California Environmental Quality Act: hospital projects.

The bill's primary mechanism changed from a full CEQA exemption (the only tool) to a dual approach: the CEQA exemption remains in Section 21080.52, but a new Section 21168.6.5 adds a streamlined review process with specific conditions that must be met for the streamlining to apply. The previous amendment to general CEQA judicial review timelines (Section 21167) was removed entirely.

The previous version's amendment to Section 21167 of the Public Resources Code, which would have modified general CEQA judicial review timelines for all projects, was removed. The new bill does not alter the general CEQA litigation framework.

New definition of 'environmental leadership hospital campus project' - a hospital campus construction project in Emeryville or Santa Clara located on a previously developed site, or on a vacant site where at least 75 percent of the perimeter adjoins or is separated only by an improved public right-of-way from parcels with qualified urban uses.

Projects seeking streamlined review must meet 12 conditions including: at least $1 billion investment in California, no net additional greenhouse gas emissions (with at least 50 percent from onsite and local reduction measures), a legally binding community benefits agreement covering electricity use, carbon-free energy, free zero-emission vehicle charging, and public transportation improvements, a 15 percent reduction in vehicle miles traveled per capita, LEED Gold or better certification for all eligible new construction, an Attorney General health impact review (with the applicant paying all associated costs including compliance monitoring), at least 500 construction jobs, prevailing wage requirements, and compliance with specific building code chapters.

The lead agency must prepare the record of proceedings concurrently with the administrative process, post all documents on a website from the date of the draft EIR release, make documents available in electronic format within 30 days, and certify the final record within 5 days of project approval. The lead agency may disregard post-comment-period comments unless they address new issues, new information released by the agency, project changes, proposed conditions, or newly known information.

The Judicial Council must adopt rules of court by July 1, 2027, requiring that any judicial action challenging the EIR certification or project approval for a streamlined hospital campus project be resolved within 270 calendar days of the filing of the certified record of proceedings, including appeals to the court of appeal or Supreme Court.

The project applicant must agree to pay all costs of the trial court and court of appeal in any judicial review case, including costs for a special master if appointed. The applicant must also pay the costs of preparing the record of proceedings concurrently with the environmental review process.

The EIR must include a prominent notice (minimum 12-point type) informing the public that the report is subject to Section 21168.6.5 and that judicial actions are subject to its procedures. The full text of the section must be included as an appendix to both the draft and final EIR.

The fiscal committee designation changed from 'no' to 'yes,' indicating a fiscal impact analysis is now required. The state-mandated local program designation also changed from 'no' to 'yes' because the bill now imposes additional duties on local agencies such as concurrent record preparation and electronic document posting.

The full CEQA exemption for hospital projects in Emeryville and Santa Clara (proposed Section 21080.52) is deleted. Projects will no longer be exempt from CEQA; they must still undergo environmental review, just under a streamlined process.

New labor compliance requirements added to the streamlining section: applicants must ensure prevailing wages in all contracts, use a skilled and trained workforce at every tier of contracting, and submit monthly compliance reports to the lead agency while construction is ongoing.

The greenhouse gas mitigation requirement is expanded to allow emissions reductions from within the Bay Area Air Quality Management District, not just onsite and local measures, giving projects more flexibility in meeting the net-zero GHG condition.

An exception is added for bona fide collective bargaining agreements: the rule that employer payments cannot reduce the obligation to pay prevailing hourly wages does not apply if otherwise provided in such an agreement. Alternative workweek schedules under Labor Code Sections 511 or 514 are also expressly permitted.

Civil penalties established: $10,000 per month for failure to provide monthly skilled-and-trained-workforce reports, and $200 per day per worker for failing to use a skilled and trained workforce. Penalties are assessed by the Labor Commissioner within 18 months of project completion and paid to the State Public Works Enforcement Fund.

A new enforcement pathway is added allowing a joint labor-management committee to bring a civil action under Section 1771.2 of the Labor Code to enforce prevailing wage obligations, in addition to existing Labor Commissioner and worker complaint mechanisms.

Certification timing is clarified: the city council must find that all conditions will be met before the lead agency certifies the final environmental impact report, rather than at a separate certification step as in the Assembly version.

A new defined term 'Applicant' is added, meaning a person proposing to construct an environmental leadership hospital campus project.

Added a CEQA exemption for hospital projects located in the City of Emeryville or the City of Santa Clara, meaning these projects are not subject to environmental impact review under the California Environmental Quality Act.

Added legislative findings and declarations (Section 1) citing Public Law 119-21 (H.R. 1) signed July 4, 2025, as creating substantial reductions in federal Medicaid funding that threaten California hospital financial viability and create a limited window to complete construction projects.

Defined 'hospital project' to include construction and operation of a licensed hospital plus organized outpatient clinics within one-quarter mile operated in association with the hospital, parking structures, and emergency transportation infrastructure including helipads.

Before a lead agency can determine a hospital project is exempt from CEQA, the project applicant must certify that the project creates high-wage jobs paying prevailing wages and that all contractors and subcontractors pay at least the general prevailing rate of per diem wages to construction workers.

The Labor Commissioner may issue a civil wage and penalty assessment under Section 1741 of the Labor Code within 18 months after project completion for prevailing wage violations, with liquidated damages available under Section 1742.1. An exception applies if all contractors are subject to a project labor agreement with arbitration enforcement.

Added a special statute declaration under Section 16 of Article IV of the California Constitution, stating a general statute cannot apply because the projects are uniquely time sensitive due to federal funding reductions, growing health care demand, site scarcity, and seismic compliance deadlines.

Added Section 4 providing that no reimbursement is required under Section 6 of Article XIII B of the California Constitution because local agencies have authority to levy sufficient service charges, fees, or assessments.

Fiscal committee determination changed from 'no' to 'yes' and state-mandated local program changed from 'no' to 'yes,' reflecting that the bill now imposes a state-mandated local program on lead agencies to determine exemption applicability.