California Enacts Major Reforms to Environmental Quality Act

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 streamline the development of housing and infrastructure projects by modifying CEQA's environmental review processes.

AB 130 introduces a statutory exemption from CEQA for qualifying infill housing projects that meet specific criteria. To be eligible, projects must be 20 acres or less (or five acres for builder’s remedy projects), located in incorporated cities or urban areas, consistent with applicable general plan and zoning ordinances, and meet minimum residential density requirements. Additionally, projects must avoid demolition of historic structures, not be situated on hazardous sites or sensitive lands, and comply with labor requirements, including prevailing wage payments for 100% affordable projects and the use of a skilled and trained workforce for buildings exceeding 85 feet in height.

AB 130 also establishes a statewide Vehicle Miles Traveled (VMT) Mitigation Bank, allowing developers to satisfy transportation-related CEQA mitigation requirements by funding location-efficient affordable housing and infrastructure projects. Furthermore, the bill imposes a freeze on building code standards applicable to new residential units until June 2031, with exceptions for emergency, fire, and conservation-related updates.

SB 131 provides CEQA exemptions for various project types, including health centers and rural clinics, childcare centers, food banks, farmworker housing, advanced manufacturing facilities, clean water and sewer projects in disadvantaged communities, broadband deployment in public rights-of-way, public parks and non-motorized recreational trails, and wildfire risk mitigation projects. The bill also exempts rezoning actions that implement the schedule of actions in an adopted housing element, with certain limitations. For housing projects that narrowly fail to qualify for a CEQA exemption, the required environmental review is limited to the specific effect that precluded the exemption.

Governor Newsom described these reforms as "the most significant overhaul of California's housing and environmental review laws in decades," emphasizing their role in accelerating housing production and infrastructure development.

The California Environmental Quality Act, enacted in 1970, requires state and local agencies to assess and disclose the environmental impacts of their actions and to mitigate those impacts when feasible. Over time, CEQA has been criticized for being used to delay or obstruct development projects, contributing to California's housing shortage and affordability crisis.

Supporters of the reforms argue that these changes will streamline development processes, reduce costly legal delays, and address the urgent need for housing. Ben Metcalf of UC Berkeley's Terner Center for Housing Innovation described the exemptions as "almost certainly the most significant rollback of CEQA for housing since it passed" and stated they "will unambiguously reduce the time frame" for development.

Opponents, including environmental groups like Sierra Club California, warn that the rollbacks could undermine essential protections for wildlife, biodiversity, and vulnerable communities. They express concern that the exemptions may lead to environmental degradation and reduced public oversight.

The enactment of AB 130 and SB 131 represents a pivotal shift in California's approach to balancing development and environmental protection. As the state grapples with a housing crisis and the aftermath of recent wildfires, these reforms aim to expedite essential projects while maintaining environmental safeguards. The long-term impact of these legislative changes will depend on their implementation and the state's ability to address the concerns of all stakeholders involved.