California Gov. Gavin Newsom (D) on Monday signed legislation paring down the state’s landmark environmental review laws in a bid to cut red tape and make housing more accessible.

As part of his 2025-2026 state budget, the governor gave his stamp of approval to two bills AB 130 and SB 131  his office described as “the most significant overhaul of California’s housing and environmental review laws in decades.”

“Today’s bill is a game changer, which will be felt for generations to come,” Newsom said in a statement.

The two “budget trailer bills” measures that essentially serve as revisions to the state budget include a streamlining package that remove certain development barriers, update review procedures for critical housing and infrastructure and create new tools for accelerating production.

Garnering bipartisan support, the legislation involves implementing major reforms to the California Environmental Quality Act (CEQA). This pivotal statute, signed into law in 1970 by then-Gov. Ronald Reagan (R), required state and local agencies to disclose the potential environmental effects of all their decisions, including on housing-related initiatives.

“I just enacted the most game-changing housing reforms in recent California history,” Newsom wrote in a post on X late Monday.

“We’re urgently embracing an abundance agenda by tearing down the barriers that have delayed new affordable housing and infrastructure for decades,” the governor added, calling upon Californians to “get building.”

Among the reforms included in the new bills are measures to speed up housing and infrastructure projects by streamlining their environmental review. Some such projects are infill housing residences built in unused urban lots, high-speed rail, utilities, broadband community centers, farmworker housing and wildfire prevention structures. 

Although the new rules maintain protections for natural and sensitive lands, they exempt local government rezoning procedures from CEQA requirements.

The legislation also expands the Permit Streamlining Act, by restricting certain Coastal Commission housing appeals and accelerating permitting in coastal areas.

Also within the bills are measures to freeze new residential building standards through 2031, with exceptions granted to emergency, fire and conservation-related updates.

Sustainable financing tools, such as a revolving fund to reinvest equity from stabilized affordable housing into new developments, will also be made available through the laws.

The approved actions also entail strengthening oversight of local homeless shelters via annual city and county inspections and authorizing the withholding of state funding if agencies fail to comply.

The legislation also more than doubles the existing Renters Tax Credit by increasing credit to support renters up to $500 for qualified filers.

State Sen. Scott Wiener (D), whose previous bill proposals provided the foundation for much of the new legislation, described the CEQA reforms in a Monday statement as “a bold step forward toward tackling the root causes of California’s affordability crisis.”

He touted the CEQA exemptions for streamlining approvals for housing, childcare centers, clean water infrastructure, climate adaptation projects and advanced manufacturing: processes that improve or create entirely new materials and products. 

“These bills get red tape and major process hurdles out of the way, allowing us to finally start addressing these shortages and securing an affordable California and a brighter future,” Wiener said.

Despite earning support from both sides of the aisle, the bills have gotten pushback from environmental groups.

A day before the legislation became law, Miguel Miguel, director of Sierra Club California, accused the state legislature of “using backroom deals to undermine” California’s “bedrock environmental law.”

“Leaders are abusing the budget process to push these anti-environmental policies, slipping language that was formerly in AB 306 and SB 607, two bills that faced massive opposition from environmental groups, into trailer bills to bypass public input and subvert democratic accountability,” Miguel wrote in a last-ditch call for opposition to the bills.

Meanwhile, as late as Monday morning, labor unions were appealing to Newsom and state legislators to reconsider a CEQA exemption on advanced manufacturing included in the bills.

“We know that exempting ‘advanced manufacturing’ industries from CEQA would expose us, our members, and colleagues to grave harm in our workplaces and communities,” the unions wrote in a collective letter.

Among their specific concerns cited was the semiconductor industry’s extensive use of toxic “forever chemicals,” also known as PFAS, in their production processes. Citing previous usages of other contaminants from the 1960 to the 1990s, the writers stressed that pollutants harmed not only workers, but also neighboring communities. 

The unions also warned that the legislation “would give carte blanche to companies like Tesla to expand without any environmental oversight.”

But other groups celebrated the CEQA reforms as critical to solving California’s looming housing and infrastructure crises.

“No longer will CEQA be leveraged to stall critical county wildfire, water and housing projects,” Jeff Griffiths, president of the California State Association of Counties, said in a statement.

“This legislation will make California more affordable for families by helping to alleviate our housing crisis and, in turn, reducing homelessness,” Griffiths added.

Chris Elmendorf, a property law expert at University of California Davis, marveled in a post-signing analysis on X just how quickly Newsom’s “triumph over CEQA…went down” and the remarkable shift in the politics of reform that has taken foot in the past few years.

He noted that just since the two trailer bills went public over the past week, one of the most powerful opponents the California Building Trades Council went from rejecting the legislation to expressing neutrality.

“The law that untold numbers of project opponents have leveraged for year after year after year of delays went from untouchable to demolished almost overnight,” Elmendorf stated.