AB2231 - California Environmental Quality Act: hospital projects.

Assembly Bill No. 2231 CHAPTER 926 An act to add Section 21168.6.5 to the Public Resources Code, relating to environmental quality. [ Approved by Governor September 30, 2026. Filed with Secretary of State September 30, 2026. ] LEGISLATIVE COUNSEL'S DIGEST AB 2231, Ahrens. California Environmental Quality Act: hospital projects. The California Environmental Quality Act (CEQA) requires a lead agency, as defined, to prepare, or cause to be prepared, and certify the completion of an environmental impact report (EIR) on a project that it proposes to carry out or approve that may have a significant effect on the environment or to adopt a negative declaration if it finds that the project will not have that effect. CEQA also requires a lead agency to prepare a mitigated negative declaration for a project that may have a significant effect on the environment if revisions in the project would avoid or mitigate that effect and there is no substantial evidence that the project, as revised, would have a significant effect on the environment. CEQA establishes administrative procedures for the review and certification of the EIR for a project and judicial review procedures for any action or proceeding brought to challenge the lead agency’s decision to certify the EIR or to grant project approvals. This bill would establish streamlined procedures for the administrative and judicial review of the environmental review and approvals granted for an environmental leadership hospital campus project, defined by the bill as a construction project of a hospital campus in the City of Santa Clara, under certain conditions. The bill would require the city council of the City of Santa Clara to certify the project for the streamlined judicial review, as specified, if it finds the project will meet those conditions. The bill would require the applicant of the environmental leadership hospital campus project to take certain actions in order for those specified procedures to apply to the project. The bill would require a certified project to meet certain labor requirements. The bill would require the Judicial Council, on or before July 1, 2027, to adopt rules of court establishing procedures requiring actions or proceedings seeking judicial review of the certification of an environmental impact report for a certified environmental leadership hospital campus project or the granting of any project approval, including any appeals to the court of appeal or the Supreme Court, to be resolved, to the extent feasible, within 270 calendar days of the filing of the certified record of proceedings with the court. The bill would require the lead agency to concurrently prepare the record of proceedings with the environmental review, as provided. Because the bill would impose additional duties on a local agency, this bill would impose a state-mandated local program. This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Santa Clara. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. (a) The Legislature finds and declares all of the following: (1) On July 4, 2025, the President of the United States signed into law Public Law 119-21 (H.R. 1), which makes sweeping changes to federal health care financing, including substantial reductions in federal Medicaid funding and other health coverage supports. (2) H.R. 1 is projected to result in significant coverage losses and increased rates of uninsured individuals, thereby increasing uncompensated care and financial strain on hospital systems nationwide, including in the State of California. (3) California hospitals, particularly safety net, rural, nonprofit, and community hospitals, operate on narrow financial margins and rely heavily on Medi-Cal reimbursement and supplemental payment mechanisms that will be materially reduced or constrained under H.R. 1. (4) The financial impacts of H.R. 1 are expected to take effect in stages over the next several fiscal years, creating a limited window during which hospital systems retain sufficient financial capacity to plan, finance, and construct new hospital facilities and critical health infrastructure. (5) The failure to complete certain essential hospital construction projects before the full implementation of H.R. 1 funding reductions will exacerbate existing capacity constraints, limit access to emergency, inpatient, and specialty care, and impair California’s ability to meet the health care needs of a growing and aging population. (6) Timely construction of certain essential hospitals and related health care facilities is essential to maintain emergency preparedness, disaster response capability, and public health resilience, particularly in light of increasing climate-related emergencies and public health crises. (7) Providing targeted streamlining of the administrative and judicial review process for the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) (CEQA) for certain essential hospital construction projects is necessary to accelerate the delivery of essential health care infrastructure before the financial ramifications of H.R. 1 significantly constrain hospital investment and capital availability. (8) It is in the interest of the State of California to ensure that hospitals are constructed, modernized, and operational before the full onset of federal funding reductions in order to preserve access to care, protect public health, and stabilize the state’s health care delivery system. (b) It is the intent of the Legislature to establish CEQA streamlining for qualifying hospital construction to address the urgent threat proposed by H.R. 1 to California’s hospital systems and to ensure timely development of critical health care infrastructure for the People of California. SEC. 2. Section 21168.6.5 is added to the Public Resources Code, immediately following Section 21168.6.2, to read: 21168.6.5. (a) For purposes of this section, all of the following definitions apply: (1) “Applicant” means a person proposing to construct an environmental leadership hospital campus project. (2) “City” means the City of Santa Clara. (3) “Environmental leadership hospital campus project” or “project” means a project for the construction of a hospital campus that is located within the city on a site that has been previously developed, or on a vacant site where at least 75 percent of the perimeter of the site adjoins, or is separated only by an improved public right-of-way from, parcels that are developed with qualified urban uses. (b) The city council of the city shall certify an environmental leadership hospital campus project for streamlining pursuant to this section before the lead agency certifies the final environmental impact report for the project if the city council finds that all of the following conditions will be met: (1) The project will result in an investment of at least one billion dollars ($1,000,000,000) in California upon completion of the construction. (2) The project will not result in any net additional greenhouse gas emissions. A project is deemed to meet the requirements of this paragraph if the applicant demonstrates to the lead agency that it has made a binding commitment to mitigate impacts resulting from the greenhouse gas emissions, if any, in accordance with Section 21183.6. At least 50 percent of any greenhouse gas emissions reductions necessary to achieve the requirement of this paragraph shall be from onsite or within the Bay Area Air Quality Management District. (3) (A) The applicant will enter into a legally binding and enforceable community benefits agreement with the lead agency that may include, but is not limited to, any of the following mitigation measures: (i) All new buildings within the project will use electricity for the buildings’ energy needs. (ii) The energy demand of the project will be met by carbon-free energy resources. (iii) The project will provide an amount of zero-emission vehicle charging stations that meets or exceeds the amount required by law and will provide charging for zero-emission vehicles free of charge. (iv) Improvements to public transportation operations and service, such as the purchase of zero-emission buses or technology investments. (B) Notwithstanding any other provisions of this division, the measures identified to meet the requirement in subparagraph (A) will be additional to any other mitigation measures required pursuant to this division, and will be undertaken in, and directly benefit, the affected community. (4) The project will achieve a reduction in vehicle miles traveled per capita of at least 15 percent compared to existing development consistent with the Office of Land Use and Climate Innovation’s Technical Advisory on Evaluating Transportation Impacts in CEQA. (5) The project will obtain certification as Leadership in Energy and Environmental Design (LEED) gold standard or better from the United States Green Building Council for all new construction that is eligible for LEED certification. (6) The project will generate at least 500 jobs during construction. (7) The project creates high-wage, highly skilled jobs that pay prevailing wages and living wages, employs a skilled and trained workforce, as defined in subdivision (d) of Section 2601 of the Public Contract Code, provides construction jobs and permanent jobs for Californians, and helps reduce unemployment. For purposes of this subdivision, “jobs that pay prevailing wages” means that all construction workers employed in the execution of the project will receive at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code. (8) The applicant demonstrates compliance with the requirements of Chapters 12.8 (commencing with Section 42649) and 12.9 (commencing with Section 42649.8) of Part 3 of Division 30, as applicable. (9) The applicant agrees that all mitigation measures required pursuant to this division and any other environmental measures required by this section to certify the project under this section shall be conditions of approval of the project, and those conditions will be fully enforceable by the lead agency or another agency designated by the lead agency. In the case of environmental mitigation measures and any other environmental measures required by this section, the applicant agrees, as an ongoing obligation, that those measures will be monitored and enforced by the lead agency for the life of the obligation. The applicant shall submit to the lead agency an annual status report on the implementation of the environmental mitigation measures and any other environmental measures required by this section. (10) The applicant agrees to pay the costs of the trial court and the court of appeal in hearing and deciding any case subject to this section, including payment of the costs for the appointment of a special master if deemed appropriate by the court, in a form and manner provided in the rules of court adopted by the Judicial Council pursuant to subdivision (d). (11) The applicant agrees to pay the costs of preparing the record of proceedings for the project concurrent with review and consideration of the project pursuant to this division, in a form and manner specified by the lead agency for the project. (c) (1) If the project is certified pursuant to subdivision (b), all of the following shall apply: (A) The applicant shall ensure that the prevailing wage requirement is included in all contracts for the performance of work. (B) All contractors and subcontractors shall pay to workers employed in the execution of the work at least the general prevailing rate of per diem wages determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate. (C) Except as provided in subparagraph (E), all contractors and subcontractors shall maintain and verify payroll records pursuant to Section 1776 of the Labor Code and make those records available for inspection and copying as provided therein. (D) Except as provided in subparagraph (E), the obligation of the contractors and subcontractors to pay prevailing wages may be enforced by the Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to Section 1741 of the Labor Code, which may be reviewed pursuant to Section 1742 of the Labor Code, within 18 months after the completion of the project, or by an underpaid worker through an administrative complaint or civil action, or by a joint labor-management committee though a civil action under Section 1771.2 of the Labor Code. If a civil wage and penalty assessment is issued, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to Section 1742.1 of the Labor Code. (E) Subparagraphs (C) and (D) do not apply if all contractors and subcontractors performing work on the project are subject to a project labor agreement that requires the payment of prevailing wages to all workers employed in the execution of the project and provides for enforcement of that obligation through an arbitration procedure. (F) Notwithstanding subdivision (c) of Section 1773.1 of the Labor Code, the requirement that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing shall not apply if otherwise provided in a bona fide collective bargaining agreement covering the worker. The requirement to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule adopted pursuant to Section 511 or 514 of the Labor Code. (2) In addition to the requirements of paragraph (1), if the project is certified pursuant to subdivision (b), all of the following shall apply: (A) The applicant shall require in all contracts for the performance of work that every contractor and subcontractor at every tier will individually use a skilled and trained workforce to complete the project. (B) Every contractor and subcontractor shall use a skilled and trained workforce to complete the project. (C) Except as provided in subparagraph (D), the applicant shall provide to the [Text truncated for display. Full text available on LegiScan.]