For a long time, one of the central tensions in California land use law has been the uneasy relationship between Housing Element Law and CEQA. Under Housing Element Law, local governments are required to identify and rezone sites to accommodate their Regional Housing Needs Allocation (RHNA). At the same time, those same rezonings have generally been subject to CEQA review, creating opportunities for delay, litigation, and political opposition.

On May 19, 2026, the California Department of Housing and Community Development (HCD) issued a memorandum addressing a new statutory CEQA exemption enacted through Senate Bill 131. The memorandum, which can be reviewed here, explains Public Resources Code section 21080.085, a provision that exempts certain Housing Element rezonings from CEQA if they are undertaken pursuant to an HCD-approved Housing Element. According to HCD, once a Housing Element has been approved and a rezoning appears in the Housing Element’s schedule of actions, the rezoning may proceed without CEQA review, subject to several important limitations.

At first glance, the exemption may appear technical. In practice, however, it has the potential to eliminate CEQA from one of the most important phases of local housing planning.

The New Statute

Public Resources Code section 21080.085 was enacted as part of the Legislature’s sweeping 2025 housing and CEQA reform package. As summarized by HCD, the statute creates a CEQA exemption for rezonings undertaken to implement the schedule of actions contained in a Housing Element that HCD has found substantially compliant with state law.

The exemption applies only to rezonings identified in the Housing Element’s required program of actions. In other words, the rezoning must be part of the jurisdiction’s strategy for accommodating its RHNA obligations rather than a later discretionary policy choice unrelated to Housing Element implementation. The statute also contains several notable exclusions. According to HCD, the exemption does not apply to rezonings facilitating certain warehouse uses, oil and gas infrastructure, or development on lands classified as “natural and protected lands.” Prime agricultural lands, however, are not categorically excluded if they are identified in the Housing Element’s implementation program.

Why This Matters

The practical significance of the new exemption cannot be overstated. Historically, a city might adopt a Housing Element and obtain HCD approval, but the subsequent rezoning process often required separate CEQA analysis. Opponents of housing frequently could focus their efforts on that later stage, challenging environmental documents prepared for rezoning programs and delaying implementation of Housing Element commitments.

The Legislature’s impetus to address this problem was apparent when it passed SB 131. Housing Element Law already requires HCD review, extensive public participation, site inventory analysis, fair housing analysis, and a detailed evaluation of land use capacity. By the time a jurisdiction reaches the rezoning stage, many of the core policy questions have already been resolved. Section 21080.085 effectively reflects a legislative judgment that requiring another round of CEQA review for those same rezonings often produces more delay than environmental protection.

HCD’s Expansive Reading

Perhaps the most interesting aspect of the memorandum is the breadth of HCD’s interpretation.

HCD does not characterize the exemption as narrow. Rather, the memorandum repeatedly emphasizes that rezoning actions contained in an approved Housing Element’s schedule of actions are exempt from CEQA. This includes rezoning actions aimed at affirmatively furthering fair housing, reducing procedural barriers, increasing density, modifying development standards such as heights and parking requirements, or allowing for a broader range of housing types in single-family zones.

This approach is consistent with HCD’s increasingly active role in enforcing Housing Element Law. Over the past several years, HCD has moved far beyond its traditional advisory role, issuing technical assistance letters, compliance determinations, notices of violation, and detailed statutory guidance directed at local governments. The new memorandum continues that trend by signaling that jurisdictions should not hesitate to utilize the exemption where applicable.

Potential Questions and Future Litigation

As with most significant CEQA reforms, the litigation questions are likely to emerge quickly.

The first question will be determining whether a particular rezoning truly implements the Housing Element’s schedule of actions. Some rezonings will fit comfortably within the exemption. Others may involve modifications, expansions, or policy changes that were not expressly contemplated during Housing Element adoption.

The second question is what environmental review remains for subsequent projects analyzed under a program EIR, and how will this new exemption operate? In some cases, Housing Elements and the rezonings that implement them are evaluated through program level environmental review that contemplate future site-specific analysis. This was the case in The Committee for Tiburon LLC v. Town of Tiburon (2016) 118 Cal.App.5^th 259, where the First District Court of Appeal reviewed the adequacy of the Town’s program EIR for its Housing Element update. As explained by my colleague Art Coon in his February 17, 2026 blog post, the court there upheld the use of a programmatic environmental document that relied on later, project-specific CEQA review to address site-level impacts not fully resolved at the Housing Element adoption stage. The court reasoned that the Town could, in theory, rely on CEQA tiering to address site-specific analysis when that level of review became appropriate. (CEQA Guidelines, § 15168(c)(1).) This raises uncertainty for the SB 131 exemption: what level of environmental review at the Housing Element or program EIR stage is sufficient to support later reliance on the exemption? While the statute appears to condition the exemption on an HCD-approved Housing Element process, it does not specify whether the underlying program EIR must include any particular level of site-specific analysis. As a result, it remains unclear whether broadly framed program EIRs that rely heavily on future CEQA review will be adequate to support exemption eligibility, or whether a more detailed and project-referential environmental record is implicitly required.

A third question concerns the significance of HCD approval. The statute, as described by HCD, hinges on an HCD-approved Housing Element. What happens if a Housing Element later falls out of compliance? What if HCD identifies deficiencies after the rezoning process has begun?

Another Step in CEQA’s Housing Transformation

The broader significance of section 21080.085 extends beyond Housing Element law.

For years, CEQA reform in California proceeded incrementally. The Legislature created exemptions for infill housing, transit-oriented development, student housing, farmworker housing, and various categories of affordable housing. Critics often described the resulting framework as “Swiss cheese CEQA.”

The reforms enacted through AB 130 and SB 131 appear different in kind rather than degree. Instead of exempting individual housing projects, the Legislature is increasingly exempting the planning and entitlement decisions necessary to make those projects possible in the first place. HCD’s memorandum regarding section 21080.085 provides another example of that shift.

Conclusion

HCD’s May 2026 memorandum may not attract the attention generated by a major appellate CEQA decision, but practitioners should not overlook its significance.

The new exemption potentially removes CEQA from one of the most consequential steps in Housing Element implementation: the rezoning of sites needed to accommodate future housing growth. If courts ultimately interpret section 21080.085 broadly, local governments may find that one of the most common procedural obstacles to Housing Element implementation has largely disappeared.

For cities struggling to complete Housing Element rezoning programs, that development will be welcome news. For CEQA practitioners, however, the more interesting question may be what comes next. The Legislature’s recent actions suggest that California is no longer merely creating housing-related exceptions to CEQA. It may be redefining the role CEQA plays in housing planning altogether.

Questions? Please contact Arthur F. Coon of Miller Starr Regalia. Miller Starr Regalia has had a well-established reputation as a leading real estate law firm for more than sixty years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. The firm has expertise in all real property matters, including full-service litigation and dispute resolution services, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, title insurance, environmental law and land use. For more information, visit www.msrlegal.com