Gov. Gavin Newsom, lagging far behind his campaign pledge to build millions more homes, signed on Monday the most significant rollback in decades to California’s core environmental law, which has long been blamed for construction delays and soaring home prices.

Assembly Bill 130 and Senate Bill 131 shield nine types of projects from the California Environmental Quality Act, or CEQA, a 1970 state law that requires builders to assess potential environmental impacts from their projects and any measures that could lessen them.

Those project types include child care centers, health clinics, food banks, farmworker housing, broadband, wildfire prevention, water infrastructure, public parks or trails and, notably, advanced manufacturing.

“This is the most consequential housing reform we’ve seen in modern history in California,” Newsom said Monday evening before signing the bills. “These two bills I’m about to sign are transformative.”

The changes were met with opposition from environmental and community groups, which said industrial plants will be more easily built in low-income communities. They also said the exemptions will advantage developers by limiting public oversight and could create legal confusion.

“This bill is the worst anti-environmental bill in California in recent memory,” a coalition of opponents, including the California Environmental Justice Alliance and the Western Center on Law & Poverty, wrote in a letter to Newsom and legislators.

At the over three-hour hearing preceding the vote on Monday, dozens of members of the public spoke in opposition, with some holding signs saying, “When CEQA is silenced, polluters speak louder.”

Asha Sharma, state policy manager with Leadership Counsel for Justice and Accountability, called the changes “a back-room, last-minute deal” that made the state budget “dependent on gutting environmental review for resource-intensive and polluting industrial projects.”

“This law would not harm all California communities equally,” Sharma said. “This budget deal is an attack on lower-income communities of color that consistently get sited for harmful industrial projects.”

The governor had two top allies: Assemblymember Buffy Wicks of Oakland and state Sen. Scott Wiener of San Francisco, two Democrats who led the push for reform.

“None of us thought this would have been possible a couple of months ago,” Wicks said. “But I think the winds of change are with us. Our constituents are demanding it.”

“If California is ever going to truly tackle our crisis of affordability, we need to build an abundance of housing, child care centers, water infrastructure, broadband and all the things that we need to make life better and more affordable for people,” Wiener said.

Too often, Wiener said, CEQA is used to derail projects “for reasons having absolutely nothing to do with the environment.”

In an unusual agreement that rankled lawmakers on both sides of the aisle, the governor’s signature on SB 131 was necessary to keep the state’s government functioning for the next year. That’s because Newsom and top Democrats in the Legislature tied CEQA reform to the state’s $321 billion budget for 2025-26, and one couldn’t pass without the other. The agreement reached last week between Newsom and top lawmakers spelled out that SB 131 “is required for the entire 2025-2026 state budget to take effect.”

That arrangement forced lawmakers to scramble to vet and approve the bills on Monday, irking Democrats and Republicans alike during a packed hearing in the state Senate’s budget committee.

“It certainly stifles discussion and conversation,” said state Sen. Sasha Renée Pérez, a Democrat representing part of the Los Angeles region, during a Monday hearing. “The road to hell is paved with good intentions.”

The Assembly approved the bill with a 50 to 3 vote, and the Senate did so 33 to 1.

CEQA requires developments to undergo a lengthy and often expensive review process that critics say is often weaponized to extract concessions from developers. But it’s been staunchly defended by environmental justice advocates as a “critical” protection.

SB 131, a version of a bill sponsored by Wiener this spring, will exempt a laundry list of project types from the state’s environmental review process, including farmworker housing, advanced manufacturing facilities for nanotechnology and semiconductors, water projects and the state’s high-speed rail project — another top priority for Newsom and one that has been slowed by a slew of CEQA lawsuits.

Wiener, who chairs the Senate budget committee, said those projects will still have to abide by local planning and zoning requirements, as well as existing land protections.

The other reform bill, AB 130, carried by Assemblymember Jesse Gabriel, D-Los Angeles, targets apartment building in urban areas. It will exempt most apartment construction in urban areas from CEQA.

That exemption won’t apply to developments that aren’t consistent with local planning and zoning requirements, or projects on environmentally-sensitive or hazardous sites, according to the most recent analysis of the bill.

And developers who take the exemption will still have to assess the site for environmental hazards and mitigate them.

The California Building Industry Association and pro-development groups supported the bill, including California YIMBY.

Alejandro Lazo and Rachel Becker at CalMatters contributed to this report.