Governor Signs Budget Trailer Bills for CEQA Reform on Housing, Infrastructure, Public Parks and Trails, and Wildfire Risk Reduction Projects

07.21.2025

On June 30, 2025, Governor Gavin Newsom signed Assembly Bill 130 (“AB 130”) and Senate Bill 131 (“SB 131”) into law. AB 130 and SB 131 are “Budget Trailer Bills”, which amend existing law to implement policies included in the State’s Budget Act. The changes enacted through AB 130 and SB 131 became effective on June 30, 2025, because trailer bills take effect immediately.

In a press release, the Governor’s office, declared that AB 130 and SB 131 “include a comprehensive streamlining package that breaks down long-standing development barriers, modernizes [California Environmental Quality Act (“CEQA”)] review for critical housing and infrastructure, and creates new tools to speed up production, reduce costs, and improve accountability across the state.”

This alert highlights some of the bills’ changes to CEQA.

New Statutory Exemption for Housing Projects

AB 130 exempts housing development projects (as defined) from CEQA if the project meets certain conditions. Some of the conditions include the following:

The project site is not more than 20 acres.
The project site meets either the following criteria:
1. is located within the boundaries of an unincorporated municipality or
2. is located within an urban area as defined by the United States Census Bureau.
The project will be at least one-half of the applicable density.
The project does not require the demolition of a historic structure (as defined).

For projects over 85 feet in height, the labor requirements in Government Code Section 65913.4(a)(8) apply, including the payment of prevailing wage as determined by the California Department of Industrial Relations and employment of a “skilled and trained construction workforce.” Prevailing wage requirements also apply to projects consisting of 100% affordable housing. Projects of 50 units or more in San Francisco also have additional labor requirements.

Water Infrastructure and Disadvantaged Communities Exemption Extension

SB 131 exempts, through January 1, 2030, a project, as defined in Public Resources Code Section 21080.47, that is a community water system that is funded pursuant to the Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024 or the State Water Resources Control Board’s Safe and Affordable Funding for Equity and Resilience program that does not otherwise include any construction activities if the project (1) results in long-term net benefits to climate resiliency, biodiversity, and sensitive species recovery and (2) includes procedures and ongoing management for the protection of the environment.

As amended, Public Resources Code Section 21080.47(a)(6)(A) now includes the following definition of “project”:

“(A) ‘Project’ means either of the following:

(i) A project that consists solely of the installation, repair, or reconstruction of one or more of the following:

(I) Drinking water groundwater wells with a maximum flow rate of up to 250 gallons per minute.

(II) Drinking water treatment facilities with a footprint of less than 2,500 square feet that are not located in an environmentally sensitive area.

(III) Drinking water storage tanks with a capacity of up to 250,000 gallons.

(IV) Booster pumps and hydropneumatic tanks.

(V) Pipelines of less than three miles in length in a road right-of-way or up to seven miles in length in a road right-of-way when the project is required to address threatened or current drinking water violations.

(VI) Water service lines.

(VII) Minor drinking water system appurtenances, including, but not limited to, system and service meters, fire hydrants, water quality sampling stations, valves, air releases and vacuum break valves, emergency generators, backflow prevention devices, and appurtenance enclosures.

(ii) A project to provide sewer service to a disadvantaged community served by one or more inadequate sewage treatment systems.

(B) ‘Project’ does not include either of the following categories of projects:

(i) Facilities that are constructed primarily to serve irrigation or future growth.

(ii) Facilities that are used to dam, divert, or convey surface water.”

In addition, SB 131 extends the existing CEQA exemption for small, disadvantaged community water projects from 2028 to 2032. The bill also expands the definition of an eligible “project” to include sewer service to a disadvantaged community served by one or more inadequate sewage treatment systems, as specified above in Public Resources Code Section 21080.47(a)(6)(A)(ii).

Public Parks and Nonmotorized Recreational Trail Facilities

SB 131 exempts “any activity or approval necessary for or incidental to planning, design, site acquisition, construction, operation, or maintenance of public park or nonmotorized recreational trail facilities funded in whole or in part by the Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024.”

New Wildfire Risk Reduction Projects Exemption

SB 131 also exempts the following wildfire risk reduction projects from CEQA:

A prescribed fire or fuel reduction to reduce wildfire risk (as described), excluding projects located on coastal sage scrub habitat or any other sensitive habitat (the project can be up to 50 acres and must be located within one-half mile of a subdivision of 30 or more dwelling units), with environmental safeguards.
Defensible space fire clearance projects (as described).
The establishment or enhancement of residential home hardening or defensible space for wildfire risk reduction within 200 feet of a legal structure located in a high or very high wildfire hazard zone.
Fuel breaks (as described).

CEQA – Streamlining and Record of Proceedings

SB 131 further exempts rezoning actions that implement the schedule of actions in an approved housing element, with certain exceptions.
Additionally, SB 131 creates a “single-condition CEQA review” process for housing projects that are disqualified from a categorical or statutory exemption due to a single condition. SB 131 also removes environmental impact report requirements to analyze alternatives and growth-inducing impacts for these limited-review projects.
Except for a project that includes a distribution center or oil and gas infrastructure, SB 131 excludes staff notes from the record of proceedings. SB 131 also clarifies that “internal agency communications does not include electronic internal agency communications, including emails, that were not presented to the final decision making body, other than those communications and documents consulted, or reviewed by the lead agency executive or a local agency executive, as defined in subdivision (d) of [Government Code] Section 3511.1, or other administrative official in a supervisory role who is reviewing the project.”

The changes in AB 130 and SB 131 reflect the State Legislature’s efforts to streamline housing development and infrastructure projects. Given their immediate effect, nuanced changes, and significant policy implications, we encourage public agencies and private developers to work with legal counsel to determine the applicability of the new exemptions and procedural rules to current and planned projects. If you have questions about your obligations under these changes to the law, or about the contents of this alert, please contact the authors of this alert or your usual AALRR counsel.

Special thanks to our law clerk, Elyse Capelli, for her assistance with this alert