A Major Turning Point in the California Housing Crisis?

A Major Turning Point in the California Housing Crisis?

By Ashley Truong and Sblend Sblendorio. Ashley Truong is a Summer Clerk with Hoge Fenton. She is pursuing her law degree and is a J.D. Candidate at U.C. Davis School of Law. Ashley earned her undergraduate degree in Neurobiology, Physiology, and Behavior at U.C. Davis.

California has taken a historic step forward in addressing its housing shortage. On June 30, 2025, Gavin Newsom signed Assembly Bill 130 and Senate Bill 131, which draw from both AB 609 and SB 607, as part of the 2025-2026 state budget. The reforms enact transformative streamlines to the California Environmental Quality Act (“CEQA”).

As the broadest CEQA exemptions ever, commentators advocate that the reforms will speed up housing and infrastructure production as well as improve affordability for all. These provisions took effect immediately.

Assembly Bill 130 exempts qualifying infill housing projects from CEQA.

• This bill is broader than the “Class 32” categorical CEQA exemption, as AB 130 is a statutory exemption not subject to disqualifying exceptions.
• There are no labor or wage standard requirements for projects up to 85 feet.
• It incorporates a new 30-day deadline for agencies to approve or disapprove qualifying projects, which is a significant change to the current law.

Senate Bill 131 limits CEQA review for housing projects that narrowly fail to qualify for a CEQA exemption.

• This includes projects that would qualify for a exemption “but for a single condition”.
• CEQA review for these projects is now limited to the environmental effects caused by the condition that precluded the ability to receive the exemption.

The legislation includes complex CEQA exemptions and both statutes contain additional reforms, which will be broken down in future analyses.