California’s CEQA Reforms Offer Narrow Exemptions — With One Powerful Exception

The California legislature recently passed SB 131 and AB 130, two bills designed to streamline environmental review under the California Environmental Quality Act (CEQA). While publicly touted as significant CEQA reform, the legal impact is more constrained, offering little relief for most industrial, commercial, or logistics-related development. SB 131 does, however, significantly expand the Governor’s discretionary power to designate certain large-scale private projects for streamlined CEQA treatment, offering potential opportunity for selected developers.

SB 131: Targeted CEQA Exemptions for Projects Aligning with State Goals

SB 131 introduces a series of narrow CEQA exemptions and procedural streamlining tools for projects aligned with specific infrastructure, climate, and housing goals of state and local governments. Rather than implementing broad-based reform, the law selectively exempts specific types of projects from full CEQA review or from certain procedural requirements.

Under the new law, CEQA exemptions or litigation streamlining measures apply to certain types of projects in the following key categories (excluding government-related project categories):

• Advanced manufacturing (as defined in Pub. Res. Code § 26003)
• Infill housing developments
• High-speed rail and broadband infrastructure
• Community water and sewer projects
• Public-serving facilities like childcare centers, community clinics, and food banks

The inclusion of advanced manufacturing could open a streamlined path for life sciences, high-tech, and clean-tech manufacturers. As defined, advanced manufacturing includes semiconductor and microelectronics production, additive manufacturing and nanotechnology, and advanced materials and industrial biotech processes.

SB 131 also:

• Narrows the availability of information in litigation by allowing internal agency communications to be excluded from the CEQA administrative record. Notably, the law excludes oil and gas infrastructure and distribution centers from these provisions.
• Limits review for certain proposed projects that would otherwise be statutorily or categorically exempt from CEQA but for the existence of a single factor for inclusion in the exemption not being met—where CEQA review must be limited to only the environmental effects caused by that single condition. Still, only certain housing development projects may use this limitation.

AB 130: Statutory Exemption Limited to Infill Housing

AB 130 creates a narrow statutory CEQA exemption for certain infill housing developments. To qualify, a residential or mixed-use housing project must meet detailed requirements, focused around ensuring the development constitutes infill development. The exemption excludes contaminated sites, projects involving wetlands impacts, and certain projects that would require the demolition of currently occupied housing, thereby further limiting the scope of the new exemption.

Yet, among the more consequential — and potentially underreported — changes in AB 130 is a new provision that allows the Governor to certify projects as “Environmental Leadership Development Projects” under a streamlined CEQA review framework. This authority revives and broadens a prior legislative framework, enabling the Governor to confer CEQA streamlining on large-scale private projects that align with the state’s policy goals and meet efficiency standards. Eligible project types include those with at least $100 million in construction investment that meet specified requirements, including clean energy projects or those having a residential, retail, commercial, sports, cultural, entertainment, or recreational use.

These projects may benefit from faster timelines and narrowed administrative requirements, potentially positioning this process as a powerful — if selective — relief valve for politically important or state-priority developments.

Key Takeaways

While SB 131 provides meaningful streamlining for some housing, infrastructure, and public interest projects, it offers no benefit to industrial developers, such as those building warehouses, logistics hubs, or oil and gas-related facilities. These sectors remain fully subject to CEQA’s documentation and litigation requirements. While AB 130 likewise focuses on housing development, the gubernatorial discretion provided in this new law affords a potentially useful avenue for projects that meet state and local priorities.

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