Recent CEQA Amendments: Meaningful Solutions or More Window Dressing?

On June 30, 2025, California Governor Gavin Newsom signed two bills into law: Assembly Bill 130 and Senate Bill 131. Both laws amend the California Environmental Quality Act (CEQA), effective immediately. The intended purpose of these CEQA reforms is to facilitate the construction of more housing and streamline the approval of certain key infrastructure projects. 

AB 130 seeks to incentivize urban infill housing development by exempting from the requirements of CEQA certain residential developments. To qualify for the CEQA exemption, the project must dedicate at least two-thirds of the square footage for residential use, unless the project proposes at least 500-net new residential units and be located within the boundaries of an incorporated municipality or within an urban area. (The Governor’s Office of Land Use and Client Innovation is directed to prepare a map of eligible urban infill sites by July 1, 2027.) Provisions of the Government Code regulating land development, such as compliance with California law regarding wetlands, fire, earthquake, and flood hazard zones, among many others, will still apply.

Nonetheless, the beneficial impacts of a CEQA exemption should not be discounted. A CEQA exemption is a statutory exemption (versus a categorical exemption), meaning that it will not be subject to CEQA’s panoply of disclosure requirements and technical studies, with the possible exception of a biological resources survey. This can be expected to streamline the approval process and save the developer time and money. Theoretically, that should translate into lower housing costs. On the other hand, the burden of satisfying the conditions of the CEQA exemption could discourage some infill projects from going forward.

While the provisions of AB 130 have been touted by its supporters as real solutions to California’s notorious housing shortage (or crisis, depending on one’s point of view) by expediting CEQA approvals, the numerous conditions attached to the streamlining incentives may lead real estate industry observers to question whether AB 130 will do much to alleviate the shortage and affordability of housing in urban markets. Furthermore, this recently enacted legislation will undoubtedly be tested in the courts resulting in rulings which could constrict or invalidate some of the law’s favorable provisions. 

SB 131 creates new or extended CEQA exemptions for certain infrastructure projects the Legislature and the Governor deem of critical importance to the future economic development of California. Examples include water system improvements, wastewater projects, broadband improvements, rural health clinics, and agricultural employee housing. As with AB 130, qualifying projects may be exempt from certain CEQA disclosure requirements. 

These statutes are two more in a long series of attempted reforms of CEQA in recent years that, judging by the ongoing acute shortage of affordable housing, appear to have been more window dressing than true reform. With the ink hardly dry on these new laws, it remains to be seen how meaningful they will be in reducing California’s urban housing shortage.