California Enacts CEQA Reforms to Expedite Housing Development

On June 30, 2025, California Governor Gavin Newsom signed into law Assembly Bill 130 (AB 130) and Senate Bill 131 (SB 131), enacting significant reforms to the California Environmental Quality Act (CEQA). These measures aim to expedite housing development by streamlining environmental review processes for certain urban "infill" projects.

CEQA, established in 1970 under Governor Ronald Reagan, mandates that state and local agencies assess and disclose the environmental impacts of their actions, including development approvals. While designed to protect the environment, CEQA has been criticized for causing delays and increasing costs in housing development due to lengthy review processes and litigation.

AB 130 introduces a new statutory exemption from CEQA for qualifying infill housing projects up to 20 acres, provided they meet specific criteria such as compliance with local zoning laws and absence from sensitive habitat areas. Additionally, the bill imposes a 30-day deadline for agencies to approve or disapprove qualifying projects, a significant change from previous timelines.

SB 131 streamlines CEQA review for housing projects that narrowly fail to qualify for an exemption, limiting the review to the environmental effects caused by the condition that precluded the exemption.

Governor Newsom emphasized the urgency and importance of reforming CEQA to address California's housing crisis. He stated, "This isn't just a budget. This is a budget that builds. It proves what's possible when we govern with urgency, with clarity, and with a belief in abundance over scarcity."

Proponents argue that these changes will streamline development and reduce costly legal delays, thereby increasing housing supply and affordability. However, environmental groups like Sierra Club California criticize the bills for potentially harming vulnerable communities and endangered species.

The reforms are part of Governor Newsom's broader strategy to address California's housing crisis by reducing bureaucratic obstacles and accelerating construction in urban areas. The changes occur amid soaring home prices and a concerning population decline that could cost California congressional seats.

This legislative move reflects a significant shift in California's approach to balancing environmental protection with housing development. Previous attempts to reform CEQA have faced substantial opposition, making this overhaul particularly noteworthy. The effectiveness of these reforms in balancing environmental protection with the need for increased housing development will be closely monitored in the coming years.