Changes To CEQA In July 2025

Back in May, I wrote an action alert asking you to contact your State legislator to oppose a bill that would have made fundamental changes to the California Environmental Quality Act (CEQA). SB 607 (Wiener) would have changed the standard of review for CEQA lawsuits, making it more difficult for community members to enforce California’s bedrock environmental law. Thanks to voices like yours, that proposed change was rejected.

But Governor Newsom had made an announcement that he would not sign the budget into law unless some kind of significant CEQA reform was also enacted. SB 607 was too controversial to pass but something had to or California wouldn’t have a budget. The result was two “budget trailer bills,” AB 130 and SB 131, which contained numerous changes to the California Environmental Quality Act, some obscure and some quite dramatic. Both bills were signed into law on June 30th. So what did the bills do?

Let’s Talk About Housing

First, let’s talk about housing. California has a housing affordability crisis and a broad array of researchers agree that building new homes is a necessary part of the solution to that problem. The question then becomes “why aren’t we building enough new homes?” Many housing development advocates have long argued that the California Environmental Quality Act, by allowing neighbors to block housing development, has contributed to this problem. Defenders of CEQA counter that these claims are overblown. 

Like so many debates the truth probably lies somewhere in the middle. Can CEQA delay housing projects? Sure. An infamous local example is “Citizens for a Better Eureka" filing frivolous CEQA lawsuits in order to try to stop affordable housing from being built on city-owned parking lots. Are there other factors producing the housing shortage? Definitely. Among them are restrictive zoning ordinances, the cost of labor and materials, higher interest rates, Trump’s tariffs, and a dozen other economic factors. EPIC’s main concern is that as we build this sorely needed housing we do so in an environmentally responsible way. 

So what did these new laws change with regards to housing? First, they expanded the existing infill housing exemption for CEQA. It’s better for the environment to build new housing in existing communities rather than sprawling out into undeveloped areas. Doing so protects habitat and also reduces climate pollution by reducing commute distances. Before June 30th, CEQA already recognized this and exempted infill housing projects that met certain conditions from the law but this bill expanded those exemptions to apply to additional sites. For those who want to wade into the details, the citation is Public Resources Code section 21080.66 or you can read this blog post which does an admirable job of summarizing the requirements for the infill exemption. The upshot is that It should now be a bit easier, at least from an environmental permitting perspective, to build an apartment building surrounded by existing development in California. 

Another notable change related to housing is the so-called “near miss” rule. This was one of the changes originally envisioned in SB 607 but back then it would have applied to all projects. Now, it only applies to housing. Imagine an existing CEQA exemption requires you check five boxes and if you check all five boxes you get to use a negative declaration instead of conducting a full environmental analysis. Under the old rule, if a developer only checked four boxes the developer would have to conduct a full environmental review for the entire project. But under this “near miss” rule if you check four out of five boxes then the developer gets to conduct an environmental review focused solely on the item they missed. How exactly this concentrated environmental analysis would work is an open question.

But It’s Not Just About Housing

It wasn’t just housing that got CEQA exemptions, however. SB 131 contained quite the grab bag of CEQA exemptions that included: certain water and sewer systems for disadvantaged communities, certain wildfire risk reduction strategies, broadband, public parks and trails funded by Prop 4, daycare centers, and more. For a full list you can read SB 131 or this blog post that summarized the list of exemptions. 

Perhaps the most concerning of these exemptions is one for “Advanced Manufacturing” facilities on industrially zoned land. What is an “Advanced Manufacturing” facility? SB 131 cites to Public Resources Code 26003 which states is incredibly vague. The definition comes from a financing act that was written to decide whether or not California should finance certain projects, not whether they are environmentally impactful or not. One kind of project that pretty clearly qualifies for this exception is semiconductor manufacturing facilities. But these facilities are not without environmental impacts. Santa Clara County has 23 active superfund sites that resulted from semiconductor facilities leaking toxic chemicals, including arsenic, lead, and chloroform into local groundwater. Countless other Californians could be impacted by future semiconductor projects that face no environmental review under this new CEQA exemption.

Another problem with these exemptions is that they could inadvertently impact sensitive habitat. While the infill housing exemption was written to only permit housing in already developed areas, this laundry list of other exemptions was not. Under a normal CEQA review, mitigation is required when development impacts sensitive habitat but these exemptions would mean that that would no longer occur, leading to a loss of habitat across the State.  When environmentalists pointed this out, the legislature added a protection for “natural and protected lands” but the definition they chose for what lands qualify was far too narrow. For example, it doesn’t include lands necessary to complete Natural Community Conservation Plan/Habitat Conservation Plan reserve or preserve areas.

EPIC, along with a coalition of other environmental nonprofits are asking the legislature to fix these bills by removing the advanced manufacturing exception and changing the “natural and protected lands” definition to better protect habitat. 

What’s Next?

President Trump’s Big Beautiful bill did a lot of awful things including sunsetting tax credits for renewable energy projects much earlier than planned. Many renewable energy projects rely on tax credits in order to finance their projects and without them are far less viable.  Under the new law, renewable energy projects that would have been able to receive Tax Credits if they were built before 2033 now have to be built before 2028. That means that a whole lot of solar and wind power plants are either going to get built quicker than was previously planned or not built at all. Naturally, renewable energy developers have asked for their own environmental review streamlining specifically to meet the new deadline. The legislature has not decided whether they will take up that request.

But it’s not just renewable energy that might be getting streamlined. On July 17th, Politico reported that Governor Newsom had proposed CEQA streamlining for oil wells in existing oil fields. The language appears intended to overturn a recent court decision that held that environmental permitting for these kinds of oil wells could not be streamlined. Newsom, who wants to be President, may be trying to signal that he cares more about gas prices more than the environment. Environmental justice and climate justice groups issued a scathing press release denouncing the move, calling it a “blank check.” While CEQA reform advocates have previously made the argument that reform is necessary to permit climate friendly development like infill housing and renewable energy, no such argument can be made for oil wells. It remains to be seen whether the legislature’s recent appetite for CEQA reform can be stretched to the point of streamlining oil wells.