Two legislative bills recently signed into law by Gov. Gavin Newsome will significantly impact the CEQA review and exemption process.
On June 30, 2025, Governor Gavin Newsom signed Assembly Bill 130 and Senate Bill 131 into law, marking a major shift in how California handles environmental review. Taking effect immediately, the new legislation introduces key exemptions under the California Environmental Quality Act (CEQA), for housing developments and other priority projects, streamlining approvals, cutting delays, and advancing the state’s goals for housing, climate resilience, and equitable growth.
Overview of AB 130
AB 130 creates a streamlined permitting process for housing on infill sites up to 20 acres. The bill aims to balance the urgent need for new housing with the state’s responsibility to protect the environment. Because the legislation was part of the budget process, its provisions took effect immediately, creating a powerful new exemption from the California Environmental Quality Act (CEQA) that can be utilized now.
Housing developments built in undeveloped areas often leave a larger environmental footprint due to increased transportation emissions, building material consumption, new highway construction, energy use, habitat destruction, and other impacts. In contrast, development in mixed-use, urban areas—often referred to as infill housing sites—is considered more environmentally beneficial, helping reduce pollution and other impacts on climate, air, water, and wildlife habitats.
Under AB 130, housing projects that meet specific conditions will benefit from a streamlined CEQA review and approval process. The bill creates a new statutory infill exemption that dramatically expands existing exemptions—such as the commonly used Class 32 categorical exemption—by allowing qualified projects on sites up to 20 acres, compared to the current 5-acre limit.
This is a statutory exemption, meaning that if a project qualifies, it is absolute and not subject to the exceptions that typically apply to categorical exemptions.
New Statutory Infill Development Exemption Qualifications Under AB 130
By adding Section 21080.66 to the Public Resources Code, AB 130 provides a new avenue to streamline the CEQA approval process by establishing a statutory exemption for housing development projects in urban areas that meet a defined set of criteria, including, but not limited to:
- 20 acres or less (except site for builder’s remedy projects, limited to 5 acres).
- On infill sites, either previously developed with an “urban use” or surrounded by at least 75% of their perimeter by existing urban uses.
- Consistent with applicable general plan and zoning requirements.
- At least one-half applicable density specified in the Housing Element Law to accommodate low-income housing accommodations.
- Not excluded from eligibility for streamlining or ministerial approvals.
- Does not include the demolition of a historic structure on a national, state, or local historical register.
- No portion deemed complete in 2025 or later designated for use as a hotel or other transient lodging.
Balancing Urgency with Oversight: Safeguards Within AB 130
While AB 130 significantly streamlines CEQA review for qualifying infill housing projects, it does not eliminate environmental oversight altogether or fully exempt projects from all review and documentation. The exemption includes several important requirements to ensure that lead agencies and the state continue to uphold environmental protections, including:
- Compliance with specified labor standards
- Mandatory consultation with tribes, including incorporation of mitigation measures where applicable
- Completion of a California Historical Resources Information System (CHRIS) archaeological records search and a Tribal Cultural Resources search
- Submission of a Sacred Lands Inventory request to the Native American Heritage Commission
- Preparation of a Phase I Environmental Site Assessment
AB 130 would exempt a significant number of remaining infill sites in California from environmental review, provided they are developed for residential use.
While AB 130 will not apply to every project, it represents a shift in the scope of CEQA compliance and a streamlined approach to approving certain residential projects. Specifically, it may lead to a reduction in traditional CEQA documents for residential development, as applicants and lead agencies move away from full Environmental Impact Reports (EIRs) with numerous technical studies toward more limited-scope documents focused on the topics identified in the exemption.
Creating a record to support this new exemption will still require faster response times for focused assessments, tribal consultation support, compliance checklists, and due diligence services (e.g., Phase I site assessments, consistency findings, and hazard screenings). AB 130 could mark a significant turning point in how California balances urgency and oversight.
Overview of SB 131: Authorizing Exemptions That Do Not Fully Meet Requirements
SB 131, signed into law as part of California’s 2025–2026 budget package, enacts targeted limitations on CEQA review for housing development projects that narrowly miss qualifying for a statutory or certain categorical exemptions. This new environmental streamlining mechanism allows CEQA review to be limited solely to the environmental impacts associated with the single disqualifying condition—streamlining the process while maintaining environmental accountability. Use of this “near miss” provision may lead to an increase in single-topic environmental impact reports (EIRs) that are much shorter and faster to prepare and certify than traditional EIRs.
The application of this provision is limited and does not apply to projects with multiple disqualifying conditions, those located on protected lands, or those involving uses such as distribution centers or oil and gas infrastructure.
New CEQA Exemptions under SB 131
As part of a broader initiative to streamline CEQA, SB 131 also introduces nine new statewide exemptions designed to accelerate the development of critical infrastructure, housing, and community services. These targeted exemptions aim to eliminate unnecessary procedural delays for projects that deliver significant public benefits, while still upholding essential environmental protections.
The new statutory exemptions created under SB 131 include:
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Health centers and rural clinics
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Childcare facilities
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Advanced manufacturing (semiconductor/EV plants)
- Food banks
- Farm-worker housing
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Clean-water infrastructure (excluding the Delta Conveyance)
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Wildfire risk reduction
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Broadband deployment
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Public parks and trails
Key Provisions Introduced by SB 131
SB 131 introduces a series of targeted reforms designed to streamline environmental review, enhance planning capabilities, and extend critical exemptions that support equitable infrastructure development. The legislation also includes the following key provisions:
- Infill site mapping: Requires the state to map urban infill areas by July 2027.
- Limited review alternative: For projects that narrowly fall short of qualifying for an exemption, agencies may conduct a focused, limited-scope initial study addressing only the specific area of concern, rather than undertaking a full environmental review. This approach is likely to result in a streamlined, checklist-style document tailored to the identified issue.
- Record-based litigation reform: Fewer internal communications will be subject to administrative record requirements.
- Extensions to existing exemptions: Extends clean water and wastewater project exemptions for disadvantaged communities to 2030/2032
Navigating AB 130 and SB 131: Key Takeaways for Developers
California’s AB 130 and SB 131 mark a potential shift in the CEQA landscape, offering new pathways for streamlining housing development while maintaining critical environmental and cultural safeguards. AB 130 introduces a powerful CEQA exemption for qualifying infill housing projects while mandating rigorous due diligence — particularly through Phase I ESAs and tribal consultation processes.
For developers, these changes present both opportunity and responsibility. Navigating the nuanced eligibility criteria, environmental assessments, and cultural resource protections requires more than just awareness — it demands expertise. Partnering with a knowledgeable, trusted third-party sustainability consultant is essential to ensure compliance, avoid costly delays, and fully leverage these new exemptions. With the right guidance, developers can move forward confidently, building responsibly and efficiently in California’s evolving regulatory environment.
FirstCarbon Solutions (FCS), an ADEC Innovation, has extensive experience in navigating CEQA streamlining exemptions and can help stakeholders ensure they are compliant amidst evolving regulations.
