Major CEQA Reform Bills Exempt Variety of Residential and Nonresidential Projects

On June 30, 2025, Governor Gavin Newsom signed AB 130 and SB 131, enacting major reforms to the California Environmental Quality Act (CEQA). Together, these bills create ten new CEQA exemptions aimed at fast-tracking housing, childcare, water infrastructure, climate resilience and adaptation, broadband, health clinic and advanced manufacturing development projects. The goal of the bills, and the exemptions they introduce, is to reduce permitting delays and costs for housing and other critical community-serving projects. Both bills passed with strong bipartisan support, as well as the support of housing advocates, local governments and business leaders.

AB 130

AB 130 creates a new statutory CEQA exemption for infill housing development projects that meet local zoning, density and objective design criteria, and that are not located in an environmentally sensitive area or on a hazardous site. The exemption borrows the definition of “housing development project” from the Housing Accountability Act, which includes projects that are solely residential-only as well as mixed-use projects where at least two-thirds of the project’s square footage is designated for residential use, or where at least 50 percent of the square footage is dedicated to residential use and the project includes at least 500 dwelling units. The statutory exemption is added to the Public Resources Code in new section 21080.66.

While State CEQA Guidelines, section 15332, already provides a categorical exemption for infill development projects, this new statutory exemption is much broader and can apply to projects on up to 20 acres; although, for builder’s remedy projects, project sites cannot exceed five acres. Because this is a statutory exemption, and not a categorical one, use of this new exemption would also not be limited by the “exceptions” to the exemptions found in State CEQA Guidelines, section 15300.2, such as the cumulative impact exception, the unusual circumstances exception or the location exception. 

Other criteria that must be met to invoke the new statutory exemption include, but are not limited to:

• Projects must be located within the boundaries of an incorporated municipality;
• The project site must have been previously developed with an urban use;
• At least 75 percent of the perimeter of the project site must adjoin parcels developed with urban uses; and
• At least 75 percent of the area within one-quarter mile of the project site must be developed with urban uses.

The bill also makes substantive changes to how tribal consultation and prevailing wage laws apply to projects invoking the new statutory exemption. Regarding tribal consultation, the bill changes some of the timing requirements and deadlines that apply to the consultation process and requires certain binding conditions of approval designed to address potential impacts to tribal resources. In regard to labor standards, the bill requires that construction workers be paid a prevailing wage for projects that are 100 percent affordable and the use of a skilled and trained workforce for buildings that are greater than 85 feet in height. 

AB 130 takes effect immediately. 

SB 131

SB 131 amends CEQA with numerous new statutory exemptions applicable to a variety of residential and nonresidential developments, removing the requirement that public agencies undertake environmental review before approving these types of projects. These new exemptions include, but are not limited to:

• Any rezoning action that implements an approved housing element, with specified exceptions;
• Certain agricultural employee housing projects;
• Certain wildfire risk reduction projects, such as defensible space clearance and fuel breaks;
• Public park acquisition, construction, operation or maintenance projects;
• Day care centers not located on natural or protected lands;
• Certain health center projects;
• Passenger rail stations for high-speed rail;
• Linear broadband projects located within public rights-of-way; and
• Projects that consist exclusively of a facility for advanced manufacturing, generally defined as “manufacturing processes that improve existing or create entirely new materials, products, and processes through the use of science, engineering, or information technologies.” 

These new statutory exemptions are now codified in Public Resources Code, sections 21080.085, 21080.44, 21080.48, 21080.49, 21080.51, 21080.55, 21080.57, 21080.69 and 21080.70.

SB 131 also amends Public Resources Code, section 21080.1, to include a “near miss” provision. This new provision establishes that where a proposed housing development project would otherwise be exempt from environmental review under any statutory or certain categorical exemptions “but for a single condition detailed” within the exemption, any required environmental review “shall be limited to effects upon the environment that are caused solely by that single condition.” This is the first time CEQA has expressly permitted this type of analysis, and it is expected that the Governor’s Office of Land Use and Climate Innovation will need to weigh in with guidance and best practices on how this provision will be implemented in practice. 

SB 131 takes effect immediately. 

If you have questions regarding how these changes to CEQA may affect your land development project, please reach out to or your relationship partner.