[co-author: Shanna Borek-Klempfner]
Much is discussed every year in the Legislature about how the California Environmental Quality Act (“CEQA”) needs reform. But the calls for change nearly always fail, aside from a few tinkering changes. This year is different. Via some deft political maneuvering to bypass the typical roadblocks to reform, major changes to CEQA have been enacted that will exempt numerous categories of projects and allow for a streamlined process for critical housing projects. The two bills are arguably the most significant change to CEQA in many years.
Background
CEQA was adopted by the California legislature in 1970 and requires state and local agencies to follow protocols for environmental analysis and disclosure. The environmental analysis process has many benefits in terms of disclosure and transparency, but it can also be very costly and time consuming. And CEQA is often used nefariously as a tool to block or otherwise get extractions from a project.
Changes to CEQA
On June 30, 2025 Governor Gavin Newsom signed into law two bills, Assembly Bill 130 (“AB 130”) and Senate Bill 131 (“SB 131”). AB 130 exempts most infill housing developments from review under CEQA, while SB 131 exempts ten other types of projects.
AB 130
The exemption under AB 130 applies to housing development projects 20 acres or less in urban areas, which have either been developed or are surrounded by urban uses. Residential only and certain mixed-use projects qualify as “housing development projects” under Government Code Section 65589.5(h)(2). Developers are still required to follow local coastal programs and relevant zoning and plan ordinances. There is no affordable housing requirement. AB 130 requires minimum residential density requirements of five units per acre in unincorporated rural counties, 10 units per acre in suburban areas, or 15 units per acre in cities. Projects may not demolish historic structures and must avoid hazardous sites and sensitive lands (e.g., prime farmlands, wetlands).
Additionally, housing developers who meet specified conditions may seek expedited judicial review under the “Jobs and Economic Improvement Through Environmental Leadership Act,” streamlining CEQA benefits. A condition of eligibility for the housing development project is no net increase in greenhouse gases, including emissions from employee transportation. AB 130 authorizes housing developers to show their project is consistent with the most recent scoping plan adopted by the state board as an alternative to the greenhouse gas condition.
AB 130 does not provide exemptions for temporary lodging, like hotels or bed and breakfasts. Developers must still consult with local tribes and include mitigation for tribal cultural resources. Developers might be required to prepare an environmental assessment on hazardous substance releases with mitigation requirements based on the consultations. Finally, developers must comply with environmental hazard and air filtration standards if within 500 feet of a freeway.
SB 131
SB 131 provides exemptions (with caveats) for a litany of other projects, including: (1) agricultural employee housing; (2) wildfire risk reduction activities; (3) disadvantaged community water systems; (4) some public park and trail projects; (5) climate adaption planning updates; (6) day care centers; (7) food banks; (8) advanced manufacturing facilities; (9) rural health clinics; and (10) facilities supporting high-speed rail.
SB 131 also creates a streamlined CEQA process for housing development projects that barely miss a CEQA exemption due to a single condition. In such circumstances, SB 131 limits CEQA review to such environmental effects caused by the condition, waiving the need for analysis of project alternatives, total impact, and developmental effects. This provision does not apply to projects with multiple reasons to disqualify for an exemption, distribution centers, oil and gas structures, or protected lands.
Lastly, SB 131 makes CEQA litigation more efficient by narrowing the administrative record. Staff notes and internal agency communications (including emails) are no longer required in the record if the materials were not presented to the project’s final governing body. There are limited exceptions to this new change.
Key Takeaway
Both AB 130 and SB 131 bring about important changes to CEQA that could allow project proponents to save time and money. These changes may also lead to increased housing development, specifically in urban areas. These changes are effective immediately, so it is off to the races.
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