On June 30, 2025, California Governor Gavin Newsom signed into law significant amendments to the California Environmental Quality Act (“CEQA”). These changes have important consequences for local governments, developers, environmental advocates, and other stakeholders. After years of debate over CEQA reform, the Governor conditioned his budget on the passage of a package of changes incorporated into budget bills AB 130 and SB 131. The amendments to CEQA took effect immediately on June 30, 2025.

AB 130 exempts from CEQA infill housing developments of 20 acres or less that meet local zoning, density, and objective planning standards. Infill is defined to include sites previously developed with residential, commercial, public institutional, transit, retail, or any combination of such uses. The exemption does not apply if the project requires demolition of a historic structure listed on a historic register, if the project site is located in an environmentally sensitive area, or if the project would be located on a listed hazardous waste site. Further requirements to protect air quality apply for development within 500 feet of a freeway. Importantly, and after significant back-and-forth, the final version of AB 130 also requires certain tribal consultation processes.

SB 131 establishes several new CEQA exemptions, including for parks, wildfire risk mitigation projects, health centers, daycare centers, food banks, advanced manufacturing facilities, updates to the State’s climate adaptation strategy, and high-speed rail stations and maintenance facilities. It also extends and expands existing exemptions for broadband and community water systems with climate and biodiversity benefits that are funded through specified programs. Reliance on any of the above CEQA exemptions must be supported by “substantial evidence” that the criteria is met. California courts review for substantial evidence in a manner deferential to the CEQA lead agency.

In addition, SB 131 streamlines the amount of environmental review required for housing projects that would qualify for a CEQA exemption but for a single unmet condition. While CEQA previously required a full environmental review of all resource areas under such circumstances, the legislative changes make it such that only the impacts associated with the one condition need be analyzed. Projects involving a warehouse distribution center or oil and gas infrastructure are not eligible for this streamlining measure.

Finally, SB 131 requires the Governor’s Office of Land Use and Climate Innovation to map sites for eligible infill development by July 1, 2027.

Key takeaways from these reforms include:

·         As amended, CEQA may offer developers of infill housing and other newly exempt projects an opportunity to speed up the environmental review process.

·         Developers and local governments seeking to rely on these CEQA exemptions will need to remain vigilant about specific requirements of the new exemptions. In particular, tribal consultation requirements will remain very important.

·         The amendments will not entirely eliminate litigation risk, costs, and delays; project approvals based on the new exceptions may be challenged, though such challenges will be subject to the deferential “substantial evidence” standard.

·         Projects with greater potential for environmental impact (whether due to size or location), will remain subject to CEQA’s typically robust environmental review requirements.

·         Interested stakeholders should closely monitor the process for and results of the upcoming infill development mapping process to be carried out by the Governor’s Office.

Please contact Wil Mumby or Matt Adams with any questions about CEQA’s requirements.