California Transportation Bills Wrap-Up 2025
Budget: Roads and Transit Funding Maintained, Active Modes Cut
California faced a considerable budget deficit this year, but the transportation sector saw both windfalls and cuts. Winners include our roads and highways, where auto-centric investments were maintained mainly at prior budget levels. Pedestrians and cyclists did not fare as well in this year’s budget cycle, as the Active Transportation Fund, which had been slashed by $400 million last year, was not reallocated. UC Davis research developed by Dillon Fitch-Polse and Matt Favetti has quantified that the benefits of active travel investments outweigh the costs. Transit agencies came away with a 9th-inning budget victory after advocates convinced the legislature to maintain around $1 billion of the increased funding levels negotiated during the 2024 budget cycle. These funds provided much-needed extra help to agencies as pandemic assistance dried up, but many agencies still face a fiscal cliff, with revenue shortages and growing costs on the horizon.
Fuels: Refinery Closures and Gas Prices Weaken California’s Climate Progress
A controversial bill advanced in this year’s legislative session identified that the state is willing to balance its long-term ambition to reduce petroleum consumption against the need to stabilize gas prices in light of recent refinery closures that would reduce gas production by 18%. SB 237 (Grayson) contained a variety of provisions to stabilize gasoline price and supply, notably granting a significant CEQA exemption to fast-track permits to expand petroleum drilling on some long-established Kern County oil fields, and creating a procedure by which the state’s requirement for cleaner gasoline specifications could be relaxed to allow more imports into the market. ITS-Davis Researcher Colin Murphy explains that additional strategies for California to endure refinery closures include better alternatives to gasoline, like higher percentages of ethanol in fuel, more electric vehicles, and better options for walking, biking, or taking public transit.
Climate Wins: Cap And Trade Refreshed And Rebranded “Cap And Invest”
California’s current cap-and-trade framework and accompanying Greenhouse Gas Reduction Fund (GGRF) portfolio of climate mitigation projects will remain in effect until at least 2045, following the signing of AB 1207 (Irwin) and SB 840 (Limon). These will reauthorize the landmark climate bills that were set to sunset in 2030. The new laws will make several changes to the structure of the offsets, how cap-and-trade funds are allocated, and how the funds can be spent on climate reduction projects. The new GGRF will increase funds for CAL FIRE and allocates $800 million to the Affordable Housing and Sustainable Communities Program, which will support transit-oriented development and other investments in underserved communities. The Legislature will also allocate $1 billion annually to priority investments at its discretion, which may be used to fund ZEV incentives moving forward. The state will also prioritize investments in California’s high-speed rail development, specifying that proposed spending plans should allocate at least $1 billion per year from GGRF to the rail system through the extended authorization period. The GGRF has funded a wide range of transportation, energy, agriculture, natural lands, and technology innovation projects, with more than $30 billion allocated to projects since the GGRF's launch in 2013. SB 840 will also require a new study of the use of offsets. UC Davis researchers have collaborated closely with state agencies to address a range of research questions regarding the cost-effectiveness of the GGRF, including evaluating transportation programs and pilots, developing methodologies for quantifying outcomes of investments, and promoting improved evaluation practices for state investments. The GGRF portfolio and its broad spectrum of applications offer opportunities to learn from a diverse range of pilot projects, small-scale innovations, and community-based improvements that can potentially be scaled or expanded into long-term transportation and climate solutions.
Land Use: Fast Tracking and Densifying Housing Near Transit
In June 2025, Governor Gavin Newsom signed AB 130 and SB 131 (budget bills), which seek to expedite approval of housing and infrastructure projects by creating new exemptions to the California Environmental Quality Act (CEQA) process. These bills create exemptions for a range of projects and project components, including projects that aim to reduce wildfire risk; projects that focus on improving community water systems in disadvantaged areas; projects developing agricultural employee housing; projects expanding broadband access through an existing right-of-way; projects that develop or improve public parks and trails; projects creating community assets such as daycare and health centers, food banks, and advanced manufacturing facilities; and projects supporting the development or maintenance of the high-speed rail system. This legislation builds upon existing policies to promote housing development in the state, such as the Class 32 exemption for infill development projects. Together, AB 130 and SB 131 represent one of the most significant expansions of exemptions in the past decade since the passing of policies such as SB 35, which streamlined housing project approval in 2017, and bills in 2021-2023, which created exemption pathways for certain types of affordable housing, climate-focused, and transit-oriented projects. UC Davis researchers have previously assessed the equity impacts and development considerations related to CEQA and its Vehicle Miles Traveled (VMT) mitigation requirements. This new legislation will likely provide further opportunities to study how streamlined development affects community travel needs and the development of transportation systems.
The Governor may also sign one of the most significant transit-oriented development bills in recent years, SB 79 (Wiener). This bill is controversial because it overrides local zoning laws to allow denser developments around qualified transit stops, with the dual goal of solving both the state’s housing crisis and declining transit ridership. The density and scale of projects allowed by SB 79 depend on the type of transit stops nearby. The bill sorts transit into two tiers, each offering more density with proximity to higher ridership transit. While local cities (including Los Angeles and San Diego) have voiced opposition, the bill also allows local government to draft a “local alternative plan” that would permit the same amount of housing. While SB 79 preempts local zoning near transit stops, SB 79 projects are not “by-right,” meaning they may still require discretionary local approval. Research from our colleagues at UCLA has examined the importance of a by-right approval process in transit-oriented developments.
Autonomous Vehicles
The legislature passed SB 480 (Archuleta), which would allow autonomous vehicles (AVs) to have a market lamp indicating that they are operating in autonomous mode or under the control of a driver or operator. If signed, this bill allows developers to circumvent a state law that limits the types of lights to only yellow or white front lights and red rear lights. The legislature rejected three other AV bills, SB 511 (Pérez), which would bring those ADAS or Level 2 vehicles under the DMV purview, establishing a special training and permitting requirement for all drivers of Level 2 vehicles under DMV authority. Also rejected was AB 33, which was the legislature's third attempt to block autonomous trucks from advancing in the state. These bills may overlap with an ongoing new regulatory pathway for autonomous trucks and vehicles proposed by the California DMV. Also rejected was SB 572 (Gonzalez), which would require that crashes in Level 2 vehicles be reported to the California DMV. This is a timely bill because the National Highway Traffic Safety Administration (NHTSA) has released a new set of exemptions for data reporting, weakening the federal requirements for crash data reporting for Level 2 vehicles that can utilize combinations of partial automation features, such as advanced cruise control and lane-keeping assistance. Researchers at UC Davis have addressed safety and governance challenges related to autonomous vehicles.
Bikes: Enhancing E-Bike Safety
Electric bikes are an increasingly important mode of transportation in California. Researchers at UC Davis have evaluated the hurdles to the adoption of e-bike sharing systems. Several bills passed by the state legislature focused on ensuring electric bikes sold in California are safe for riders and other pedestrians. Existing regulations classify types of e-bikes based on their maximum speed, both with and without pedal assistance. Class 1 and class 2 e-bikes cannot exceed 20 miles per hour, and class 3 e-bikes cannot exceed 28 miles per hour. AB 545 (Davies) prohibits manufacturers and third parties from installing or selling modifications that allow an e-bike to exceed speeds permitted in its class. AB 965 (Dixon) prohibits the sale of class 3 e-bikes, which may reach speeds of 28 miles per hour, to people under the age of 16. AB 544 (Davies) requires e-bikes to have red reflectors on the bike at all hours of the day instead of only at night. It allows minors who are cited for not wearing a helmet while riding an e-bike to complete a specialized e-bike safety course in lieu of paying a fine.
Battery Recycling: No Reforms this Year
California still lacks a comprehensive law governing electric vehicle battery management, unlike the European Union and other jurisdictions. SB 615 (Allen) failed to pass out of the legislature this year, but would have addressed this gap by requiring manufacturers to ensure that these batteries are first reused, repaired, or remanufactured if possible, then repurposed and eventually recycled, rather than ending up in the waste stream. ITS-Davis experts provided a briefing to legislative staff to educate them on global best practices. They discussed California’s approach—the bill aimed to establish a battery management hierarchy system and a reporting system for tracking battery transactions. Battery recycling reform has yet to be successful; the California Legislature passed a similar bill in the 2023-2024 session, but the Governor vetoed it in September 2024.
Freight: Still No Statewide Baseline
AB 914 (Garcia), also known as the "Pollution Hotspots Solution Act," is a bill that affirms the California Air Resources Board's (CARB) authority to regulate air pollution from indirect sources on a statewide basis. These indirect sources are facilities like ports, warehouses, and distribution centers that attract a high volume of polluting mobile sources such as diesel trucks and equipment. While local air districts currently have this authority, only a few have exercised it, resulting in varying regulations across the state. AB 914 would create a consistent, statewide baseline. The bill passed the Assembly Natural Resources and Appropriations committees but was re-referred to the Appropriations committee and did not get a floor vote.
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Mollie Cohen D’Agostino is Executive Director of the Mobility Science, Automation and Inclusion Center at the ITS-Davis
Roland Hwang is Policy Director at ITS-Davis
Brian Harold is Policy Evaluation Specialist at ITS-Davis
Ryan Joy is a Legal Fellow at ITS-Davis
Colin Murphy is Co-Director of the Energy Futures program at ITS-Davis and Co-Director of the ITS-Davis Low-Carbon Fuel Policy Research Initiative