SB 797 creates a temporary categorical carve‑out from the California Environmental Quality Act (CEQA) for projects that convert overhead electric distribution or transmission facilities to underground and for projects that insulate those facilities, except where the project is located in a statutorily defined environmentally sensitive area. The exemption automatically lapses either when the Public Utilities Commission (CPUC) submits a required plan on investing in undergrounding and insulation or no later than July 1, 2027, and the statutory provision is repealed on January 1, 2028.
Separately, the bill requires the CPUC to convene a working group to study the costs of undergrounding and insulating electric distribution and transmission facilities, compile utilities' wildfire mitigation reports, and deliver a plan to the Legislature by July 1, 2027, about how best to invest in or otherwise support utilities for preventing fires in very high fire hazard severity zones, wildland‑urban interface areas, and state forests. The measure includes a statutory finding that it imposes a local program and asserts no state reimbursement is required under the California Constitution.
At a Glance
What It Does
Temporarily exempts non‑sensitive undergrounding and insulation projects from CEQA review until the CPUC files a prescribed plan or until July 1, 2027; directs the CPUC to form a working group, study costs, compile wildfire mitigation reports, and submit a plan to the Legislature by July 1, 2027. The CPUC’s planning mandate sunsets on January 1, 2031.
Who It Affects
Investor‑owned electrical corporations and their contractors who plan undergrounding or insulation work, local lead agencies that administer CEQA determinations, and the CPUC staff who must convene and support the working group. Communities and habitats in 'environmentally sensitive areas' remain subject to full CEQA review.
Why It Matters
The bill accelerates the administrative pathway for many utility resiliency projects by removing CEQA as a gating review in non‑sensitive locations, while directing a statewide analysis of costs and investment priorities — a combination that shifts emphasis from project‑level environmental review to top‑down planning and potential future funding decisions.
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What This Bill Actually Does
SB 797 rewrites how certain utility safety projects interact with CEQA and asks the state regulator to prepare a practical roadmap for scaled investment. First, it adds Section 21080.6 to the Public Resources Code to declare that CEQA does not apply to projects that convert overhead electric distribution or transmission lines to underground or that insulate those facilities, but only if the work is outside defined 'environmentally sensitive areas.' That carve‑out is not permanent: it becomes inoperative as soon as the CPUC files the required plan, no later than July 1, 2027, and the statutory CEQA exemption is repealed on January 1, 2028.
Second, the bill adds Section 279 to the Public Utilities Code and forces the CPUC to convene a working group to study the practical cost of undergrounding and insulating both distribution and transmission facilities and to compile existing utilities’ wildfire mitigation reports. The working group must translate its findings into a plan for the Legislature by July 1, 2027, identifying how to most effectively invest in undergrounding and insulation or otherwise support electrical corporations for fire prevention in very high fire hazard severity zones, wildland‑urban interface areas, and state forests.
The plan must be submitted consistent with the Government Code process for state plans and the CPUC’s mandate sunsets on January 1, 2031.Operationally, the bill shifts some decisions from project‑level environmental review to a statutory, time‑bounded planning exercise. Local lead agencies retain the duty to assess whether a specific project falls inside the exemption (and thus are now performing new determinations that the bill labels a state‑mandated local program).
The statute does not itself create a funding stream for undergrounding; it requires study and planning that could inform future budget or rate decisions. The bill also includes a constitutional reimbursement clause asserting no state reimbursement is required because local agencies can cover any mandate through fees, charges, or assessments.
The Five Things You Need to Know
Section 21080.6 (added to the Public Resources Code) exempts conversion of overhead electric distribution/transmission facilities to underground and insulation projects from CEQA unless located in an 'environmentally sensitive area.', The CEQA exemption becomes inoperative when the CPUC submits its plan, but no later than July 1, 2027; the exemption statute is repealed January 1, 2028.
Section 279 (added to the Public Utilities Code) requires the CPUC to form a working group to study undergrounding and insulation costs and to compile utilities’ wildfire mitigation reports.
The CPUC must deliver a plan to the Legislature by July 1, 2027, on how to most effectively invest in undergrounding/insulating or otherwise support utilities for fire prevention in very high fire hazard zones, WUI areas, and state forests; that planning authority sunsets January 1, 2031.
The bill declares the CEQA‑exemption determinations a state‑mandated local program but states no state reimbursement is required because local agencies can levy fees, charges, or assessments to cover costs.
Section-by-Section Breakdown
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Temporary CEQA exemption for undergrounding and insulation projects
This provision creates the narrow categorical carve‑out from CEQA for projects that convert overhead electric distribution or transmission lines to underground and for projects that insulate those facilities, with a clear exception for projects in 'environmentally sensitive areas' (referencing the existing statutory definition). Practically, it removes the requirement for lead agencies to prepare environmental impact reports or mitigated negative declarations for qualifying projects while the exemption is operative, but it leaves the determination of whether a project qualifies to the local lead agency — which is why the bill is treated as imposing a state‑mandated local program.
CPUC working group, cost study, and legislative plan
This section directs the CPUC to convene a working group to analyze the costs of undergrounding and insulating both distribution and transmission facilities and to compile existing wildfire mitigation reports submitted by utilities. The working group’s deliverable is a plan to be provided to the Legislature by July 1, 2027, identifying how to most effectively invest in undergrounding/insulating or otherwise support utilities specifically for preventing fires in very high fire hazard severity zones, wildland‑urban interface areas, and state forests. The provision ties the plan submission to Government Code processes (Section 9795) and sets a statutory sunset for the CPUC’s duty on January 1, 2031.
Reimbursement and fiscal framing
The bill states that no state reimbursement is required under Article XIII B, Section 6 of the California Constitution because local agencies have authority to levy fees, charges, or assessments sufficient to comply. That language is procedural but consequential: it attempts to avoid triggering the state's reimbursement obligation for any local costs tied to determining CEQA exemptions, thereby placing potential fiscal pressure on counties, cities, and special districts that must make those determinations.
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Explore Energy in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Electrical corporations (investor‑owned utilities): The temporary CEQA exemption can shorten permitting timelines for non‑sensitive undergrounding and insulation projects, reducing project delay risk and administrative burdens for routine resiliency work.
- Contractors and construction firms specializing in undergrounding/insulation: Faster environmental clearance for many projects could accelerate procurement and permit‑to‑construction timelines, boosting near‑term project pipelines.
- Residents and property owners in non‑sensitive, high‑risk areas: Where utilities move quickly to underground or insulate lines, local communities may see reduced wildfire ignition risk and fewer outages tied to overhead infrastructure.
- State policymakers and planners: The CPUC cost study and legislative plan will produce centralized data and recommendations that can inform future budgeting, regulatory policy, and statewide prioritization of undergrounding investments.
Who Bears the Cost
- Local lead agencies: They must determine whether individual projects qualify for the CEQA exemption, creating administrative workload and potential legal exposure without a dedicated reimbursement stream.
- Ratepayers and utility customers: The bill does not provide funding; if utilities are directed or encouraged to accelerate undergrounding, costs may be recovered through rates, shifting fiscal burden to customers unless alternate funding is provided.
- CPUC and state agencies: The commission must staff and support the working group and prepare the plan, which consumes regulatory resources between now and the 2027 deadline and through the 2031 sunset.
- Environmental and conservation stakeholders: Projects that proceed under a categorical exemption could avoid site‑specific CEQA scrutiny, raising the risk that local environmental harms are not fully identified or mitigated.
Key Issues
The Core Tension
The bill pits speed and scale in wildfire risk reduction against local environmental review and fiscal clarity: it seeks to remove CEQA hurdles for many undergrounding projects so utilities can act faster, but in doing so it shifts oversight to local agencies without dedicated funding, and it risks sidelining site‑specific environmental protections unless the CPUC plan leads to concrete, funded policies.
SB 797 combines a temporary procedural shortcut with a time‑limited planning requirement, but the bill leaves key implementation questions unresolved. The statute exempts many undergrounding and insulation projects from CEQA without specifying how lead agencies should document eligibility, which may produce inconsistent determinations across jurisdictions and invite litigation over whether a given location qualifies as 'environmentally sensitive.' The bill explicitly preserves CEQA review in environmentally sensitive areas, but it does not define how to treat projects that overlap sensitive and non‑sensitive parcels or that introduce ancillary impacts (access roads, staging yards, vegetation removal) beyond the immediate footprint of undergrounding work.
The bill mandates a CPUC study and plan but creates no funding mechanism for the investments the plan may recommend. That gap leaves three linked uncertainties: who will pay for large‑scale undergrounding (ratepayers, state general fund, or local assessments), how the CPUC’s recommendations will translate into enforceable policy or ratemaking, and whether a plan submitted by July 1, 2027 will be specific enough to resolve trade‑offs between cost, wildfire risk reduction, and environmental protection.
Additionally, consolidating wildfire mitigation reports and cost data into a single plan raises questions about data standardization, confidentiality of utility submissions, and whether the working group will have the technical capacity and stakeholder representation needed to produce actionable prioritization.
Finally, the bill’s fiscal framing—asserting no state reimbursement is required because local agencies can levy fees—may understate the real administrative costs local governments face in applying the exemption and defending decisions. That creates an implementation tension: the state accelerates project approvals in many areas but expects local governments to absorb the compliance and oversight tasks without clear funding, while utilities and ratepayers confront ambiguous funding responsibility for the capital‑intensive undergrounding work.
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