California’s Prop 45 Puts CEQA on a Clock. Are Data Centers In?

Proposition 45, on California’s November 3, 2026 ballot, is an initiative statute that would add new procedures to the California Environmental Quality Act for projects it defines as “essential.” The Legislative Analyst’s Office lists the eligible types: housing, water systems except Delta conveyance, clean energy except nuclear, health facilities, clinics and medical office buildings, fire, police and sheriff’s stations, wildfire risk reduction, broadband internet access, education facilities, and transportation except high-speed rail. The new track is optional. The analyst says an eligible applicant may use either the new procedures or the existing ones.

The deadlines are specific. The measure’s text requires a lead agency to decide whether to certify an environmental impact report within 365 days after an application is complete, and it defines “day” in those sections as excluding weekends and state holidays, which computes to roughly 17 months on PSV’s arithmetic. Some published summaries say only 365 days. Lawsuits must be filed within 30 days of the agency’s notice and completed within 270 calendar days, including appeals, with up to 90 more at the court’s discretion. Impacts are judged under the standards in place when the application was submitted, the applicant develops one proposed alternative, and a court can stop only the part of a project that failed review, according to the analyst. The analyst estimates initial state and local costs in the high tens of millions of dollars a year, possibly above $100 million, partly covered by fees, with uncertain long-term effects in either direction.

The clearest commercial real estate effect is in housing. The text’s “essential housing project” covers residential-only projects, subdivisions, and “a conversion of an existing commercial building to residential use.” Mixed use qualifies when at least two-thirds of the square footage is residential. It can also qualify at 50 percent residential with at least 500 net new units and no hotel component, and a further path adds demolition or conversion thresholds. Heavy industrial, port and refinery uses cannot count as the nonresidential portion. Standalone office, retail, hotel and warehouse projects do not appear on the analyst’s list. Section 21033 applies the chapter to all pending and future reviews once it takes effect, so projects already in the queue could be affected. Section 21034 lets the Legislature amend it only by a two-thirds vote in each house, and only in ways consistent with its purposes.

The data center dispute turns on one definition. An “essential broadband internet access project” is a project to provide “mass market retail service” to customers with the capability to reach substantially all internet endpoints, “including, but not limited to, any capabilities that are incidental to and enable the operation of the communications service.” Separately, an essential project includes related infrastructure included in the application “to serve” a listed project. The measure expressly excludes high-speed rail, nuclear generation, Delta conveyance and detention facilities, and it does not mention data centers either way. Official proponent Kurt Oneto argues the definition tracks Government Code section 53167 and does not reach them. Brownstein Hyatt reports that a Legislative Counsel opinion, requested by the Yes campaign, reached the same conclusion. Commercial Observer and the Daily Journal report that opponents read the language more broadly and dispute the opinion’s weight. PSV’s read: the argument is not over, because a court, not a campaign, would decide it. A nearer question is power. The clean energy category covers renewable generation, storage, microgrids and associated transmission, and PSV found no limit in that definition based on who buys the electricity. That is PSV’s reading of the text, not a legal opinion.

Before Tuesday’s result, a California developer can build a pipeline screen that works under either outcome. Inputs: each project’s entitlement file, its use mix by square footage, its CEQA stage and notice dates, and the official measure text. Output: one row per project showing the matching statutory category with the section cited, the square-footage test where mixed use applies, whether the review is pending, the applicable deadline, and any labor requirement the category carries. Broadband, clean energy and education categories each point to Section 21183.5, and counsel should confirm the rest. An extraction tool can draft the row and quote the clause. A land-use attorney reviews it, and the development head approves any change to the schedule.

A second pass belongs in underwriting. For each eligible project, the team should keep the current schedule as the base case and model the new deadlines as a separate scenario, because the deadlines bind the agency and the courts but do not guarantee an approval. Section 21014 says the chapter does not diminish an agency’s authority to approve or disapprove. The other approvals remain too: the analyst notes many projects also need local land use changes and state wildlife or water reviews. Data center projects should stay on their existing California path in any base case. Brownstein reports that Governor Newsom signed seven data center bills this year, including SB 887 on CEQA and AB 2469 on water supply assessments, and those requirements need their own check.