CEQA exemptions and the 2025 reforms: defusing the schedule bomb

For discretionary housing approvals, CEQA (Pub. Res. Code §§ 21000–21189.91) is the dominant schedule risk: even a mitigated negative declaration invites a petition with fee-shifted counsel, and an EIR is a multi-year commitment. The exemption architecture — categorical exemptions in the CEQA Guidelines and statutory exemptions in the code — is therefore where housing feasibility is won.

The June 2025 budget reforms (AB 130 and SB 131) rebuilt that architecture in housing's favor: a broad statutory exemption for qualifying infill housing, single-issue review for projects that miss an exemption by one criterion, and procedural limits on the administrative-record weaponry that drove CEQA litigation costs.

The Guidelines' Class 32 categorical exemption covers infill projects on sites ≤5 acres within city limits, substantially surrounded by urban uses, consistent with the general plan and zoning, without habitat value, and serviceable by utilities — subject to the categorical-exemption exceptions (unusual circumstances, cumulative impacts).

• Underwriting watch-outs:
• "Consistent with plans and zoning" makes Class 32 fragile exactly where you rely on waivers — density-bonus waivers are consistency by statute, but document that chain explicitly.
• Traffic/noise/air studies still get prepared to support the exemption findings — budget the technical memos, just not the EIR.
• The exceptions (esp. unusual circumstances) are the standard attack; a clean administrative record deciding them is what survives review.

• AB 130's infill housing exemption: qualifying housing development projects on infill sites up to 20 acres, meeting density floors, plan/zoning consistency (with the density-bonus chain honored) and site screens (no wetlands/high-hazard/protected-species conflicts, tenancy screens) are statutorily exempt — not categorical, so the unusual-circumstances exception doesn't apply. Labor standards attach to taller projects.
• SB 131's near-miss rule: a project failing an exemption on a single condition gets CEQA review limited to that issue — no full-scope EIR because one criterion missed.
• Process limits: narrowed record-preparation abuse, focused judicial-review provisions, and additional exemptions for specified project types.
• Guidelines lag: the implementing Guidelines rulemaking is still pending; until adopted, apply the statutes directly — they control over older Guidelines text.

• Underwriting watch-outs:
• The reforms are new: local staff often still route projects into MNDs by habit. Bring the exemption analysis to the counter, don't wait for it.
• Exemption ≠ no process: findings, notices of exemption (which start a 35-day statute of limitations) and supporting memos still matter — file the NOE.

Where full review is unavoidable, the practical hierarchy is: (M)ND where impacts mitigate below significance (with a 30-day comment window and 30-day challenge statute), focused/tiered EIRs off program documents (specific plans, housing-element EIRs), and full project EIRs last. Streamlining provisions — SB 375 transit-priority, Class 32 companions, the § 65457 residential-specific-plan exemption — reward siting inside already-studied plan areas.

Litigation math drives the choice: an NOE's 35-day and an ND's 30-day windows are survivable option periods; an EIR's exposure runs through certification plus appeal. That difference belongs in the land-contract timeline, not just the legal budget.