Jeffrey Miron
On January 12, California Governor Gavin Newson signed an executive order waving permitting requirements for homeowners and businesses affected by the fires in Los Angeles and Ventura counties. The directive suspends sections of the California Environmental Quality Act (CEQA) and the California Coastal Act, aiming to expedite the rebuilding of as many as 12,000 homes destroyed in the fires.
Even before the fires, the typical home in California was $790,742, 220 percent of the national average. Moreover, the Wall Street Journal points out that California’s onerous building codes and permitting fees contribute to astronomical “affordable” housing costs, where units can cost $1 million to build. The state’s regulatory framework is widely regarded as a significant barrier to development; by requiring environmental reviews and opening the door for lawsuits, CEQA and the Coastal Act delay projects for years, driving up costs and discouraging investment.
Governor Newsom’s executive order waives permits previously justified as necessary for environmental protection and sustainable development. But if these regulations were essential before the fires, why suspend them now? The risks they seek to mitigate, such as soil erosion and waterway contamination, still exist post-fire and may be amplified by rushed rebuilding.
On the other hand, if these regulations were always excessive, then why limit their suspension to fire recovery? In the past, CEQA exemptions have been granted for high-profile projects such as sports stadiums and affordable housing developments. These cases highlight an inconsistency: the state recognizes that CEQA hinders timely and efficient development but has so far resisted broader reform. Why not reform or relax the laws to make them less onerous everywhere, rather than relying on piecemeal exceptions during crises?
Newsom’s executive order exposes a fundamental tension in California’s housing policy. If the regulations are too restrictive for disaster recovery, they are likely too restrictive broadly. And if they truly are necessary, they should remain, even in the face of the fires.
This article appeared on Substack on January 29, 2025. Jonah Karafiol, a student at Harvard College, co-wrote this post.