The California Environmental Quality Act (CEQA) has long shaped the state’s development landscape, often entangling projects in lengthy permitting and litigation processes. That landscape has now shifted dramatically. In a bold effort to address California’s housing crisis and spur economic growth, Governor Newsom signed AB 130 and SB 131 into law on June 30, 2025, marking the most significant overhaul of CEQA in decades.
AB 130 establishes a broad exemption from CEQA for infill multi-family residential and mixed-use developments. To qualify, projects must be code-compliant, in an urban area, and located on a site that is no larger than 20 acres. Notably, and in a major departure from past exemptions, for most projects under 85 feet in height, AB 130 does not impose affordable housing, labor, or wage requirements as conditions for exemption. However, projects involving the demolition of historic structures or located in sensitive areas, such as fire hazard zones, wetlands, or hazardous waste sites, are excluded.
This new exemption is similar to, but more litigation resistant than, the existing “Class 32” categorical exemption for infill housing. As for other exemptions created by regulation, a Class 32 exemption may be overturned if there are “unusual circumstances” associated with the project that may create environmental impacts. Project opponents have often used the “unusual circumstances” argument to derail infill projects, or at least tie them up in years of litigation. AB 130 eliminates this strategy by creating a statutory exemption, which cannot be overturned based on unusual circumstances. In this way, the new law creates greater certainty and lowers the litigation risk associated with infill housing projects.
SB 131 reinforces the pro-development intent of these reforms, making clear that “CEQA should not be used primarily for economic interests, to stifle competition, to gain competitive advantage, or to delay a project for reasons unrelated to environmental protection.” The bill broadens CEQA exemptions to include an array of other socially beneficial project types, including childcare centers, health clinics, food banks, farmworker housing, broadband infrastructure, water systems, parks, and advanced manufacturing facilities.
Importantly, SB 131 also introduces a streamlined CEQA review for infill housing projects that narrowly miss qualifying for a full exemption. Rather than triggering an exhaustive environmental review, agencies must now focus only on the specific environmental impacts related to the disqualifying criterion. This eliminates a key procedural choke point.
And in a change that will bring developers further relief, SB 131 now imposes a firm 30-day deadline for public agencies to approve or disapprove a qualifying project. This marks a striking departure from the often open-ended review timelines that have historically stalled development. By introducing real deadlines, the legislature has added teeth to the CEQA reforms, reducing uncertainty and signaling a strong push toward project delivery and accountability.
These sweeping reforms aim to eliminate long-standing bottlenecks in urban infill and infrastructure development—factors often blamed for California’s soaring housing costs and sluggish economic expansion. Coupled with recent changes to federal environmental regulations, AB 130 and SB 131 promise a smoother, more predictable path to project approval, and they’re effective immediately. That means qualifying projects still in the permitting pipeline could now be exempt from CEQA, provided clearance hasn't yet been completed.
At Venable, we have extensive experience guiding clients through all phases of development, from site planning and entitlement to CEQA compliance, litigation, and project implementation. If you have questions about how these reforms may affect your current or future projects, please contact your Venable advisor or reach out to any member of our Environmental or Land Use teams.