On June 30, 2025, California Governor Gavin Newsom signed two bills into law that have substantially modified the California Environmental Quality Act (CEQA) to, in large part, increase housing development in a state with a “serious housing shortage” that has resulted in especially low rates of home ownership in young adults. In a somewhat controversial move, Assembly Bill 130 (AB 130) and Senate Bill 131 (SB 131) were advanced as trailer bills to the state’s 2025 budget—maintaining some, but not all, of the CEQA reforms included in SB 607 introduced by Senator Scott Wiener early this year, as we previously reported.

AB 130 (Housing)

AB 130 (Pub. Resources Code, § 21080.66) created a new CEQA statutory exemption for housing developments with sites that are 20 acres or less, or 5 acres or less for builder’s remedy projects (see Gov. Code, § 65589.5, subd. (d)(3)), meeting certain criteria, including:

• Located in an incorporated municipality or within an urban area that has either been previously developed with an urban use or meets specific urban perimeter requirements;
• Consistent with the applicable general plan, zoning ordinances, and local coastal program (if any);
• Meeting minimum residential density requirements (5 units per acre in unincorporated county areas, 10 units per acre in suburban areas, or 15 units per acre in metropolitan areas);
• Not located on sensitive lands as defined in Government Code section 65913.4, subdivision (a)(6) (coastal zone, prime farmland or farmland of statewide importance, wetlands, high or very high fire hazard severity zone, hazardous waste site, earthquake fault zone, regulatory flood zone, etc.);
• Not result in demolition of a historic structure; and
• Not include transient lodging (hotel, motel, or bed and breakfast inn, etc.).

This CEQA change likely will result in some quicker housing approvals but will not help in circumstances where one of these many criteria cannot be met, such as the relatively common barrier to fast housing development of a site requiring rezoning from commercial or other similar use to residential.

Housing exempt from CEQA review under AB 130 must meet specific tribal consultation requirements and avoid impacting tribal cultural resources, where feasible, unless another agreement is reached with a tribe. AB 130 includes other miscellaneous requirements for phase 1 environmental assessments, housing near freeways, and construction worker rates for lower-income housing projects.

Notably, AB 130 allows a project to mitigate vehicle miles traveled to a less-than-significant level by contributing to the state’s Transit-Oriented Development Implementation Fund, originally established in 2006, using fee methodology to be established by the Governor’s Office of Land Use and Climate Innovation (LCI), formerly known as the Office of Planning and Research, which must release initial guidance by July 1, 2026, and adopt final rules by January 1, 2028. The bill also codified the so-named “Nollan/Dolan standard” deriving from two landmark U.S. Supreme Court cases—Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994)—that requires mitigation be “roughly proportional” to project impacts with a “reasonable relationship, or ‘nexus,’ ” between the impact and its mitigation, and other court-made rules that mitigation must be accomplishable “within a reasonable time frame, taking into account economic, environmental, legal, social, and technological factors. (Pub. Resources Code, § 21080.43.)

AB 130 contains non-CEQA housing provisions as well—to streamline housing approval processes, limit changes to applicable building codes for housing development, and expand California’s Environmental Leadership Development Projects, namely for housing, which already benefit from an expedited CEQA judicial review process (challenges must be resolved within 270 days).

SB 131 (Public Resources)

SB 131 (Pub. Resources Code, § 21080.44 et seq.) likewise created new statutory exemptions from CEQA review for a variety of project types: agricultural employee housing (§ 21080.44), disadvantaged community water systems (§ 21080.48), wildfire risk reduction activities (§ 21080.49), climate adaptation planning updates (§ 21080.55), specific public park and trail projects (§ 21080.57), day care centers (§ 21080.69), rural health clinics (§ 21080.69), food banks (§ 21080.69), advanced manufacturing facilities in industrial zones (§ 21080.69), and maintenance facilities supporting high-speed rail (§ 21080.70).

SB 131 also established a streamlined environmental review process for housing projects, as defined by the Housing Accountability Act, that fail to qualify for a CEQA exemption (statutory or categorical) “but for a single condition.” In these cases, CEQA review should focus on “the effects upon the environment that are caused solely by that single condition,” without the need for analysis of project alternatives, cumulative impacts, and growth-inducing effects. In other words, lead agencies need only evaluate these barely disqualifying housing projects in highly focused initial studies or environmental impact reports, with exceptions for distribution centers, oil and gas infrastructure, and projects located on “specified natural and protected lands.” It remains to be seen how lead agencies will interpret what constitutes a “single condition” and whether additional guidance from the state may be warranted for agencies unsure how to utilize this exemption.

Additionally, LCI must map “eligible urban infill sites” by 2027 (Pub. Resources Code, § 21083.03) and update CEQA Guidelines “at least once every 2 years” to “address any rigid requirements, lack of clarity in vague terminology, and the potential for excessive exposure to frivolous litigation over lead agency determinations.” The mapping of eligible urban infill sites will be especially helpful to lead agencies reluctant to apply the Class 32 urban infill categorical exemption (CEQA Guideline, § 15332) and may also help developers identify sites where their proposed projects can be streamlined and have a lesser impact on the environment.

Lastly here, SB 131 narrowed the scope of communications within a project’s “record of proceedings,” aka the administrative record, to exclude staff notes and internal agency communications (like emails) if they were not presented to the project’s “final decisionmaking body” (with some exceptions) (Pub. Resources Code, § 21167.6, subd. (e)(10)(B)(iii)), in a likely effort to reduce the size of records used in CEQA litigation and the time it takes to prepare them. While it is not uncommon in CEQA litigation for parties to voluntarily stipulate to this type of record limitation, especially as administrative records have become increasingly unwieldy, there is sure be at least some debate about which communications can be excluded under this new rule.

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These CEQA streamlining provisions join a myriad of other statutory provisions aimed at increasing housing production in the state, like SB 375 (2008) (Pub. Resources Code, § 21155) that allows expedited review for residential or mixed-use projects consistent with Sustainable Communities Strategies and SB 35 (2017) (Gov. Code, § 65913 et seq.) that created a streamlined approval process for multifamily residential projects in cities and counties not meeting their Regional Housing Need Allocation goal. None of this legislation has moved the needle toward substantially meeting California’s housing needs, due at least in part to confusion on how and when to apply these complex laws. Time will tell if this recent CEQA reform can be applied in a manner that eases the statewide housing shortage and allows younger generations to purchase houses en masse. In the meantime, CEQA practitioners would be well served to become familiar with these new provisions and determine if they might apply to pending or future client housing projects and agency approvals.

For questions regarding this topic, please contact:

For inquiries or additional information, please contact:

• Casey A. Shorrock, cshorrock@somachlaw.com

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