On June 30, 2025, Governor Newsom signed AB 130 and SB 131 into immediately effective law as budget trailer bills, marking a historic effort to accelerate housing production and to reform the CEQA review process that has been stifling housing and other essential projects across California. These landmark laws effect substantial changes intended to streamline the approval process for infill housing and essential infrastructure projects by establishing clearer timelines, reducing procedural hurdles, and expanding CEQA exemptions tailored to support sustainable development. While AB 130 largely focuses on improving and clarifying the entitlement process for housing projects, SB 131 adds CEQA exemptions and streamlining for a diverse set of projects and actions.
A brief analysis of some key aspects of these important new laws follows below:
Assembly Bill 130
New Statutory Exemption for Infill Housing Development Projects up to 20 Acres
AB 130 enacts a new CEQA exemption codified at Public Resources Code section 21080.66 for infill housing on sites of up to 20 acres in size, an exemption originally found in AB 609 (Wicks) prior to its incorporation into this budget bill. (Unfortunately, projects eligible under the builder’s remedy or Government Code section 65589.5(d)(5) are subject to a reduced 5-acre limit.) This new statutory CEQA exemption for infill housing projects applies to qualifying sites (which do not include environmentally sensitive, hazardous, or conservation sites, as defined by SB 35 in Government Code section 65913.4(a)(6)) located within incorporated city limits or in U.S. Census Bureau-defined urban areas. In order to utilize this CEQA exemption, sites must:
- Be either previously developed with or predominantly surrounded by urban uses, with defined adjacency formulas;
- Be consistent with either the general plan or zoning ordinance (only one is required in case of conflict and consistency will be found if substantial evidence would allow a reasonable person to make that finding); and
- Meet at least 50% of the minimum density for housing element sites under Government Code section 65583.2(c)(3)(B) (the so-called “Mullin density”), which sets minimum densities for lower-income housing. (For most suburban/urban areas, this results in a minimum requirement of 10-15 units per acre to qualify.)
The exemption can’t be used for projects involving the demolition of historic structures that were listed on a federal, state or local register prior to submittal of a preliminary application. Additionally, to qualify for this exemption, a mandatory but expedited tribal consultation process is required. Within 14 days of deeming a housing application complete (or determining CEQA exemption eligibility), local governments must notify all traditionally affiliated California Native American tribes. Tribes then have 60 days to request consultation, which must begin within 14 days of the agency’s receipt of the Tribe’s notification that it is requesting consultation, and conclude within 45 days (subject to one 15-day extension at the Tribe’s request). Project conditions must include binding cultural protections agreed upon in the consultation, and other provisions require a Sacred Lands Inventory request and cultural records search.
Conditions of approval for exempt projects must also require a Phase I Environmental Site Assessment, and, if contamination is suspected, a Preliminary Endangerment Assessment, with removal and mitigation of any hazardous substances releases to current federal and state standards also being required.
Additionally, some labor standards apply, including prevailing wage requirements for all workers on 100% affordable housing projects and buildings over 85 feet in height. (In San Francisco, projects with 50 or more units must also pay prevailing wage regardless of height.)
For exempt housing projects on sites located within 500 feet of a freeway, buildings are required to have centralized HVAC with outdoor intakes facing away from the freeway, no balconies facing the freeway, and MERV 16 air filtration replaced at designated intervals.
New Fee-Based Mitigation Option for Vehicle Miles Traveled (VMT)
AB 130 allows developers, with lead agency approval, to mitigate significant vehicle miles traveled (VMT) impacts to a less-than-significant level by contributing to the state’s Transit-Oriented Development Implementation Fund, which was originally established in 2006 by SB 1689 and helps to fund and facilitate VMT-efficient projects. The fee methodology will be established by the Governor’s Office of Land Use and Climate Innovation (“LCI”), which must release initial guidance by July 1, 2026, and adopt final rules by January 1, 2028. While this new law offers a potential state-level fee-based mitigation pathway, it unfortunately does not in its current form prevent municipalities from layering additional fees and exactions on a project to mitigate VMT. Because cities and counties retain discretion under the new law – albeit consistent with established nexus and rough proportionality principles – to impose additional or alternative VMT mitigation, including local impact fees or site-specific measures, the new pathway has some problematic aspects. It may streamline and simplify project approvals and VMT mitigation in some jurisdictions but be ignored—or layered with new costs—in others. This local discretion creates some uncertainty, limiting the provision’s potential utility as a statewide CEQA VMT solution. Accordingly, this is an area that seems ripe for future clean up legislation to further clarify the nature and operation of this fund and the interplay between contributions to the fund and local fees and requirements; it will also be important to monitor LCI’s process in establishing implementation guidance in order to gauge how useful this new mitigation tool may prove to be.
Speeding up the Development Process
AB 130 also introduces various changes to laws governing how cities and counties process housing development projects, aiming to speed up approvals, reduce unnecessary delays, and provide greater clarity for applicants. These include, but are not limited to:
- Indefinitely extending the law limiting public hearings to no more than five on housing development projects that meet objective zoning and planning rules once the application is complete, by removing existing law’s current sunset date on the five-hearing limit as to such projects.
- Removing the sunset or inoperative dates of various other Housing Accountability Act (HAA) and Permit Streamlining Act (PSA) provisions and definitions that benefit and expedite the processing of housing development projects.
- Providing that all housing development projects requiring any preliminary entitlement, whether ministerial or discretionary, are covered by the PSA’s protections.
- Newly subjecting the California Coastal Commission to the PSA’s deadlines for responsible agency review and approval or disapproval of housing development projects.
- Indefinitely extending the requirement that municipalities decide if a housing project site is historic at the time of application completeness.
- Removing the sunset on the requirement that municipalities must maintain a public list of all required application materials for housing projects and allowing project applicants to request a non-binding fee estimate, which must be provided within 30 business days.
- Further tightening some PSA decision deadlines, which require lead agencies to approve or deny projects within certain timelines based on environmental review type – generally 180 days following CEQA compliance, but shortened to 90 days for qualifying housing projects and now as little as 30-60 days for smaller or affordable projects.
- Clarifying that the PSA’s time limits are maximums, not minimums, and that if public hearings or notices aren’t provided on time, applicants can compel agency action through legal writs, and projects may be deemed approved if agencies fail to meet deadlines.
Freezing Building Codes
AB 130 also introduces important changes to the building code compliance process for residential construction to encourage housing development by providing greater certainty to project applicants. These and related changes include:
- Limited Local Changes: From October 1, 2025 through June 1, 2031, cities and counties generally cannot amend locally adopted-by-reference versions of state residential building codes.
- Strict Code Adoption Rules: The California Building Standards Commission cannot adopt new residential building standards during this period except for emergencies, wildfire safety updates, or to meet federal requirements.
- Permit Protections: Building codes in effect at the time of permit submission will remain locked in, protecting projects from changes after applications are filed. Local ordinance changes only apply to permits submitted after their effective date, except in emergencies.
Making Certain Housing Projects Eligible for ELDP Certification
- Expanding California’s Environmental Leadership Development Projects (ELDP) to include certain infill housing developments that invest at least $15 million and dedicate a minimum of 15% of units to lower-income households. These projects must meet environmental standards, such as LEED Gold certification, and comply with prevailing wage requirements. Among the benefits of these Leadership projects is a faster, streamlined judicial review process with CEQA challenges required to be resolved within 270 days. California’s ELDP projects have previously been limited to major projects like stadiums and large hotels; AB 130 now extends these benefits to qualifying housing developments of a more modest nature.
Senate Bill 131
CEQA Exemptions for Various Housing, Infrastructure and Other Projects
Numerous new or extended CEQA exemptions are provided for specific types of projects, including:
- Rezonings that implement the schedule of actions in an approved housing element, except when rezonings would allow distribution centers, oil and gas infrastructure, or construction on natural and protected lands, as defined;
- Wildfire risk reduction projects, such as prescribed burns, vegetation clearance near evacuation routes, defensible space improvements, and fuel breaks, as specified and limited;
- Agricultural employee housing;
- Water system improvements and small-scale water and wastewater projects for small or disadvantaged community water systems;
- Broadband deployment within existing public road rights-of-way;
- Updates to the state climate adaptation strategy, and certain public parks and nonmotorized recreational trails projects;
- Day care centers (outside residential zones), small rural health clinics, nonprofit food banks on industrial land, and advanced manufacturing in industrial zones;
- Certain high-speed rail maintenance and passenger facility projects;
Streamlined Review for Nearly Exempt Projects
SB 131 also establishes a limited CEQA review process for housing development projects, as defined by the HAA, that are disqualified from a statutory exemption or from specified categorical exemptions due to not satisfying a single condition of the exemption. This streamlined or limited review for such “near-miss” projects would focus only on the environmental effects caused by the specific condition that triggered the disqualification, and would not require analysis of project alternatives or growth-inducing impacts, which would reduce review time and complexity.
However, because there may be some ambiguity around precisely what constitutes a “single condition,” which could lead to differing interpretations among agencies and project applicants, this new provision could potentially benefit from clean up legislation or some form of authoritative guidance.
CEQA Administrative Record Contents
CEQA’s administrative record statute is revised (see new Pub. Resources Code, § 21167.6(e)(10)(B)(i)-(iii)), except with respect to distribution center and oil and gas infrastructure projects, to exclude internal agency communications (including emails) not presented to the final administrative body “other than those communications and documents consulted, or reviewed by the lead agency’s executive or a local agency executive… or other administrative official in a supervisory role who is reviewing the project.” This revision essentially excludes internal agency communications in CEQA litigation challenging most types of projects from mandatory inclusion in the record, with the exception of communications with a city manager or similar executive or official.
Mapping of Eligible Infill Sites by Office of Land Use and Climate Innovation
The Office of Land Use and Climate Innovation will be tasked with mapping eligible urban infill sites by 2027 and regularly updating CEQA infill guidelines that promote sustainable, transit-oriented development aligned with state climate goals. The new law prescribes a detailed process whereby cities and counties can provide input, and the office’s maps and guidelines must be updated at least every two years.
Conclusion and Implications
With the enactment of AB 130 and SB 131, California’s budget package marks a significant shift in the state’s housing and CEQA landscape. Together, these two bills appear to reflect growing mindsets geared toward “Abundance,” prioritization of production over process, and expediting the kinds of projects that the state so desperately needs to get built.
However, these laws leave open questions: How are project applicants supposed to successfully navigate the complex world of VMT mitigation? What exactly is a “single condition” for purposes of the new CEQA streamlining for “near-miss” projects? Further legislative clean up or administrative guidance may help answer these and other questions.
Also, and despite the significance of these new pro-housing laws, what former Governor Jerry Brown called “the Lord’s work” (i.e., comprehensive CEQA reform) remains unfinished. While these budget trailer bills clearly represent the most robust legislative effort to reform CEQA in decades, they are still mostly of the “Swiss cheese” exemption/special legislation variety, albeit with larger “holes” that clearly benefit a much broader range of favored projects. For example, conspicuously absent from SB 131 was the elimination of the “fair argument” standard of review proposed in Senator Weiner’s predecessor bill, SB 607. Still, keeping in mind that the “perfect” – achieving broader CEQA reform through bolder fundamental structural revisions – should not be the enemy of the “very good,” these new laws are just cause for celebration among benefitted housing and other developers and the land use practitioners who represent them.
