On June 30, 2025, a couple of months shy of the California Environmental Quality Act’s (CEQA) 55th birthday, Governor Gavin Newsom signed two budget trailer bills into law – Assembly Bill (AB) 130 and Senate Bill (SB) 131. These bills were big news in California, generating diverse headlines like California lawmakers finally achieve ‘holy grail’ reform of states’ key environmental law (Cal Matters. Commentary by Dan Walters, July 2, 2025) and From Green icon to housing villain: The fall of California’s landmark environmental law (Politico. Jeremy B. White, July 18, 2025).
As CEQA practitioners and lead agencies navigate the provisions of these two bills, perhaps this is an opportune time to reflect on how we arrived at this point and the veracity of these attention-grabbing headlines.
If you don’t know where you’ve come from, you don’t know where you’re going. -Maya Angelou
On September 18, 1970, Jimi Hendrix died of asphyxiation, and Governor Ronald Reagan signed CEQA into law. While they are two unrelated, yet significant cultural touchstones in California, the effects of CEQA’s passage and subsequent impacts, followed by President Nixon’s signing of the National Environmental Policy Act (NEPA) into law on January 1, 1970, are still being debated. (Fun fact: Nixon signed the bill at the “Western White House” in San Clemente, CA.) NEPA was approved by Congress in 1969 in response to increased national awareness of smoggy skies, polluted rivers, and the Santa Barbara oil spill. NEPA is a public disclosure law applicable to federal actions.
California followed the federal government and became the first state to adopt its own environmental legislation, CEQA. CEQA, like NEPA, is a public disclosure law. CEQA is also substantive. Simply put, CEQA has a substantive mandate that requires an agency to mitigate potentially significant environmental impacts before approving a project, when feasible. When Governor Reagan signed CEQA into law, he did not intend to obstruct development in California.
As with many new laws, the scope of CEQA was not well understood at the time of its passage. As initially drafted by the California Legislators in 1970, CEQA did not include a definition for “project,” which is the governmental activity subject to CEQA review. As a result, most public agencies applied CEQA only to public projects. That changed on September 21, 1972, with the California Supreme Court’s ruling in Friends of Mammoth v. Board of Supervisors of Mono County. That ruling found CEQA applied to both public projects and any private development that requires a discretionary action by a public agency. It was, and still is, up to each public agency to determine what constitutes a discretionary action.
A couple of years later, the second CEQA case, No Oil, Inc. v. the City of Los Angeles, was heard by the California Supreme Court. In its February 13, 1975, decision, the Supreme Court promulgated the “fair argument” standard. Specifically, the court said … since the preparation of an EIR is the key to environmental protection under CEQA, accomplishment of the high objectives of that act requires the preparation of an EIR whenever it can be fairly argued based on substantial evidence that the project may have a significant environmental impact.
Both the Friends of Mammoth and No Oil, Inc. decisions were game-changers for CEQA practitioners and lead agencies. Subsequent to these decisions, changes to CEQA’s scope and application have been the result of both judicial action and legislative statute, and the interplay between the two.
Sacramento, we’ve had a problem (with apologies to Jack Swigert and Jim Lovell)
The legislative desire to revise, some would say, reform or modernize, CEQA has always been closely related to effects resulting from population growth, or the state of the economy, or other factors not related to the physical environment, such as the use of CEQA to stop or significantly delay a project for business or other reasons. Throughout the 1980s and 1990s, the legislative focus on CEQA reform, according to Governor George Deukmejian, was to “reduce the regulatory burden on development.” The business and development community believed that streamlining the regulatory process and limiting the scope of CEQA to prevent uncertainty was crucial for maintaining a robust California economy.
In 1987, the courts expanded CEQA’s scope. The Supreme Court upheld the appellate court decision in Friends of Westwood, Inc. v. City of Los Angeles. This decision expanded the definition of discretionary action, thus making more development projects subject to CEQA and detailed environmental review.
The main legislative change to streamline the CEQA process was the codification of the mitigated negative declaration into law in 1993. Although the MND was not explicitly part of CEQA, lead agencies nonetheless prepared and adopted it. The MND process is shorter in comparison to the EIR process.
Throughout the 2000s and 2010s, debate and complaints regarding CEQA as an alleged impediment to development continued. At least one project that was stopped due to CEQA was highlighted during every legislative session as evidence that the regulatory burden imposed by CEQA was hurting the state economy; hence, the scope and application of CEQA should be limited.
CEQA amendments during Governor Arnold Schwarzenegger’s administration were surgical. Instead of terminating CEQA or substantially amending CEQA in a way applicable to all projects, spot amendments were made to exempt or provide expedited judicial review for specific projects. This approach continued during Governor Jerry Brown’s administration. The high-profile beneficiaries of this fast-track treatment were developers of new stadiums, such as the Sacramento Kings and 49ers.
No court decisions resulted in substantial changes to CEQA during the 2000s and 2010s. Legislative amendments to CEQA during this time included a new exemption for infill development projects, a new requirement to analyze greenhouse gas (GHG) emissions, and the passage of SB 743. SB 743 changed the metric to evaluate transportation impacts from level of service (LOS) to vehicle miles traveled (VMT), effective July 1, 2020.
Throughout the 2020s, in recognition of the state’s acute housing shortage and the resultant rising cost of housing, different Legislators proposed bills that would substantially modify CEQA by reducing its scope and reach, particularly concerning housing projects. Adding to the pressure for substantial revisions to the scope and reach of CEQA was the rising misuse of CEQA for purposes other than environmental protection. CEQA has been used to delay or stop projects for economic or political reasons. Most of the proposed amendments to streamline the CEQA process or reduce CEQA’s scope were met with opposition from environmental groups and labor unions that want CEQA to remain intact with narrow exemptions.
A New Dawn or the End of Days?
Back to the two budget trailer bills, AB 130 and SB 131, and the attention-grabbing headlines referenced in the first paragraph of this article. Are AB 130 and SB 131 a new beginning for CEQA, or do these bills have CEQA on the ropes?
AB 130 and SB 131 continue the trajectory, initiated during the Schwarzenegger and Brown administrations, by introducing new housing exemptions. And while these two bills may be the most consequential revisions to CEQA in recent history, they fall short of the sweeping CEQA reform that has been the topic of discussion for decades. AB 130 and SB 131 are not new ideas, and portions of these bills have been part of prior legislative proposals that were not approved. (A summary of these bills is included under the subheading Would you like to know more?)
Unlike other CEQA exemptions, AB 130 requires Native American consultation, preparation of a Phase 1 Environmental Site Assessment, and compliance with certain labor standards. We see in these requirements the continued interest and influence of Native American tribes and labor unions in the CEQA process.
An intriguing aspect of SB 131 is the “near miss” provision. This streamlined CEQA process applies to housing projects that would otherwise be exempt from CEQA, except for a single condition. CEQA review for a “near miss” project would be limited to the environmental effects resulting from that condition. CEQA documents for “near miss” projects are not required to include an analysis of project alternatives, cumulative impacts, and growth-inducing effects. The “near miss” provisions do not apply to projects with more than one disqualifying condition, projects involving distribution centers, oil and gas infrastructure, or projects located on protected lands as defined in Public Resources Code section 21067.5.
While AB 130 and SB 131 contain provisions that streamline CEQA for a broad type of projects, these bills are not the “holy grail” of CEQA reform, nor are they harbingers of CEQA’s demise. To quote the Little Hoover Commission, CEQA is neither a curse on California nor is it perfect. The sweet spot for amending CEQA would result in a process that does not compromise CEQA’s important purpose and ensures CEQA’s purpose is achieved while minimizing unnecessary obstacles to development.
The Little Hoover Commission offers the following recommendations for consideration by the Legislature: strengthen standing requirements for CEQA litigation to mirror NEPA and limit data dumps and the consideration of information submitted after the end of the public comment period, except for information that could not have been known during the public comment period.
Now What?
As with every CEQA reform, the story is far from over. Cleanup legislation is in the works, and both foes and fans of CEQA will be watching the Legislature and Courts for new developments.
WEBB’s Environmental Services team will continue to be a part of the ongoing CEQA dialogue through leadership in professional organizations and will stay informed about CEQA changes, enabling us to remain a trusted advisor to our internal and external clients.
Would you like to know more? (Starship Troopers)
AB 130 and SB 131 also revised the state housing law, and AB 130 establishes a framework for a statewide vehicle miles traveled (VMT) mitigation bank. The following is a summary of the non-VMT CEQA-specific provisions of these bills.
AB 130 created a new statutory CEQA exemption for infill housing development projects on a site no greater than 20 acres (5 acres for a builder’s remedy) that provided that the project:
- is not located on a hazardous site, prime farmland, wetlands, regulatory floodway, high fire severity zones, protected species habitat, or within portions of the coastal zone;
- is within a census-defined urban area or an incorporated city and surrounded by at least 75 percent urban uses;
- is consistent with the general plan and zoning requirements;
- meets minimum residential density requirements;
- does not require demolition of a historic structure; and
- does not include transient lodging.
In addition to the above conditions, the project must also comply with California Native American Tribal consultation and mitigation of any impacts to tribal cultural resources. It must perform a Phase 1 environmental site assessment, mitigate any identified impacts, and implement specific air filtration and air quality requirements. Additionally, construction of a project using this exemption must comply with labor requirements, including payment of prevailing wages for 100 percent affordable housing projects and use of a skilled and trained workforce for buildings exceeding 85 feet in height.
- SB 131 created new statutory exemptions for:
- agricultural employee housing
- disadvantaged community water systems
- wildfire risk reduction activities
- climate adaptation planning updates
- certain public park and trail projects
- day care centers
- rural health clinics
- food banks
- advanced manufacturing facilities
- facilities supporting high-speed rail
Sources:
Barbour, E., Teitz, M. (April 6, 2005). CEQA Reform: Issues and Options. Occasional Papers, Public Policy Institute of California. (Available at https://www.ppic.org/wp-content/uploads/content/pubs/op/OP_405EBOP.pdf.)
Coon, A. (Feb 5, 2013). Perfect Storm for CEQA Reform in 2013? Former Govs Weigh In. Miller Starr Regalia CEQA Developments. (Available at https://www.ceqadevelopments.com/2013/02/05/perfect-storm-for-ceqa-reform-in-2013-former-govs-weigh-in/
Fulton, W. (Jan 1, 2010). Schwarzenegger Operates on CEQA with Scalpel, Not Hatchet. California Planning and Development Report. 25(1) (Available at https://www.cp-dr.com/articles/node-2571.)
Little Hoover Commission. (May 2024.) CEQA: Targeted Reform for California’s Core Environmental Law. Report #297. (Available at https://lhc.ca.gov/report/california-environmental-quality-act-ceqa/)
Ouellette, M. & Tehrani, A. (2019). “The Lord’s Work”: An Overview of CEQA’s Judicial Remedies and Recommendations for Reform. UC Law Environmental Journal, 25(1), 85-100.
Waters, D. (August 2, 2018). Brown talks CEQA reform, but hasn’t done it. CalMatters. https://calmatters.org/environment/2018/08/brown-talks-ceqa-reform-but-hasnt-done-it/
White, J. B. (Jul 18, 2025). From green icon to housing villain: The fall of California’s Landmark environmental law. Politico. (Available at https://www.politico.com/news/2025/07/18/california-ceqa-environmental-law-housing-00448276.)
