California Enacts Major Changes to CEQA and State Housing Laws

July 7, 2025

CEQA Changes

On June 30, 2025, Governor Newsom signed two bills – AB 130 and SB 131 – that include wide-ranging changes to the California Environmental Quality Act (CEQA) and notable amendments to state housing laws. This article summarizes these changes, which became effective immediately. The new laws will significantly change how public agencies, developers, and community groups engage with state and local permitting processes.

Single-Condition Exemption: SB 131 allows streamlined environmental review for housing development projects that nearly miss qualifying for a statutory or categorical exemption under CEQA. Under previously existing law, a project may be exempt from CEQA if (1) it meets all the elements of a statutory exemption created by the Legislature or a categorical exemption adopted through the regulatory process, and (2) no other provision of law, like an exception to an exemption, requires CEQA analysis.

Public Resource Code 21080.1 now provides that, if a housing development project that would otherwise be exempt from CEQA “but for a single condition” detailed in the relevant exemption, CEQA’s application to the housing approval “shall be limited to the effects upon the environment that are caused solely by that single condition.” Specifically:

• An initial study or EIR need only examine effects that the lead agency determines are caused solely by the single condition; and
• An EIR need not include any discussion of alternatives or growth-inducing impacts of the housing project.

The exemption applies only if the relevant nearly missed exemption is:

• A statutory exemption, or
• One of the listed categorical exemptions in section 21080.1(b)(1), which are Class 1-5, 12, 15, 20, 27, 30, or 32 exemptions.
  • The law also provides that a single condition may include a condition listed in 14 CCR 15300.2. This regulation includes categorical exemption exceptions for location, cumulative impacts, unusual circumstances, scenic highways, and categorical waste sites.

The project must qualify as a housing development project, which includes all-residential projects and specific mixed-use projects as outlined in Government Code section 65589.5(h)(2). Generally, a mixed-use project must dedicate as housing at least two-thirds of its square footage, or half its square footage for specific large projects, to qualify.

This single-condition exemption also does not apply if housing development project is:

• Not similar in kind to projects in the relevant exemption;
• Ineligible for the exemption due to two or more conditions;
• Also comprised of a distribution center or oil and gas infrastructure; or
• Located on natural and protected lands as provided in section 21067.5, which is a new code section added by SB 131 comprising specified types of sensitive land. Note that the fire severity-zone lands in that section are still eligible for the single-condition exemption.
• Note also that “housing development project” is a defined term in Government Code section 65589.5(h)(2), encompassing all-residential projects.

New Infill Exemption: AB 130 adopted a new urban infill housing CEQA exemption. Public Resources Code 21080.66 now provides that a housing project is exempt from CEQA if it meets the following conditions:

• Size: The project site is 20 acres or smaller, or for specific types of projects including builder’s remedy projects, five acres or smaller.
• Area: The project site is within an incorporated municipality or an urban area as defined by the U.S. Census Bureau.
• Urban Use: The project meets at least one urban use criterion:
  1. Has been previously developed with an urban use.
  2. At least 75 percent of the perimeter of the site adjoins parcels that are developed with urban uses.
  3. At least 75 percent of the area within a one-quarter mile radius of the site is developed with urban uses.
  4. For sites with four sides, at least three out of four sides are developed with urban uses and at least two-thirds of the perimeter of the site adjoins parcels that are developed with urban uses.
  5. Note that “urban use” means any current or previous residential or commercial development, public institution, or public park that is surrounded by other urban uses, parking lot or structure, transit or transportation passenger facility, or retail use, or any combination of those uses.
• Consistency: The project is consistent with the applicable general plan, zoning ordinance, and local coastal program. The project is considered consistent if substantial evidence would allow a reasonable person to conclude it is consistent.
• Density: The project meets density minimums, including the two most relevant minimums of 15 units/acre in urban areas and 10 units/acre in suburban areas.
• Sensitive Land: The project is not located on sensitive lands outlined in Government Code 65913.4(a)(6).
• Historic status: The project does not require demolition of a historic structure registered as such before a preliminary application for the project was submitted.
• Type of lodging: The project is not used as a hotel, motel, or bed and breakfast, unless an exception applies.

Exempt urban infill projects under AB 130 must also follow certain rules, including:

• Tribal consultation and related project conditions: The local government must provide formal notification to tribes traditionally and culturally affiliated with the project site. The notification and tribal consultation must proceed according to timelines and rules outlined in Government Code section 21080.66(b). Any enforceable agreements reached during consultation must be included as project approval conditions. Certain measures must also be included as project approval conditions unless the tribe and project proponent agree otherwise, as outlined in Government Code section 21080.66(b)(4)(B).
• Hazardous substance assessment and freeway-adjacent housing protections: The local government must condition approval on a Phase I hazardous substance study, as outlined in Health and Safety Code section 78090, including any follow-up and mitigation procedures outlined in Government Code section 21080.66(c)(1). Any housing within 500 feet of a freeway must also meet heating, ventilation, and air-conditioning rules outlined in Government Code section 21080.66(c)(2).
• Labor standards: Specific types of infill projects are subject to labor standards outlined in Government Code section 21080.66(d), including:
  • Prevailing wage requirements for construction workers employed in developing 100-percent low-income housing.
  • Prevailing wage and additional labor standards provided in Government Code 65913.4(a)(8) for buildings over 85’ above grade.
  • Prevailing wage and additional labor standards provided in Government Code 65912.130 and subsequent sections within Article 4 for projects 50 units or greater in San Francisco. These standards apply for construction workers in crafts where 50 percent of units in market-rate multifamily housing projects receiving certificate of occupancy between 2022 and 2024 were built by workers paid prevailing wages.

Housing element rezoning actions: SB 131 creates a new CEQA exemption for rezoning actions that implement the schedule of actions contained in an approved housing element. The exemption does not apply for:

• Rezoning allowing the construction of oil and gas infrastructure or a distribution center.
• Rezoning allowing construction within any natural and protected lands, as newly defined by Public Resources Code section 21067.5. This exception does not apply if the natural and protected lands are excluded from the rezoning, unless the lands are agricultural lands as defined in section 21067.5(p).

Several other CEQA exemptions: SB 131 created CEQA exemptions for several other kinds of projects. Some exemptions include exceptions for natural and protected lands, and some do not. The exemptions that do not apply on natural and protected lands include:

• Daycare centers not located in residential areas;
• Rural health clinics and federally qualified health centers, unless the facility is over 50,000 square feet;
• Non-profit food banks or food pantries that solicit, store, and distribute sufficient food to their defined service areas and are located on an industrially zoned site;
• Advanced manufacturing as defined in Public Resources Code 26003, if the project is located in an industrially-zoned site;
• High-speed rail projects that meet one of two categories:
  • The development, construction, or operation of heavy or other maintenance facilities, so long as the project is tiering off project-level EIR that evaluated a similar facility, all applicable mitigation is incorporated, and the project is within ½ mile of an approval high-speed rail right-of-way; and
  • The development, construction, or modification of proposed passenger rail stations, or design changes of passenger rail stations, if the station is within the resource study area of a previously certified EIR and the project incorporates all applicable mitigation.

Additional CEQA exemptions include:

• New agricultural employee housing funded by federal, state, or local public funding or owned or operated by a public or nonprofit entity, provided the housing meets the affordability requirements in Public Resources Code 21159.22 and the additional restrictions on type, size, operation, and funding in Health and Safety Code section 17021.8(i)(1)-(4).
• Community water system projects funded by specific state programs outlined in section 21080.48(a) and meeting the project definition in section 21080.47, provided that:
  • The project does not otherwise include construction activities;
  • The project results in long-term net benefits to climate resiliency, biodiversity, and sensitive species recovery; and
  • The project includes procedures and ongoing management for environmental protection.
  • Of note, this exemption expires January 1, 2030.
• Wildfire risk reduction projects that comply with all other laws, ordinances, and zoning requirements. The projects included in this exemption are:
  • Prescribed fire and fuel reduction to reduce fire risk by reestablishing the fire return interval appropriate to the ecosystem for biodiversity or other benefits, provided that:
    • The project is not located on coastal sage scrub habitat or any other sensitive habitat;
    • The project does not exceed 50 contiguous acres and is located within a half-mile of 30 or more residences; and
    • The project takes the consultation, design, and impact mitigation steps outlined in section 21080.49(a)(2)-(4);
  • Defensible space fire clearance up to 100 feet for public roadways identified as egress or evacuation routes for 30+ residence communities that remove flammable vegetation or trees under 12 inches in diameter;
  • Establishment or enhancement of residential home hardening or defensible space for wildfire risk reduction within 200 feet of a legal structure in a high- or very high-fire severity zone; and
  • Fuel breaks up to 200 feet from structures, including clearing flammable vegetation and trees under 12 inches in diameter.
• Broadband projects as outlined in section 21080.51.
• Updates to the state climate adaptation plan.
• Public park or trail facilities work, provided the specified work is funded by the state’s 2024 climate bond and the trails are non-motorized recreational trail facilities.

CEQA administrative record changes: SB 131 now allows an agency to exclude from the CEQA administrative record electronic internal agency communications, including emails, that were not presented to the final decision-making body, unless the communications were consulted or reviewed by a lead agency executive, local agency executive, or other supervisory administrative official. These records must, however, still be included for oil and gas infrastructure and distribution center projects.

Non-CEQA Housing Changes

New deadlines:

• A project subject to ministerial review must be approved or disapproved within 60 days, unless relevant objective design standard timelines apply as outlined in Government Code section 65950(a)(6).
• A project qualifying for the new CEQA infill housing exemption must be approved or disapproved within 30 days of the conclusion of the exemption’s tribal consultation provisions.

Limitations on local modifications to building standards: Existing law allows a city or county to make reasonably necessary changes and modifications to state building standards, including green building standards, due to local climatic, geological, or topographical conditions, subject to certain restrictions. AB 130 prevents local changes from October 1, 2025, to June 1, 2031, applicable to residential units unless an exception outlined in Health and Safety Code section 17958.5(c) applies.

Extending housing law provisions: Many elements of the Housing Accountability Act, the Housing Crisis Act of 2019, and the Permit Streamlining Act were previously subject to sunset provisions that were repealed in AB 130.

The new laws also include amendments to many other areas of state housing law not discussed here.

Stay Tuned

Public statements from state officials indicate that many new provisions of state law may be amended throughout this legislative session. Courts, public agencies, and project applicants will also have to determine how these laws interact with existing and new laws.

For more information about the effect of these new laws, contact Josh Kirmsse.