Governor’s Office of Land Use and Climate Innovation Releases Draft Guidance for Voluntary Statewide Vehicle Miles Traveled Mitigation Program

On April 8, 2026, the California Governor’s Office of Land Use and Climate Innovation (LCI) released draft guidance for the Assembly Bill 130 Statewide Vehicle Miles Traveled (VMT) Mitigation Program (the Program) for public comment through May 8, 2026. The Program would introduce a voluntary, monetary contribution-based pathway for project proponents to mitigate significant transportation impacts under the California Environmental Quality Act (CEQA) in lieu of traditional, project-specific VMT reduction measures.

PROGRAM OVERVIEW

AB 130, signed into law in 2025, expanded the state’s Transit-Oriented Development Implementation Program (TDIP) and directed LCI to develop a voluntary, statewide framework for mitigating VMT impacts under CEQA. As proposed, the Program is structured as a statewide, credit-based mitigation system available to any project that is determined to create significant VMT impacts under CEQA.

Similar to how projects can purchase credits or offsets to mitigate biological or greenhouse gas impacts, the Program allows lead agencies to mitigate VMT impacts by facilitating the project developer’s purchase of VMT Mitigation Credits that represent funding for low-VMT affordable housing projects within the region. The Program is based on the premise that location-efficient affordable housing, particularly in transit-accessible and infill areas, generates lower VMT per unit than comparable market-rate housing. These reductions serve as compensatory mitigation by offsetting a project’s transportation impacts through off-site VMT reduction measures.

Under the proposed framework, lead agencies retain discretion to determine whether a project results in significant VMT impacts. For projects that generate significant VMT impacts, lead agencies may elect to mitigate those impacts by facilitating a monetary contribution to the Transit-Oriented Development Implementation Fund (TDIF) administered by the California Department of Housing and Community Development (HCD). HCD, in turn, awards those contributions through the TDIP to support VMT-efficient affordable housing and related infrastructure projects within the same or adjacent region to the contributing project.

The number of VMT Mitigation Credits a project must purchase to offset its impacts is based on the project’s VMT impacts and the estimated cost of reducing one mile of vehicle travel within a given region based on LCI’s modeling and regional data calculations. These values will be updated annually to account for inflation and every three years as part of a more comprehensive Program update. Affordable housing projects funded through the Program must be subject to a long-term affordability restriction of 55 years.

Importantly, participation in the Program is voluntary and remains subject to lead agency approval. As a result, agencies may instead continue to rely on traditional mitigation strategies to address transportation impacts, such as transportation demand management or project-specific improvements.

CEQA COMPLIANCE

The Program emphasizes compliance with core CEQA principles governing mitigation, including requirements related to additionality, nexus, proportionality, enforceability, quantifiability, and timely implementation of the proposed mitigation. In particular, the Program requires that mitigation be “additional,” meaning that the VMT reductions would not occur but for the contributions received through the Program. To meet this requirement, the Program relies on a gap funding model in which contributions are used to advance projects that would not have otherwise been constructed. LCI relies on these gap funding assumptions to calculate the cost of VMT Mitigation Credits in each region. The Program also contemplates monitoring, reporting, and credit-tracking mechanisms to ensure that mitigation is implemented and solely attributable to the Program.

GEOGRAPHIC SCOPE AND PRIORITIZATION

The Program divides the state into regions based on the jurisdiction of existing Metropolitan Planning Organizations or Regional Transportation Planning Agencies. Priority for TDIP funding is granted to affordable housing or related infrastructure projects in “location-efficient areas” within the same region as the funding project, which is based on the area’s regional average for per capita VMT, proximity to major transit stops or high-quality transit corridors, and the site’s urban area or infill development characteristics. Funding may be allocated to projects outside of the originating region if the travel patterns and development costs in the area are similar, to ensure similar VMT reduction benefits are comparable, though these projects have a lower priority status compared to mitigation projects within the same region.

COST PER VMT MITIGATION CREDIT

LCI calculated the cost of VMT Mitigation Credits on a regional basis based on the gap funding requirements for affordable housing (defined as 15% of the overall cost) and the estimated VMT reduction produced by affordable housing. The cost-per-credit of reducing one VMT per day ranges from $1,515 in the Madera County Transportation Commission Combined Area up to $6,682 in the Santa Barbara County Association of Governments area. The majority of credit values are between $2,000 and $4,000.

IMPLEMENTATION AND AGENCY ROLES

AB 130 assigns complementary roles to LCI and HCD in administering the Program. LCI is responsible for developing the underlying methodology, including pricing and VMT reduction calculations, while HCD will calculate and collect contributions and award funding to eligible mitigation projects. LCI’s guidance and HCD’s implementation guidelines are being developed concurrently and are expected to evolve in response to public comment. Together, these materials will define the Program’s overall structure, supplementary processes, and operational framework.

POTENTIAL IMPLICATIONS

The Program represents a significant shift in how VMT mitigation is addressed under CEQA through the introduction of a standardized, credit-based mitigation framework. For project proponents, this approach could offer a more predictable alternative to mitigating transportation-related impacts associated with new development. At the same time, key uncertainties remain. Participation in the Program is ultimately subject to lead agency approval and it is not yet clear how broadly agencies will accept Program contributions as sufficient mitigation. Furthermore, while the Program itself is designed to align with established CEQA principles, its legal durability has not yet been tested.

NEXT STEPS

LCI is accepting public comments on the draft guidance through Friday, May 8, 2026. AB 130 requires LCI to finalize its guidance by July 1, 2026, and update it at least every three years thereafter.

Allen Matkins will continue to monitor developments as the Program moves toward finalization and implementation. For information on the AB 130 exemption for infill residential development, see our prior legal alert. To learn more about the draft guidance or its potential implications for your project, please contact the Allen Matkins land use and natural resources team.