Two newly enacted California Environmental Quality Act (CEQA) reform laws (AB 130 and SB 131) would significantly impact California’s infill housing sector. Our Environment, Land Use & Natural Resources Group unpacks what developers and other stakeholders need to know about the changes.
- AB 130 creates a CEQA exemption for qualifying infill housing and expands housing streamlining provisions
- SB 131 introduces nine CEQA exemptions for infrastructure, community-serving facilities, and climate resilience projects
- Both bills include new limits on public hearings, judicial review timelines, and building standard updates
On June 30, 2025, Governor Newsom signed Assembly Bill 130 and Senate Bill 131 into law, finalizing a broad legislative package intended to address permitting and approval delays under the California Environmental Quality Act (CEQA). While AB 130 focuses primarily on housing development and local permitting processes, SB 131 targets infrastructure, public facilities, and procedural CEQA changes. The bills aim to streamline environmental reviews by introducing exemptions and timelines, while preserving key safeguards and adding new labor and oversight requirements.
AB 130: CEQA Exemptions for Infill Housing and Expanded Housing Streamlining
Assembly Bill 130 introduces a CEQA exemption for qualifying infill housing developments that meet local zoning and planning standards and are not located on hazardous or environmentally sensitive sites. Projects that qualify are not subject to CEQA environmental review. The bill includes limitations that preserve protections for historic structures, tribal cultural resources, and hazardous materials assessment.
AB 130 also establishes a statewide vehicle-miles-traveled mitigation program, allowing developers to fulfill transportation-related mitigation obligations by contributing to the development of location-efficient affordable housing or related infrastructure.
In addition, the bill allows certain housing developments to seek expedited judicial review under the Jobs and Economic Improvement Through Environmental Leadership Act. The eligibility thresholds for these projects have been adjusted to accommodate smaller-scale investments and allow alternative methods for greenhouse gas compliance.
Beyond CEQA, AB 130 codifies several streamlining measures for housing approvals:
- Expands the Permit Streamlining Act to include ministerial housing projects and makes related timelines permanent.
- Caps the number of public hearings for qualifying housing projects at five.
- Makes permanent provisions of the Housing Accountability Act and Housing Crisis Act, including the builder’s remedy.
- Removes certain California Coastal Commission appeal rights for specific residential development proposals.
AB 130 also includes a moratorium on the adoption of new or more restrictive residential building standards at both the state and local levels. Effective from October 1, 2025 through June 1, 2031, the moratorium does not apply to updates related to emergencies, fire safety, or conservation.
The bill includes provisions related to housing finance, enforcement, and tenant support. These include the creation of an affordable housing default reserve account, a mechanism for extracting equity from properties with affordability covenants (subject to reinvestment), and an expansion of the renters tax credit—subject to future appropriations. The bill also requires local governments to conduct annual inspections of homeless shelters and submit compliance reports to the state. Failure to comply may result in the withholding of state funds.
SB 131: New CEQA Exemptions for Infrastructure and Community-Serving Facilities
Senate Bill 131 creates new CEQA exemptions for specific project types, including:
- Health centers and rural clinics.
- Childcare centers.
- Food banks.
- Farmworker housing (new and existing repairs).
- Advanced manufacturing facilities.
- Clean water and sewer projects in disadvantaged communities.
- Broadband deployment in public rights-of-way.
- Public parks and nonmotorized recreational trails.
- Wildfire risk mitigation projects (subject to conditions).
The bill also exempts rezoning actions that implement the schedule of actions in an adopted housing element, with certain limitations. For housing projects that are disqualified from existing CEQA exemptions based on a single condition within the exemption, SB 131 limits the scope of required environmental review to that specific effect. The bill does not apply this narrowed review framework to projects with multiple disqualifying conditions or projects involving oil, gas, or distribution center uses.
SB 131 also extends and clarifies several existing CEQA exemptions. These include an extension of CEQA relief for certain water and sewer projects through January 1, 2032, an expanded exemption for broadband projects in public rights-of-way, and exemptions for high-speed rail maintenance facilities and climate adaptation strategy updates.
The bill also directs state agencies to improve CEQA infill site mapping and update implementation guidelines to reduce litigation risks and clarify the application of exemptions.
Labor Requirements for Covered Projects
SB 131 requires housing projects to meet specific labor standards to qualify for CEQA exemptions. Public agency projects are required to use a skilled and trained workforce unless covered by a qualifying Project Labor Agreement (PLA), while private projects must certify prevailing wage payments and workforce standards, include these in all contracts, and submit monthly compliance reports—unless all contractors are under a PLA with arbitration enforcement. These provisions may increase labor costs and impose additional compliance obligations for qualifying projects.
Next Steps for Stakeholders
With this CEQA reform package now in effect, stakeholders across all sectors are encouraged to review their policies, permitting practices, and development plans to identify necessary adjustments under the new laws.
Specifically, local governments may need to revise ordinances, update permit processing procedures, and train staff to implement changes introduced by AB 130 and SB 131. This includes adjustments to zoning, building standards, shelter enforcement policies, and housing element reporting.
Developers should assess whether current or planned projects may qualify for CEQA exemptions or streamlined approval processes. Internal compliance procedures, entitlement strategies, and project feasibility assumptions may need to be updated considering the new statutory framework.
Homeowners associations (HOAs) should consider updating CC&Rs and enforcement policies to reflect changes in state housing law, including rules related to accessory dwelling units (ADUs), penalties, and fines.
Lastly, ongoing monitoring of agency guidance, regulatory updates, and local implementation will be important in the months ahead. Stakeholders should therefore consider documenting policy updates, monitoring forthcoming state implementation guidance, and maintaining open lines of communication with local officials and legal counsel.
We continue to monitor these developments and will provide further updates as they emerge.
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