New California Laws 2026
SB 131: CEQA exemptions expand for housing, infrastructure, water and clean energy projects
By Sheri L. Bonstelle S B 131 creates a wide range of new, statutory ex- emptions under the California Environmental Quality Act (CEQA) for housing, water, clean energy and infrastructure projects. The budget trailer bill was signed by the Governor and opera- tive on June 30, 2025. The bill was largely based on Sen. Scott Wiener’s proposed SB607 and includes the “near miss” provision for housing projects that almost qualify for a CEQA exemption, but for a sin- gle condition. SB131 also provides a statutory CEQA exemption for any rezoning by a city that implements an approved Housing Element. Single condition review. SB 131 provides that if a proposed housing development project would other- wise be exempt from CEQA pursuant to a statutory exemption (including AB130) or a Class 1–5, 12, 15, 20, 27, 30 or 32 categorical exemption, but for a sin- gle condition, then the environmental review shall be limited to impacts caused solely by that single condi- tion. (PRC §21080.1) The legislation defines “condi- tion” as “a physical or regulatory feature of the proj- ect or its setting or effect on the environment caused by the project.” Typically, if a single condition took the project out of the exemption, the agency would be required to evaluate the “whole of the action” through a Mitigated Negative Declaration (MND) or Environmental Impact Report (EIR), which could take several months at a significant cost. But under SB131, the agency is only required to evaluate the potential significant impact of the single condition through a limited EIR or MND that does not require analysis of alternatives or growth-induc- ing impacts. This streamlining provision does not apply to projects that include warehouse distribution centers (PRC §21060.4), oil and gas infrastructure facilities (PRC §21064.8), are located on natural and protected lands (PRC §21067.5), or are located on properties exceeding four acres that are build- er’s remedy projects, affordable housing projects or emergency shelters that are non-compliant with the general plan or zoning. “Whole of the action” review. SB131 completely overturns a basic CEQA principle, which holds that a “full EIR” must be prepared whenever a project may have any significant environmental effect. Farmland Protection Alliance v. County of Yolo (2021) 71 Cal.
App.5th 300. This is based on CEQA’s three-tiered process, which requires an agency to: (i) conduct preliminary review to determine whether a “proj- ect” subject to CEQA exists, and if so, whether it is exempt (statutorily or categorically); (2) conduct an initial study to identify potential impacts, and to in- form the choice between an MND and an EIR, and then prepare an MND if the project may be mitigated to a less than significant environmental effect; and (3) if the project may have a significant environmen- tal effect, prepare a full EIR, known as “the heart of CEQA.”(See Save Our Big Trees v. City of Santa Cruz (2015) 241 Cal.App.4th 694, 704-705; Laurel Heights Improvement Assn. v. Regents of University of Cali- fornia (1993) 6 Cal.4th 1112, 1123.) In Farmland Protection Alliance, the court held, “if any aspect of the project triggers preparation of an environmental impact report, a full environmental impact report must be prepared in accordance with the definition of [an EIR in Public Resources Code] section 21061.” (Farmland Protection Alliance, 71 Cal.App.5th 300, 310, San Bernardino Valley Audu- bon Society v. Metropolitan Water Dist. (1999) 71 Cal.App.4th 382, 402) In addition, PRC section 21168.9 does not provide authority to disregard the mandatory three-tier approach under CEQA and to split a project’s impact analysis across two types of environmental review documents. Id. This caselaw analysis would have prohibited a limited EIR for an otherwise CEQA exempt project. Benefits of single condition review. SB131 now turns the three-tiered analysis on its head by allow- ing specific limited evaluation that would not consid- er the “whole of the action” for the sole purpose of ex- pediting a housing development project. SB131 does not provide any limit and is open to interpretation relating to the scope of the single “condition” that requires evaluation. SB131 would be helpful where there is a minor deviation or gray area that qualifies as a “condition,” and where the housing development project would otherwise clearly qualify for a CEQA exemption. But it may not have greater applicabili- ty and could only expose the housing development project to litigation risks. To make the “near miss” provision most effective for housing development,
See SB 131 on page 105
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