It was a little-noticed aspect of the final California budget deal, but Gov. Arnold Schwarzenegger made California Environmental Quality Act history when he signed the long-delayed 2008-09 budget in February.

Schwarzenegger asked for and got something no governor had ever gotten through the budget process before: an exemption under the California Environmental Quality Act for certain state construction projects based on economic hardship, rather than on natural disaster. The governor also got a CEQA exemption for as-is sale of state surplus property, which is possibly not something of much value in a down economy but a significant concession nevertheless.

It's not uncommon for CEQA to be the fall guy in a recession, especially one where real estate development has taken a nosedive. But the charge – often unsuccessful – is usually led by homebuilders and developers, who typically argue that CEQA is one of the causes of the slowdown.

It's not uncommon for the governor to ask for a CEQA exemption when natural disaster strikes – floods, fires, mudslides, earthquakes, the usual range of California nightmares.

But a governor asking for and getting a CEQA exemption because the economy is slow? That's never happened before. It's a reminder of just how tough times are, and also a reminder that even after nearly 40 years and endless court rulings, CEQA is merely a law that can be changed or even repealed if the governor and the Legislature want to do so.

Meanwhile, the builders – perhaps mired in the endless stalemate with local governments and environmentalists in Sacramento – haven't pushed the "blame CEQA" idea the way they usually do. Instead of pursuing aggressive CEQA streamlining in response to the economic climate, the builders focused most of their effort in the last legislative session on getting a minor and complicated CEQA exemption put into SB 375.

Schwarzenegger's CEQA exemptions are contained in AB 8x2 (or AB 8xx), a bill carried by Republican Assemblyman Brian Nestande of Palm Desert, whose father, Bruce Nestande, was Mr. Transportation in Orange County for many years as a county supervisor, a legislator, and a state transportation commissioner.

The most highly publicized part of the bill was the provision that delayed implementation of a new state air pollution rule requiring retrofitting of off-road diesel construction equipment. That provision was openly criticized by Schwarzenegger's own top air quality regulator, Mary Nichols, who told the Los Angeles Times, ""There are people who will die because of this delay."

But the CEQA provisions are also important. They include both CEQA exemptions and a streamlined environmental review process for an overlapping set of transportation projects. The eight projects listed in the bill for CEQA exemptions are:

(1) A Highway 101 interchange modification, adding a southbound auxiliary lane and a southbound mixed-flow lane, from Interstate 280 to Yerba Buena Road, in Santa Clara County.

(2) Northbound and southbound high-occupancy vehicle lanes on I-805 from I-5 to Carroll Canyon Road, including construction of north-facing direct access ramps, in San Diego County.

(3) Rehabilitation and traffic calming on State Route 99 through Los Molinas, from Orange Street to Tehama Vina Road, in Tehama County.
(4) A State Route 99 Island Park widening project that adds one mixed-flow lane in each direction, from Ashlan Avenue to Grantlund Avenue, in Fresno County.

(5) State Route 99 median widening and the addition of one mixed-flow lane in each direction, from State Route 120 west to 0.4 miles north of Arch Road, in Manteca in San Joaquin County.

(6) State Route 12 pavement rehabilitation and shoulder widening in San Joaquin County on Bouldin Island.

(7) State Route 91 widening, adding one mixed-flow lane in each direction, from State Route 55 to Weir Canyon Road, in Orange County.

(8) U.S. Highway 101 pavement rehabilitation and shoulder widening
in San Luis Obispo County.

The list of projects that qualify for streamlined CEQA review – essentially an internal Caltrans environmental review process that is not done under CEQA – included some of these same projects but also four others, including three in Orange County. These are:

(1) Palm Avenue grade separation in San Bernardino County.

(2) State Route 57 northbound widening, from Katella Avenue to Lincoln Avenue, in Orange County.

(3) The addition of an auxiliary westbound lane to State Route 91, from
Interstate 5 to State Route 57, in Orange County.

(4) State Route 91 widening that adds one mixed-flow lane in each direction, from State Route 55 to Weir Canyon Road, in Orange County.

A Highway 50 carpool lane project had already been in CEQA litigation, which was settled in January. In exchange for dropping the lawsuit, environmentalists got Caltrans to promise to pay Sacramento Regional Transit $8 million toward a second light-rail track from Sacramento to Folsom along the Highway 50 corridor.

It remains to be seen whether the budget-deal exemptions will actually move projects along faster. Schwarzenegger may be trying to make these projects "shovel-ready" to qualify for the Obama stimulus money, though nobody has yet asked the question of whether projects funded with stimulus money must go through the environmental review process at the federal level under CEQA's equivalent, the National Environmental Policy Act.

Perhaps most important, we'll see whether California's homebuilders catch on to the idea that CEQA might be a bigger target in the current slowdown than they thought. Inside the Sacramento beltway, it's easy to get caught up in the idea that only incremental changes are possible – and that builders have limited leverage on CEQA against the environmentalists. But Schwarzenegger may have proven that the combination of the economic downturn and ongoing budget problems make it possible to think about weakening CEQA in a much broader way over the next couple of years.