SB 131’s “near-miss” rule allows for streamlined review of a residential project that meets all but one condition for a CEQA exemption and does not violate select criteria.
Major changes to the California Environmental Quality Act (CEQA), mostly focused on how the act addresses housing, became law on June 30 when Governor Gavin Newsom signed Assembly Bill (AB) 130 and Senate Bill (SB) 131. Because he strategically tied these bills to the budget, which needed to be finalized before the stroke of midnight, the most significant changes to CEQA in more than 50 years went into effect immediately. A key feature of SB 131 is what has been called the “near-miss rule,” which allows a housing or mixed-use project to qualify for a statutory exemption or one of several categorical exemptions if all criteria are met for that exemption but for one “condition.”
Product of Compromise
An earlier version of the rule appeared in SB 607, a predecessor bill that, like SB 131, was introduced by Senator Scott Wiener (D-San Francisco). The initial text applied the near-miss standard to all project types. That proved too controversial to gather enough support for passage, so the rule was softened in its final form to apply specifically to state-defined “housing development projects,” which include mixed-use developments.
There are additional criteria for a project to qualify as a “near-miss,” three of which are straightforward and a fourth that needs further explanation.
A proposed project:
- Cannot include a distribution center.
- Cannot include oil and gas infrastructure.
- Cannot be located on natural or protected lands.
- Must be “similar in kind” to projects described in the exemption.
“Similar in” … What?
The “similar in kind” provision was included to prevent clever usage of SB 131 to obtain an exemption for a project for which the near-miss condition would make it unique among the other projects receiving the same exemption. The bill did not include a definition of the phrase “similar in kind,” but it appears to mean that an exemption cannot be granted if the absence of the near-miss condition would result in the development of a project that is radically different from the types of projects envisioned for that exemption.
As an example, the Class 32 categorical exemption applies to infill housing development projects of 5 acres or less that meet certain criteria. An apartment building planned on a site that is slightly over the 5-acre limit would qualify for a near-miss exemption because the project is similar to other projects that fully meet the exemption. By contrast, an applicant for a project that meets all of the Class 32 requirements except that it is a commercial building cannot claim a near-miss exemption because the
resulting project (a commercial building) would not be similar to projects that fully meet the categorical exemption.
There’s Still Some Review to Do
If a project qualifies for the near-miss exemption, then an initial study or Environmental Impact Report (EIR) would be limited to evaluating the effects upon the environment that are caused solely by that single condition. For example, if a project satisfies all of SB 131’s exemption criteria except that it would result in a significant and unavoidable impact on cultural resources in the project area, the lead agency may prepare an EIR limited to addressing that single condition.
Benefits and Risks
Agencies often limit analysis to one or a few resource areas through a focused EIR. Under the near-miss provision, however, the CEQA document does not need to evaluate project alternatives or growth-inducing impacts, which will result in potential cost and schedule savings.
Those who operate at all levels of the CEQA universe have raised concerns about how the near-miss rule would apply and that it could lead to an unusual CEQA document that addresses an extremely specific issue. While an initial study would still provide the up-front dismissal of other resource areas, the resulting document could appear artificially narrow, creating uncertainty that makes the rule ripe for legal challenges which could either weaken SB 131 or, conversely, result in court decisions that reinforce it.
ESA is actively monitoring the dynamic policy landscape in California and beyond, and we are here to advise and support our clients as we adapt to changing processes and priorities. Do you have questions about your project and want to speak with an CEQA expert? Reach out to Meredith Parkin, Environmental Planning Practice Leader, for more information, and be sure to subscribe to our newsletter and follow ESA on LinkedIn for timely regulatory updates.
Date
September 3, 2025
