/>iOn June 30, 2025, California Gov. Gavin Newsom signed two bills into law (AB 130 and SB 131) that include reform measures to the California Environmental Quality Act (CEQA).
CEQA, a state law similar to the National Environmental Policy Act and originally enacted in 1970, requires California state and local agencies to analyze and disclose potential environmental impacts of proposed development projects. Various stakeholders have raised concerns that CEQA contributes to California’s housing shortage and affordability crisis, with some arguing that the process causes delays or halts projects that have already met local environmental and zoning standards.
AB 130 creates a new statutory housing exemption under CEQA that differs from existing urban infill categorical exemptions. SB 131 provides additional CEQA exemptions for specific project types meeting certain criteria and establishes streamlined environmental review for housing projects that narrowly miss qualifying for an existing exemption under CEQA. Effective immediately, AB 130 and SB 131 may reduce approval times for qualifying residential and mixed-use projects and accelerate housing development in California.
AB 130: CEQA Statutory Exemption for Infill Housing
AB 130 exempts from CEQA review qualifying infill housing developments, i.e. new development projects on un-or-underutilized land within an existing development scheme, that meet local planning and zoning standards and are not located on hazardous or environmentally sensitive sites. Unlike prior exemptions, AB 130 does not (i) require affordable housing (although the local government’s inclusionary standards may still apply), (ii) require payment of prevailing wage (except for buildings over 85 feet in height and certain projects in San Francisco), (iii) cap the number of units in a project, or (iv) require proximity to major public transit facilities. AB 130 also accommodates up to 20-acre sites and is an absolute “statutory” exemption that excludes a project from CEQA consideration regardless of the potential for environmental impacts. It is not subject to disqualifying exceptions to the exemption like, for example, a Class 32 categorical exemption for infill development.
Specifically, to qualify for the AB 130 CEQA exemption, projects must meet all of the following criteria:
| 1. | Project Type. The exemption is available for all “housing development projects” as defined in Government Code section 65905.5(b), which includes single-family residences, multi-family communities, mixed-use developments, transitional housing, and farmworker housing. Hospitality uses (e.g., hotels, motels, and other temporary or “transient lodging”) do not qualify for the CEQA exemption under AB 130. |
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| 2. | Site Area. Project site must be under 20 acres in size (or five acres for “builder’s remedy projects,” as defined in Government Code section 65589.5(h)(11)). |
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| 3. | Location. Project site must be located in an incorporated municipality or urban area as defined by the U.S. Census Bureau. |
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| 4. | Urban Infill. Project site must be developed with “urban uses” or substantially surrounded by “urban uses.” (“Urban uses” means any current or previous residential or commercial development, public institution, or public park that is surrounded by other urban uses, parking lot or structure, transit or transportation passenger facility, retail use, or any combination of those uses.) |
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| 5. | General Plan and Zoning Consistency. Project must be consistent with the local general plan and zoning standards and any appliable local coastal program. |
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| 6. | Minimum Density. Project’s density must be at least 50% of the jurisdiction’s minimum density required by the State Housing Element Law (Government Code section 65583.2(c)(3)(B)), which ranges from 10 units per acre in unincorporated nonmetropolitan counties to 30 units per acre in incorporated metropolitan counties. |
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| 7. | Historic Resources. Project must not require the demolition of a historic structure that was placed on a historic register before the project’s preliminary application was submitted. |
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| 8. | Other Site Characteristics. Project must not be located in specified areas of the coastal zone or in certain environmentally impacted or sensitive areas. |
If a site qualifies for this new CEQA exemption, the ordinary CEQA environmental review – which may include the preparation of lengthy environmental studies, public notice and participation requirements, evaluation of multiple alternatives to the development plan(s), and implementation of environmental mitigation or offset measures – is not required. A project proponent must merely complete a Phase I Environmental Site Assessment (ESA) in accordance with American Society for Testing and Materials standards. If such Phase I ESA identifies a Recognized Environmental Condition, related mitigation measures will be required notwithstanding the CEQA exemption. However, additional, unrelated environmental studies may not be required under the CEQA exemption.
SB 131: Streamlined Review for Qualifying Housing Projects
SB 131 provides additional CEQA exemptions for specific project types meeting certain criteria and establishes streamlined environmental review for housing projects that narrowly miss qualifying for an existing exemption under CEQA. Where a proposed housing project would otherwise qualify for a CEQA exemption but for a single condition, SB 131 limits the review required under CEQA solely to the environmental impacts that single condition may cause. Other aspects of the proposed project do not have to be assessed in this streamlined review. In addition to the foregoing, SB 131 also provides an exemption to CEQA review for rezoning actions by municipalities, so long as the rezoning contains an approved housing element.
SB 131 does not apply to housing projects that:
| 1. | Are “not similar in kind” to projects that typically qualify for the exemption; |
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| 2. | Fail to satisfy a CEQA exemption due to the presence of two or more conditions; |
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| 3. | Include a distribution center; |
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| 4. | Include oil or gas infrastructure; or |
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| 5. | Are on natural and protected lands. |
Takeaways
Taken together, AB 130 and SB 131 aim to alleviate the regulatory and administrative burden on housing projects that CEQA imposes in order to increase the availability of housing and development of infrastructure projects in California. More projects may be constructed in California as compared to prior years.
