SACRAMENTO — In a historic move to address California’s persistent housing affordability crisis, Governor Gavin Newsom signed into law the most sweeping reforms to the California Environmental Quality Act (CEQA) in over five decades. The legislation, embedded in the 2025–2026 state budget and passed through AB 130 and SB 131, represents a fundamental rethinking of how the state balances environmental review with the urgent need to build homes, infrastructure, and climate-resilient facilities.
“These reforms reflect a new mindset—one that prioritizes delivery over delay,” Newsom said during the signing ceremony in Sacramento. “This isn’t just a budget. This is a budget that builds. It proves what’s possible when we govern with urgency, with clarity, and with a belief in abundance over scarcity.”
At the heart of this legislative shift is the “Abundance Agenda,” a guiding framework for Newsom’s administration that calls for producing more of what Californians need—especially housing—by removing procedural obstacles and empowering local governments with tools to move projects forward. This legislative package, drawing heavily from proposals by Senator Scott Wiener and Assemblymember Buffy Wicks, redefines what can—and must—be done to increase housing supply and affordability.
AB 130 and SB 131 together create ten new CEQA exemptions for a range of projects, including infill housing, child care centers, health clinics, broadband infrastructure, food banks, wildfire mitigation, and clean water systems. These exemptions are designed to accelerate permitting and shield developers from years of costly and uncertain litigation—often driven not by environmental concerns but by groups seeking to block change.
“This is a vote for the biggest CEQA reform in 55 years,” said Wicks. “This has been decades in the making: every governor since Ronald Reagan has attempted this. And now, today, we sit on the precipice of that change. Let’s deliver on this priority.”
Supporters of the reforms argue that CEQA, while vital when enacted in 1970, has become a tool for obstruction in the hands of special interests. From anti-housing homeowner groups to labor organizations seeking leverage on unrelated issues, CEQA lawsuits have been weaponized to delay or block projects that already meet local environmental and zoning requirements. The most affected developments tend to be those focused on infill housing and urban revitalization—projects critical to both climate policy and affordability goals.
Under AB 130, housing developments that meet objective planning standards and are located in already-zoned, non-sensitive areas can bypass CEQA review altogether. “This is what we’ve all been waiting for—a long-overdue step to stop CEQA from being weaponized against housing,” Wicks said. “We’re taking a major step toward building desperately-needed homes faster, fairer, and with more certainty.”
SB 131 goes further, targeting vital infrastructure and community services. Projects exempted under the bill include those involving advanced manufacturing facilities, rural clinics, parks, and wildfire mitigation efforts—areas where the intersection of environmental review and urgent public needs has long produced bottlenecks.
“This is, and I can humbly say this as someone who’s been a student of this and a practitioner of sorts over the past six-plus years, the most consequential housing reform that we have seen in modern history in the state of California,” said Newsom.
Local leaders praised the move. “No longer will CEQA be leveraged to stall critical county wildfire, water, and housing projects,” said Inyo County Supervisor Jeff Griffiths, president of the California State Association of Counties. Riverside Mayor Patricia Lock-Dawson added that “the Transit-Oriented Development Implementation Program in trailer bill AB 130 is a smart, forward-thinking approach that provides the flexibility cities need to meet our climate goals while still allowing for responsible development.”
The reforms are backed by housing advocates, labor groups, and environmental organizations focused on urban sustainability.
“We applaud the governor and the legislature for this breakthrough reform package,” said Matthew O. Franklin, President & CEO of MidPen Housing. “We know that increasing housing supply is key to solving our affordability crisis, and are confident these measures contribute to a future with more affordable, environmentally sustainable housing options for all Californians.”
Yet, the legislation has also drawn fierce opposition from environmental justice advocates, conservation groups, and some tribal communities, who argue the changes were rushed through the budget process with minimal transparency and public input.
“This half-baked policy written behind closed doors will have destructive consequences for environmental justice communities and endangered species across California,” said Jakob Evans, a senior policy strategist with Sierra Club California.
Asha Sharma, State Policy Manager at Leadership Counsel for Justice & Accountability, criticized the process: “The legislature’s back-room budget deal is an attack on lower-income communities of color that consistently get sited for harmful industrial projects. It’s not a question of if, it’s a question of when a public health disaster will occur.”
Other critics argue that while infill exemptions may help streamline development, the broader CEQA rollbacks open the door to projects that could erode hard-won environmental protections. “Exempting a broad swath of development with no consideration of habitat for imperiled species will decimate the state’s natural heritage,” said Frances Tinney, an attorney at the Center for Biological Diversity.
Still, even critics acknowledge California’s dire housing conditions, with median home prices pushing past $900,000 in some regions, and rents consuming more than half of income for many families. The state needs an estimated 2.5 million new homes by 2031, including over one million affordable units, to meet demand.
Senator Aisha Wahab, chair of the Senate Committee on Housing, emphasized that the reform package isn’t just about deregulation—it also brings more than $1.4 billion in new investments for affordable housing, renters, and first-time homebuyers. “With SB 681, and these budget wins, we’re delivering real protections for residents, fighting displacement, and prioritizing affordability,” she said.
To reinforce local accountability, the budget includes $500 million for the Homeless Housing, Assistance and Prevention (HHAP) Program Round 7. Jurisdictions must demonstrate compliance with state housing laws, adopt encampment policies, and meet performance benchmarks to qualify for funding. The state may reallocate funds from underperforming jurisdictions to those producing results.
Additional investments include $100 million for the Encampment Resolution Fund, $81 million for the Home Safe Program (which helps older adults remain housed), and $81 million for Bringing Families Home, which supports families involved in the child welfare system. These funds complement the Governor’s broader homelessness response strategy.
In tandem with these reforms, Newsom announced nearly $103 million in Homekey+ awards to five counties, creating over 315 units of permanent supportive housing for veterans and individuals with behavioral health needs. This is the first round of funding under Proposition 1’s $2.14 billion allocation, with applications continuing to be reviewed on a rolling basis.
These reforms arrive as California’s homelessness growth slows, even as national numbers rise. While homelessness rose over 18% nationally in 2024, California’s overall increase was limited to 3%. The state also recorded the largest reduction in veteran homelessness and made notable progress in reducing youth homelessness.
The legislative momentum is drawing national attention. Urbanists, housing researchers, and YIMBY leaders hailed the CEQA reforms as a game-changer.
“I honestly can barely believe this happened,” wrote Atlantic policy writer Jerusalem Demsas. “Total YIMBY victory in California today. After Newsom signs this bill, CEQA will no longer apply to any infill housing under 85 feet.”
Chris Elmendorf, UC Davis law professor and CEQA scholar, called it “the most impressive case of gubernatorial leadership I have ever seen.”
Nolan Gray, planning director of California YIMBY, added, “The impossible has become possible: we’ve passed a clean CEQA infill exemption. This is probably the most important thing California has done on housing in the present YIMBY moment.”
Corey Smith, Executive Director of the Housing Action Coalition, struck a cautious but hopeful tone: “AB 130 and SB 131 ensure that the state’s environmental review process works better—not just for housing, but for climate action and equity. CEQA’s current framework is too often misused to block exactly the kinds of infill, affordable, and sustainable housing our communities desperately need.”
The road ahead will test whether these reforms yield their promised results. The success of AB 130 and SB 131 will depend not only on implementation by state agencies and local governments but also on whether the state can maintain the political will to defend the reforms against potential litigation and backlash.
Still, many believe the tide has turned.
“We’ve finally moved from diagnosis to action,” said Senator Wiener. “These reforms offer a chance to reclaim our future—and to build a California where more people can afford to stay, thrive, and belong.”
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Asha Sharma Assemblymember Buffy Wicks california environmental quality act Corey Smith Frances Tinney Governor Gavin Newsom Jakob Evans Matthew O. Franklin Senator Aisha Wahab Senator Scott Wiener