Federal Lawsuit Challenges California Law Singling Out Single Housing Project

A new federal lawsuit has been filed against the State of California and the City of Santa Barbara, challenging a state law that allegedly applies specific environmental review criteria to only one housing project statewide. This legal action comes amidst a period of significant judicial scrutiny over California's housing laws, as noted by columnist Emily Hoeven.

The lawsuit, filed by developer Mission LLC, targets a state law, identified as Senate Bill 158 (SB158), which the developer argues violates the equal protection clause of both the California and U.S. Constitutions by specifically hindering their proposed 270-unit apartment building in Santa Barbara. The project includes 54 units designated for low-income residents.

According to reports, the criteria outlined in SB158 for requiring California Environmental Quality Act (CEQA) review are so narrowly defined that they reportedly apply only to this single project. These criteria include location in cities with a population between 85,000 and 95,000, counties between 440,000 and 455,000, and requiring the project parcel to be on wetland, within a regulatory floodway, and adjacent to a California historical landmark.

The project falls within the district of State Senator Monique Limón, who is set to become the incoming Senate leader. While Limón has acknowledged providing feedback on the bill, her office stated that she "continues to support efforts to build more housing that’s more affordable across California." However, critics allege that the provision was designed to specifically target the Santa Barbara development.

This federal challenge follows a recent state appellate court ruling in October 2025 that struck down Redondo Beach's housing element for failing to comply with state housing laws, highlighting the ongoing legal complexities in California's efforts to address its housing crisis. The "weaponization" of CEQA, which is often used to delay or block housing projects, has been a long-standing point of contention in the state's development landscape. Emily Hoeven summarized the situation, stating:

"🍨 Scoop in my latest column: A new court ruling “blows up” CA housing law. It’s being leveraged in a new federal lawsuit against CA challenging a law that applies CEQA review to 1 project in the state—in incoming Senate leader Monique Limón’s district."

The outcome of this federal lawsuit could have significant implications for how California crafts and implements housing legislation, particularly regarding the balance between environmental review and addressing the state's acute housing shortage.