation.
Original source: CalMatters
