On June 30, 2025, California Governor Gavin Newsom signed two budget trailer bills into law, AB 130 and SB 131, containing significant reforms to the California Environmental Quality Act (“CEQA”). Among those reforms is a new exemption from CEQA’s environmental reporting requirements for urban “infill” housing development projects meeting certain requirements. Notably, compared to some prior legislative attempts to reform CEQA, these requirements are less stringent.
In order to qualify for the new exemption, the development must either be an all-residential project or a primarily residential mixed-use project. The project site must be 20 acres or less (or not more than 5 acres if a builder’s remedy project), and located within an incorporated city or urban area. Additionally, the project must be an infill project, meaning the site must either have been previously developed with an urban use or is substantially surrounded with such uses, which include residential, commercial, and public institutional uses, as well as parking lots, transit facilities, and public parks surrounded by other urban uses. A project does not qualify if it would require demolishing a historic structure or is located in sensitive areas, which include certain sites located in the coastal zone, designated hazardous waste sites, sites with wetlands or habitat for protected species, and sites within a very high fire hazard severity zone, delineated earthquake fault zone, or special flood hazard area, unless otherwise excepted.
Qualifying projects must also meet a certain minimum density, which for most projects will be either 10 or 15 units per acre, and must be consistent with the relevant jurisdiction’s general plan and zoning code. However, if the jurisdiction’s general plan and zoning are inconsistent with one another, a project is deemed consistent with both if it is consistent with either one.
The law also includes provisions requiring project proponents to pay prevailing wages to all construction workers and to utilize a skilled and trained workforce, but for most projects other than 100% affordable projects, these provisions only apply if the project exceeds 85 feet in height.
Qualifying projects are also subject to a tribal consultation requirement. The consultation process includes notifying each California Native American tribe affiliated with the project site of the project and the right to consultation. Each affiliated tribe then has 60 days to request consultation with the local government reviewing the project. Consultation must conclude within 45 to 60 days of initiation and may require, as conditions of project approval, enforceable agreements between the project proponent and the tribes, onsite tribal monitoring during ground-disturbing activities, and other requirements related to protection of tribal cultural resources.
Finally, while the exemption allows project proponents to avoid the stringent environmental reporting requirements imposed by CEQA, project proponents must still complete a phase I environmental assessment of the site. If certain environmental hazards are found to exist, additional assessments or mitigation may be required prior to issuance of the certificate of occupancy.
The new laws also provide CEQA exemptions for other projects, including rezonings to implement actions contained in an approved housing element. They also eliminate the sunset clause of SB 330 and makes permanent the pro-housing provisions of that law.
Additionally, the new laws impose a six-year pause on residential building code changes (with limited exceptions) and authorize the establishment of a vehicle miles traveled mitigation bank fee (subject to adoption of state guidance).
Please contact Rutan if you have questions about CEQA reform, or its implications
