AEP Legislative Update July 2026

Legislative Overview

In the first half of 2026, the California state Legislature has been busy. Most recently, legislative leadership and the Governor worked to pass the state budget ahead of the new fiscal year and collaborated to shape the upcoming November ballot. 

Much of June focused on budget negotiations ahead of the June 15th and June 30th budget deadlines. These negotiations involved budget subcommittee hearings broken down by subject, along with full committee meetings to finalize the Senate and Assembly two-party deal.

Additionally, the deadline for the Legislature to pass policies intended to go on the November ballot was June 25th. The Legislature and Governor worked on and agreed to add several new measures for voter approval, and were able to negotiate several off of the ballot.

Throughout the month, Legislators also worked long hours to hear and pass bills out of their relevant policy committees. The deadline for bills to be heard in policy committee was July 2nd. Those that are fiscal now move to Appropriations Committees, where their fate will be decided on August 14th. Bills without a fiscal tag go straight to the Floor. All bills must pass out of the Legislature by the end-of-Session on August 31st.

November Ballot Measures

Come November, California voters will have the opportunity to vote on 14 statewide policy proposals spanning a wide range of issues. This includes topics like the billionaire tax, voter thresholds for local taxes, voter ID, healthcare and more. These measures can either be sponsored by private interest groups, or through legislation. This year there are several ballot measures relevant to AEP.

First and foremost is the California Chamber of Commerce sponsored Proposition 45, which would substantially amend the California Environmental Quality Act to accelerate "essential projects". It would create deadlines for environmental reviews for projects including housing, transportation, water, healthcare and clean energy. It would also speed up related permitting and limit the courts' ability to stop or delay developments. As CalChamber prepares for a robust campaign this fall, the State Building & Constructions Trades Council and environmental organizations have begun forming an opposition coalition.

The Governor and Legislators also added to the ballot Proposition 1, an $11.25 billion affordable housing bond with specific carveouts for veterans, university students and faculty, farmworkers and youth.

Democratic leaders also put Proposition 43 on the ballot to raise the threshold for citizen-driven special tax ballot initiatives to pass from a simple majority to two-thirds. This reflects a late breaking deal with the Howard Jarvis Taxpayers Association, which had originally worked on a measure to retroactively cap property taxes and raise the voter threshold. They removed their proposition following the deal with top legislators on Proposition 43.

California State Budget

On June 26th, the Governor and legislative leaders announced a three-party budget deal. The $352 billion budget that passed on June 30th ahead of the July 1st start of the fiscal year was balanced for this fiscal year and the following.

As part of the budget, the Governor and legislators agreed to implement a State Clearinghouse submittal fee at the Office of Land Use and Climate Innovation (LCI). AEP met with LCI in May to discuss the fee, which LCI intends to be low and reasonable for the documents being submitted electronically. The office will hold a formal regulatory process to solicit public feedback before finalizing the fee amounts and payment processes. The goal is that the fees will enable LCI to develop a much more sophisticated and user-friendly portal for easier submittals and more useful data production.

While the budget addressed a number of different issue areas, decisions around the allocations of the Greenhouse Gas Reduction Fund were punted to August, leaving things like climate and wildfire resiliency, housing and transit program funding up in the air. The recent downturn in Cap and Invest revenues, as well as recent regulatory decisions at CARB have led to decreased revenues overall. This led to frustration from Legislators and stakeholders who were becoming reliant on the funding. Legislators and the Governor will continue negotiating through the July Recess and will need to make final decisions on allocations before the end of Session on August 31st.

Tracked Bills

AEP continues to track a number of bills that are working through the legislative process, including the following measures:

SENATE

SB 887 (Padilla) The bill would expand California environmental review rules by defining data centers for CEQA purposes, preventing them from using categorical exemptions, and allowing certain data center and geothermal power plant projects to qualify as environmental leadership development projects. It would direct the Energy Commission to set statewide standards for data center conditions, require compliance reporting and enforcement, and apply greenhouse gas quantification and mitigation rules to data center projects. This bill is in Assembly Appropriations.

SB 954 (Blakespear) The bill would amend the CEQA provisions that were agreed to in last year's budget trailer bill that created an exemption for advanced manufacturing. The bill would eliminate that exemption and instead created expedited judicial review for specific types of manufacturing facilities that meet certain requirements. The bill would also provide more standard habitat protections that were accidentally left out of AB 131 last year. It is in Assembly Appropriations Committee.

SB 1326 (Wahab) One of multiple bills at the intersection of tribes and CEQA, this would expand the CEQA tribal cultural resource protections by broadening the definition, strengthening consultation and mitigation requirements, and requiring lead agencies to justify decisions when they do not use or adopt tribe-proposed methods or measures. This bill is in Assembly Appropriations Committee.

ASSEMBLY

AB 1457 (Bryan) This bill requires cities and counties to adopt an environmental justice element on or before June 30, 2028, and requires certain community engagement procedures to ensure meaningful involvement of disadvantaged communities in the development, adoption, and implementation of the plan. The bill is in the Senate Appropriations Committee.

AB 1881 (Ramos) The bill, called the California Indian Freedom Act of 2026, would strengthen protections for California Indian and California Native American religious practices on state lands and create new confidentiality rules for related tribal information. This bill is in the Senate Appropriations Committee.

AB 2059 (Wilson) This bill adds a rule that, except as specified, a transportation project is presumed to have a lessâthanâsignificant transportation impact under the VMT metric if at least 80% of the project is located in one or more nonmetropolitan counties. This bill is in the Senate Appropriations Committee.

AB 2074 (Haney) This bill would require major transit cities to create regional transit hub districts by July 1, 2027, and would make certain "downtown housing developments" in those districts eligible for streamlined ministerial approval. This bill is in the Senate Appropriations Committee.

AB 2185 (Quirk-Silva) This bill mandates that by July 1, 2027, several Californian housing agencies must review and adjust their regulations to encourage the use of factory-built housing in multifamily affordable housing programs. This bill is in Senate Appropriations Committee.

AB 2234 (Papan) The bill would create an exemption for a geothermal exploratory project under CEQA and clarify how distance limits for such wells are measured. It is in Senate Appropriations Committee.

AB 1573 (Bryan) This bill would add victims of domestic violence, sexual assault or human trafficking to the definition of "target population" for the purposes of housing elements in general plans. The bill is on the Senate Floor.