Riders to California's budget aim to reduce housing and infrastructure delays
The long-standing third rail of California politics, the California Environmental Quality Act ("CEQA"), has finally been touched, in a major win for proponents of the anti-NIMBY "Yes In My Back Yard" movement ("YIMBY"). On Monday, June 30, 2025, Governor Gavin Newsom signed into law Assembly Bill 130 and Senate Bill 131, a duo of budget trailer bills that enact some of the farthest-reaching CEQA reform since the law was signed by then-Governor Ronald Reagan in 1970, and nearly a decade after then-Governor Jerry Brown attempted to pass similar reforms in 2016. The emphasis that both Governor Newsom and YIMBY legislators put on passing these reforms make it clear that the state of California is making a clear policy choice to expedite housing development, reduce protracted studies and development challenges, and generally respond to those who are seeking to ease the housing crisis and critical development roadblocks.
Critically, these reforms will reshape the development landscape in California—particularly for housing developers, infrastructure investors, some industrial users, and municipalities. If you have a project that has been slowed by CEQA hurdles, or if you're considering new investment in infill or high-density housing, broadband, clean energy, or advanced manufacturing, now is the time to align your strategy with California's newly honed priorities. The reformed legal framework should accelerate approvals, reduce risk, and get projects to ground-breaking faster.
The two bills enact a number of reforms to CEQA and other relevant statewide development laws and regulations, including:
- Enacting multiple new CEQA pathways for infill housing development and other necessary infrastructure, including high-speed rail facilities, utilities, broadband, farmworker housing, childcare facilities, and wildfire prevention work. Key to this effort is the infill housing exemption, which is similar, but more expansive, than CEQA's existing Class 32 categorical exemption.
- Exempting rezoning actions that implement a municipality's approved housing element from CEQA compliance, thereby allowing cities and counties to prioritize housing development.
- Expanding the applicability of the Permit Streamlining Act previously only enjoyed by ministerial projects to include any housing development that requires a local agency entitlement, regardless of whether the approval is ministerial or discretionary.
- Promoting industrial redevelopment in existing industrial zones for both community-facing projects (like food banks) and future-forward manufacturing projects (any "advanced manufacturing" facility under Public Resources Code section 26003, including those for micro- and nano-electrics, semiconductors, and advanced materials).
- Modifying California Coastal Commission permitting requirements to be in line with other state agencies and limiting the scope of certain coastal housing development appeals.
- Maintaining residential building standards through 2031 to provide a stable regulatory platform for housing stock buildout.
- Establishing a statewide "vehicle miles traveled" ("VMT") mitigation bank to increase investment in urban infill development and transit infrastructure, and allow developers greater flexibility in meeting CEQA mitigation requirements.
While some of these exemptions are obviously designed to ease the regulatory morass of housing and infrastructure developments, they do not entirely erase other applicable design and review processes at the state and local levels and will require careful navigation to ensure that any project fits within this new CEQA framework.
Next Steps
Over the next few weeks, we'll break down key elements of these reforms and keep close tabs on their success—or failure—in allowing critical housing and industrial development to move forward at a pace faster than the usual snail's crawl. If you're considering a project that may benefit—or wondering how these changes apply—stay tuned or reach out to the authors.
