Introduction
This week, California enacted the most significant reforms to the California Environmental Quality Act (CEQA) since the mid-1970s. On June 30, Governor Gavin Newsom signed Senate Bill 131 and Assembly Bill 130 into law, effective immediately. These laws will streamline or exempt new project categories from CEQA review and reduce litigation risks across the state.
These unprecedented changes mark a significant shift in how CEQA will shape project timelines and risk profiles for developers, public agencies, and regulated industries. The new framework also raises important questions about the future impacts on environmental protections and environmental justice communities throughout the state.
Key Takeaways
1. SB 131: Exemptions for Priority Projects and Streamlined Procedure
The legislative reforms in SB 131 create new CEQA exemptions for projects deemed critical to California's affordability and climate resilience goals. Where housing projects narrowly fall outside of an exemption by a single criterion, SB 131 limits environmental review to that issue.
CEQA exemptions apply to qualifying projects within the following categories:
- Urban infill housing
- Rezoning for housing elements already reviewed under CEQA
- High-speed rail
- "No build" water efficiency infrastructure (excluding the Delta Conveyance)
- Advanced manufacturing and semiconductor facilities
- Broadband and utilities
- Climate adaptation strategy
- Wildfire risk mitigation
- Childcare centers, health clinics, farmworker housing, public parks, and food banks
Lawmakers designed these exemptions to expedite project approvals that align with local plans and environmental goals, thereby reducing the need for environmental impact reports (EIRs), shielding qualifying projects from CEQA-based litigation, and avoiding associated delays.
SB 131 also streamlines CEQA litigation. For example, in most cases, it eliminates from CEQA administrative records internal agency emails among non-supervisory personnel, if the emails were not presented to the final decision-making body. This narrowing of administrative records will reduce the cost and delay associated with many CEQA-related legal challenges.
2. AB 130: Exemption for Infill Development
To address California's housing crisis, AB 130 specifically implements a broad exemption from the CEQA review process for infill housing – or new housing projects on land in existing urban areas.
To qualify for this exemption, projects must meet housing density thresholds, be located on a site of not more than 20 acres, comply with local zoning and density standards, and not involve the demolition of historic structures. As a condition of approval for projects approved under this exemption, the approving agency must require the developer to complete a Phase I Environmental Assessment, remediate any hazardous substances found on the site, and, for projects within 500 feet of a freeway, require specified air filtration and ventilation measures.
This exemption has major implications for urban redevelopment as it eliminates one of the most prominent barriers to housing projects in California.
3. Environmental Justice Considerations
While the reforms are designed to accelerate urgently needed development, they will also eliminate CEQA's public environmental-review-and-comment process for many urban infill projects located in or near environmental justice communities disproportionately burdened by pollution and underinvestment.
To address these considerations, AB 130 includes provisions that require environmental investigations and cleanup of such project sites, as well as mitigation of hazards from surrounding properties and activities. These will create opportunities for (1) developers to proactively engage with local stakeholders about such cleanups and mitigation measures and (2) stakeholders to litigate if they believe developers have fallen short.
Looking Ahead
In the coming months, expect the California Natural Resources Agency to issue guidance and implementation rules related to the CEQA reforms. In the meantime, regulated entities and public agencies should:
- Review project eligibility under the new exemptions
- Update internal CEQA checklists and workflow protocols
- Engage legal counsel early to assess compliance and litigation strategies
The 2025 CEQA reforms represent a bold shift in California's approach to balancing environmental review with the urgent need for projects focused on expanding housing, infrastructure, and climate resilience. For the regulated community, these changes offer both new opportunities and responsibilities to ensure compliance when seeking these exemptions.
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