The California Legislature took another big swing to promote housing development in battling the continuing housing crisis when it passed Assembly Bill 130 (AB 130) and Senate Bill 131 (SB 131) earlier this year.

AB 130 and SB 131, signed into law on June 30, 2025, represent some of the most significant reforms to California Housing Law and the California Environmental Quality Act (CEQA) in recent years.

These laws took immediate effect upon signing, meaning housing providers and developers can begin using the new exemptions and streamlined processes as of July 1, 2025.

The key benefits for residential housing developers include a broader statutory CEQA exemption and streamlined approval under AB 130, as well as additional statutory exemptions and a “Near-Miss” provision under SB 131.

These benefits include:

AB 130 CEQA Exempt Projects

AB 130 contains streamlined review and a CEQA Exemption substantially broader than the Class 32 Infill CEQA Exemption routinely applied to infill housing development projects. The AB 130 Exemption applies to housing development projects, which include single-family developments, multifamily projects, mixed-use projects where at least two-thirds of the square footage of the project is dedicated to residential use, and transitional and supportive housing, that meet the following specific environmental and planning criteria.

  • Urban Context Flexibility: The housing development infill site (which under Class 32 had to be within City limits) now includes any urban site previously developed or 75% surrounded by urban uses.
  • Larger Project Size: AB 130 applies to project sites up to 20 acres in size (instead of the 5-acre maximum under Class 32). Builder’s Remedy projects using the AB 130 Exemption are capped at 5 acres.
  • Applicable Housing Projects/State Density Bonus Law: AB 130 applies to all housing development projects, as defined above, and excludes only hospitality/lodging uses and designated historic structures. AB 130 does not affect the eligibility of a housing development project to receive a density bonus, concessions, incentives, or waivers under the State Density Bonus Law.
  • Easier Approval Process: Applicable AB 130 Projects are subject to a Ministerial Review Process without CEQA review, but the project must be consistent with the applicable general plan and zoning ordinance, meet objective zoning and planning standards, not be located on historic or certain sensitive sites (e.g., floodways, prime farmland, wetlands, fire zones), and comply with labor requirements for projects of a certain size.
  • Strict Timing Limits: Local governments must determine whether an application is complete within 30 days of submittal. Once the application is deemed complete, the agency must approve or disapprove the project within 60 days (the total maximum time from application submittal to final decision is 90-120 days depending on the size of the project).
  • Other Tribal, Environmental Site Assessment, and Labor Requirements: Tribal consultation under AB 52 must begin early in the planning process to qualify for the AB 130 Exemption—specifically, within 14 days after the lead agency determines that a project application is complete. AB 130 requires all housing projects, as a condition of approval, to complete an environmental assessment for hazardous substances and implement measures to remove or reduce any discovered environmental conditions. In addition, 100% affordable housing projects must pay workers prevailing wages and projects with buildings over 85 feet in height must also use a skilled and trained workforce.
  • Statutory Exemption: Further strengthening the impact of the AB 130 is that AB 130 is a Statutory CEQA Exemption. Unlike a Categorical Exemption (like Class 32) which can be challenged under certain conditions, CEQA does not apply at all for statutory exemptions and statutory exemptions generally receive substantial deference from courts, when challenged.

SB 131 CEQA Exemptions and “Near-Miss” Provision

  • SB 131 also benefits developers by creating nine new CEQA exemptions for various infrastructure and public service projects, and introduces a “near-miss” provision allowing partial CEQA exemptions for projects, including housing development projects, that meet all but one exemption criterion for statutory exemptions or specified categorical exemptions (e.g., Classes 1 through 5, 12, 15, 20, 27, 30, or 32).
  • “Near Miss” Provision: For a housing development project that meets a CEQA exemption for all but one criterion, any CEQA review for the project would focus only on the environmental impacts related to the missed criterion. An example of the “near miss” provision would be where a housing provider proposes a project that meets all aspects of the new infill exemption, except that the project would require demolition of a designated historic structure. In such case, any CEQA review would focus only on the environmental impacts related to the demolition of the historic structure.

Other CEQA Reforms

  • AB 130 expands the method for mitigating significant Transportation/Vehicle Miles Traveled (VMT) impacts with an option to contribute to a state managed fund.
  • A local government’s rezoning (typically upzoning) of land to implement its “approved” housing element is now exempt from CEQA.
  • AB 130 strengthens the development of ADUs as part of a housing development project by prohibiting local governments from imposing standards on ADUs beyond state law requirements.

These new laws include additional CEQA reforms and further detail for implementation.

See also: CEQA Reform Client Alert – July 1, 2025