Efforts to revamp New York State environmental laws to lower barriers to building housing more quickly threw the state’s annual budget process into limbo.

Negotiations blew past an April 1 budget deliberation deadline, with a proposed overhaul of the State Environmental Quality Review Act emerging as a point of impasse.

The outcome could determine whether New York builds hundreds of thousands of homes – or doesn’t.

SEQRA, as the law is known, has governed environmental review of development projects for 50 years. Gov. Kathy Hochul says it has become a tool to block housing.

She wants it scaled back – significantly.

Hochul made SEQRA reform a pillar of her “Let Them Build” agenda, embedded in her executive budget. Under her plan, certain housing projects would be exempt from review entirely. In New York City, projects up to 250 units – or 500 units in higher-density districts – would qualify automatically.

Outside the five boroughs, projects on previously disturbed land with existing water and sewer access would also be exempt. The threshold for triggering any environmental review would jump from the current level of three units to 100, statewide.

Following California

New York State’s push mirrors California’s playbook. Last June, Gov. Gavin Newsom signed legislation exempting most urban infill housing from the California Environmental Quality Act, or CEQA. Supporters said CEQA had become a legal weapon for project opponents rather than an environmental safeguard. California’s reform didn’t come easily. Newsom spent years battling environmental groups and local opponents before signing the CEQA overhaul last June.

Porting that extent of regulatory reform to New York State has proven complicated. The Senate included a narrowed version of Hochul’s proposal in its budget. It caps exemptions by municipality size and requires water and sewer connections. The version also creates a limited review track for multifamily projects, restricting scrutiny to core environmental concerns and excluding factors like shadows and viewsheds.

New York State’s Assembly took a different direction. It left SEQRA entirely out of its budget plan, parking its version in a standalone bill. That divide is why the issue has stalled. Assembly Speaker Carl Heastie flagged it early as a likely pressure point.

Now it sits unresolved, weeks after the deadline, alongside climate law changes and auto insurance as the budget’s biggest fights.

Battle between opponents and supporters

Opposition from environmental groups has been strong since Hochul introduced the plan.

“We reject the whole premise that SEQRA is the reason we don’t have affordable housing,” Adrienne Esposito, executive director of Citizens Campaign for the Environment, said during a roundtable discussion Hochul organized in late March.

Environmental groups and local land trusts want stronger protections near floodplains and contaminated sites. They argue that sewer deficits and infrastructure gaps do more to block housing than environmental review.

Supporters say the current process drives up costs and blocks housing production without delivering better environmental outcomes.

Notably, local governments typically push back on housing reforms if they would pre-empt their control. But they have sided with Hochul on this one.

“Local governments bear the brunt of these delays” because of SEQRA reviews, Stephen Acquario, executive director of the New York State Association of Counties, said in a statement. “Counties and municipalities conduct thorough local land use review, apply local zoning standards, and require compliance with environmental permits – yet projects are frequently stalled for years in state environmental review even after clearing all local hurdles.”