2025 CEQA Amendments: Enough of a Step in the Right Direction?

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2025 CEQA Amendments:

Enough of a Step in the Right Direction?

 Recognizing that, since its inception in 1970, the California Environmental Quality Act (CEQA) has been used and abused to delay the processing of development projects throughout the state, the California Legislature championed much-needed changes to CEQA through reforms in two budget trailer bills – Assembly Bill (AB) 130 and Senate Bill (SB) 131. Both bills were signed into law on June 30, 2025 and went into effect immediately upon enactment, with the goal of expediting the development approval process and addressing the state’s long-standing housing crisis.

While both bills reflect pro-housing intent and have been lauded by some media outlets as constituting a game-changing shift in California’s development policies, their practical impact remains uncertain. Only time itself will tell whether these CEQA amendments reduce procedural barriers and result in more housing units actually being built or simply add to a growing list of well-intentioned but ineffective reforms that fail to deliver real relief from burdensome regulations.

A brief summary of key highlights from AB 130 and SB 131 follows below. Each bill contains numerous, detailed provisions that require careful, project-specific analysis. As such, this summary is not exhaustive and intended only to provide a general overview. GDB attorneys are available to assist with an evaluation of whether and how these new CEQA amendments may be relevant to specific projects.

Assembly Bill 130

AB 130 provides a new statutory exemption from CEQA review for infill housing development projects within an urban area that are not more than 20 acres in size and meet certain conditions relating to location, density and use. The exemption’s eligibility criteria incorporate a laundry list of siting criteria from SB 35 (Gov. Code, §65913.4, subd. (a)(6)).  Exempt projects must be consistent with applicable local plans; however, the bill clarifies that a project’s use of the State Density Bonus Law (Gov. Code, §65915) is not grounds upon which to determine that a project is inconsistent with the applicable general plan, zoning ordinance, or local coastal program.

The bill includes tribal consultation provisions, as well as prevailing wage and labor requirements for projects meeting specified design attributes. Under AB 130, local governments also must require the development proponent to assess hazardous substance releases and, if such a condition is discovered, complete a preliminary endangerment assessment and mitigation based on that assessment.

In addition, there is now a 30-day limit for the lead agency to approve or deny a project that qualifies for the new infill exemption, which runs from the conclusion of the environmental assessment. In the event the agency fails to act within 30 days, the project is deemed approved.

On the housing law front, AB 130 repeals the January 1, 2034 sunset date for the Housing Crisis Act of 2019, which prohibits an affected county or city from enacting certain development policies, standards, or conditions with respect to land where housing is an allowable use. Thus, AB 130 extends application of the Housing Crisis Act of 2019 indefinitely. Sunset dates were also eliminated for specified Permit Streamlining Act and Housing Accountability Act provisions.

AB 130 also addresses building standards. It imposes a temporary freeze – effective October 1, 2025 through June 1, 2031 – on local governments’ ability to adopt residential building standards more restrictive than state code, including green building requirements, unless narrow exceptions apply.

AB 130 further introduces a new vehicle miles traveled (VMT) mitigation framework that could drive up housing costs. The bill directs a mitigation banking scheme under which homebuilders may offset a project’s VMT impacts by funding or facilitating affordable infill housing or related infrastructure. The Governor’s Office of Land Use and Climate Innovation (formerly OPR) is tasked to develop the methodology for this approach. If the VMT mitigation bank fee is then adopted by local governments, an applicant cannot refuse to use it as a mitigation measure.

Senate Bill 131

Returning to the theme of expedited housing and CEQA compliance opportunities, SB 131 also introduces a number of new statutory exemptions from CEQA review, including:

  • A rezoning that implements the schedule of actions contained in an approved housing element.
  • New agricultural employee housing projects and projects consisting exclusively of the repair or maintenance of an existing farmworker housing project.
  • Wildfire risk reduction projects, including, among other things, projects for prescribed fire, defensible space clearance, and fuel breaks (until January 1, 2030).
  • Public park or nonmotorized recreational trail facilities.
  • Unless located on natural and protected lands, a day care center, a federally qualified health center or a rural health clinic, a nonprofit food bank or food pantry, and a facility for advanced manufacturing.
  • A heavy maintenance facility for electrically powered high-speed rail, and passenger rail station for the purpose of serving electrically powered high-speed rail.
  • Updates to the state’s climate adaptation strategy.

SB 131 also provides for a limited CEQA review for housing development projects that do not qualify for a statutory or categorical exemption because of a single condition. For such “near miss” projects, SB 131 requires preparation of an initial study or EIR to examine the impacts that are caused by that single condition. EIRs for such projects do not need to discuss alternatives or growth-inducing impacts. Exceptions to this limited review are housing projects that are not “similar in kind” to those listed in the exemption; that miss by two or more conditions; that include a distribution center or oil and gas infrastructure; or that are located on specified natural and protected lands.

This bill further requires the Office of Land Use and Climate Innovation, on or before July 1, 2027, to develop a definition of and metrics for identifying an “eligible urban infill site” based on whether the land use designation is consistent with infill development and whether the onsite development promotes compact development to promote such goals as reduction of greenhouse gas emissions and reduction of agricultural land conversion, among others.  Then the Office will map the “eligible urban infill sites” within every urbanized area or urban cluster in the state. This requirement is intended to facilitate the use of the CEQA’s infill exemptions.

Importantly, SB 131 also addressed a few administrative matters. After the Natural Resources Agency certifies CEQA Guidelines to implement CEQA amendments pursuant to SB 131, on or before January 1, 2027, and at least once every two years thereafter, it will review and update those CEQA Guidelines to address rigid regulations and vague terminology. The purpose of this review and update requirement is to better incentivize affordable and smart infill housing growth. For CEQA challenges to any project approval, SB 131 also excludes staff notes and internal agency communications from the administrative record of proceedings, provided those materials were not presented to the final decision-making body.

[This alert does not constitute legal advice and no attorney-client relationship is created by viewing or responding to this alert. Legal counsel should be sought for answers to specific legal questions.]