By Dr. Clair Brown and Dr. Julia Walsh, University of California, Berkeley
Last year, the California Legislature passed a bill [SB 131] that exempted certain industrial facilities from environmental review under the California Environmental Quality Act (CEQA). The exemption covered a class of projects defined as “advanced manufacturing.” While this term may sound harmless to communities, it includes more than 75 polluting industrial sectors, from metal recycling to biofuel refining to rare earth mining. The bill passed without adequate public debate or a clear rationale for why these industries deserved special treatment.
Public discourse concerning CEQA often occurs without evidence-based analysis. Our research team at UC Berkeley wanted to examine how exempting “advanced manufacturing” projects from environmental review would affect both developers and communities. We asked: what are the net effects of projects with and without CEQA review, and who ultimately pays in each scenario?
The question of cost is particularly relevant because CEQA requires developers to prevent or mitigate the environmental and public health harms their projects may cause. Without CEQA review, the costs of those impacts may be shifted to the public through higher utility bills, taxpayer-funded cleanups, and adverse public health impacts.
To evaluate the net effects of CEQA review, we spent a year analyzing environmental records, regulatory filings, and public health data for three “advanced manufacturing” facilities across California. The results are telling.
Foster City conducted CEQA review for the campus expansion of Gilead Sciences, a biopharmaceutical facility that produces antiviral treatments for HIV and hepatitis. Energy efficiency requirements reduced the company’s electricity consumption by an estimated 14.9 million kilowatt-hours annually, resulting in roughly $1.5 million in avoided costs. Transportation mitigation measures cut vehicle trips by nearly 2,000 per day, reducing climate-harming greenhouse gas emissions. Water planning kept demand within the site’s approved allocation. A mandatory waste diversion program kept 1,530 tons of material out of landfills annually. CEQA did not block the project, but rather ensured the facility minimized social costs, including public health and community-related impacts.
The expansion of the BioMarin campus in San Rafael, where treatments for rare genetic diseases are developed, tells a similar story. Thanks to CEQA, construction dust controls reduced particulate emissions by approximately 60 percent, and vehicle trips were reduced by 15 percent. The company also funded sewer infrastructure upgrades, preventing such costs from being passed onto 16,000 local ratepayers. Groundwater protections, overseen by the Department of Toxic Substances Control, avoided contamination that could have cost up to $30 million to remediate. These protections reduced both public health risks and financial burdens on the surrounding community.
Then there is Quemetco, a lead-acid battery recycler that has operated in Los Angeles County since 1959, before CEQA existed. It would likely qualify today for SB 131’s “advanced manufacturing” exemption, and it illustrates the substantial health and community costs that can result from exempting industrial facilities from CEQA review. Arsenic emissions from Quemetco have created lifetime cancer risks exceeding 22 in one million for nearby residents. Children living within a mile of the facility have blood lead levels 20 to 30 percent above regional baselines, which are levels linked to developmental delays and neurological damage. Annual healthcare costs borne by the surrounding community were estimated to exceed $4 million, and potential soil remediation liability stands at $550 million.
The importance of these risks is demonstrated by Exide Technologies, a comparable lead-acid battery recycler in Vernon, Los Angeles. When Exide declared bankruptcy, California taxpayers inherited $770 million in cleanup costs that are still accruing today. A similar outcome at Quemetco is certainly plausible.
Under SB 131’s CEQA exemption, communities lose their right to know what is being built next door, what kinds of toxins may be emitted into their air and water, and what current and future costs might ultimately be passed on to the public. As our case studies illustrate, environmental review helps prevent companies from shifting such costs onto surrounding communities.
We also examined the critique that CEQA raises costs and slows projects. Our research found that compliance costs represent less than one percent of total project costs, and litigation affects fewer than two percent of projects requiring environmental review. The CEQA process also encourages companies to design smarter facilities that use fewer resources, including electricity and water, and impose fewer burdens on surrounding communities.
Our goal in this report is to educate lawmakers and the public on the net benefits of CEQA review, so they understand the importance of restoring such review for “advanced manufacturing” facilities, which is currently being proposed under Senate Bill 954 (Blakespear). This bill would help ensure that corporations pay for the impacts of their operations, rather than shifting these costs onto taxpayers. Our report demonstrates that if the “advanced manufacturing” exemption is not addressed, it will likely produce lasting harms to public health and the environment while increasing the risk of costly, publicly funded cleanup efforts.
Dr. Claire Brown is Professor of Economics emerita and Director of the Center for Work, Technology and Society; Dr. Julia Walsh is Senior Research Scientist at the Bixby Center, both at University of California, Berkeley.
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