From 'not The Issue' To A Claim Of 'nation-leading': Newsom's Data Center Turnaround

What a difference a year makes.

Last year, California Gov. Gavin Newsom vetoed legislation that would have tracked data centers’ water use and signed a pared-back study measure on their electricity rates. Just a few months ago, he was downplaying the importance of the issue altogether.

Now, as he gears up for a likely 2028 presidential run, the governor is suddenly touting himself as a national leader in regulating the computing facilities.

Newsom on Monday signed seven bills that grant state and local officials more power to control data centers’ energy, water and land use — including a water consumption reporting bill similar to the one he rejected last year. Newsom’s past stance didn’t stop him or his team from trumpeting the policies as nation-leading.

“I just signed the most comprehensive data center protections in America,” Newsom said in an X post Monday. “We're making sure these companies pay the costs they create instead of sticking working families with the bill.”

Newsom’s not the only politician making that claim. Last week in Virginia, Gov. Abigail Spanberger described her executive order to tighten development rules for data centers as the nation’s “most comprehensive” framework. And this summer in New York, Gov. Kathy Hochul approved the country’s first statewide moratorium on new hyperscale data center construction, which she called “nation-leading.”

“It is not nation-leading. That is spin from Governor Newsom,” Mitch Jones, managing director of policy at Food & Water Watch, told POLITICO. “California is merely keeping pace with where the industry itself is, and in the case of Governor Newsom, he's keeping pace with where most of the other potential presidential candidates for 2028 within the Democratic Party are.”

The competition to be America’s chief data center wrangler underscores the issue’s political importance as voters sour on the facilities and the AI giants racing to build them. Recent POLITICO polling shows many Americans view data centers as energy-hungry, water-guzzling scourges on their communities, despite the industry’s efforts to dispel sustainability concerns and promote the jobs and economic benefits the facilities offer.

For Newsom — a longtime Silicon Valley ally who argued last fall that California was “well positioned” to support data center construction and was blasé on data center controls as the issue blew up earlier this year — his evolution on the issue demonstrates how politicians are pivoting to avoid blowback.

Mark Toney, executive director of The Utility Reform Network, a California-based nonprofit, told POLITICO he noticed ”more urgency” and “more positive signals from the governor's office” to regulate data centers this year. He contrasted it to last year, when he said “there was not a sense that California had to be out front — and in fact, California was at risk of falling behind.”

Newsom’s office defended his record on data centers in a statement to POLITICO. Asked how California’s new data center rules are the nation’s “most comprehensive,” spokesperson Tara Gallegos pointed out that they were enacted via legislation, while Hochul and Spanberger established their regulatory frameworks through executive orders.

“California built the internet. We are home to North America’s first website and web server. The Governor is proud of that history,” Gallegos said. “But those early server rooms are a world away from today’s massive hyperscale data centers. He’s never chased those.”

And when asked why Newsom last year vetoed Assemblymember Diane Papan’s water-use reporting bill, which is similar to legislation he signed Monday, the governor’s office argued the previous offering was too vague, pointing to a committee analysis that found this year’s version more clearly dictated when and how data should be reported.

Nonetheless, advocates argue that the new laws Newsom signed fall short of the moratorium Hochul signed into law and similar temporary stoppages it inspired in other states. On Monday, Republican Texas Gov. Greg Abbott created a stark contrast between himself and Newsom by halting all permits that the state issues for data centers until it can complete an audit.

Even when compared to efforts to regulate data centers that don’t pause development of the facilities, advocates considered Newsom’s package “middle of the pack” or late to the trend.

Jones, whose group has pushed for data center moratoriums across the country, put the laws Newsom signed in the same ballpark as an executive order Pennsylvania Gov. Josh Shapiro — another 2028 contender who has shifted away from a more welcoming stance toward new data centers — issued and dubbed the “strictest standards in the nation” back in August.

Both Shapiro's order and California’s new regulations stipulate that data center providers must pay for all the new energy they’re generating. It’s an idea that has been gaining traction among Democrats for months and that President Donald Trump already got several of the biggest tech companies to agree to with a nonbinding pledge in March.

Previously, Newsom suggested the focus on who should pay for new data center construction was misguided.

“Just saying that you should not or cannot build a data center is not going to slow this technology down,” he said at the Center for American Progress conference in May. “We’re still discussing who’s going to pay for my increased electricity because of the data center, which is a legit issue, but it’s not the issue.”

His movement on data centers is part of a broader recalibration as AI itself has become more politicized. He’s supported giving the public shares in AI firms to fight economic inequality, approved new child safety rules for chatbots and most recently ordered experts to consider a requirement that AI companies develop a “kill switch” for their most advanced models after vetoing a version of that idea in 2024.

At a signing ceremony for several tech and AI bills this month, Newsom signaled more action was coming soon on data centers.

Jones argued that once data center opposition spread nationwide and other pro-growth Democrats pivoted, there wasn’t a political reality where Newsom could have vetoed the bills this year.

“With the governors who rolled out the red carpet for this industry, I don't think any of them right now could be seen vetoing bills that are being sold to their constituents as somehow reining in data centers,” he said. “It just wouldn't make political sense for them to be doing that right now if they're even contemplating running for any other office, let alone president.”

A version of this story first appeared in California Decoded, POLITICO’s morning newsletter for Pros about how the Golden State is shaping tech policy within its borders and beyond. Like this content? POLITICO Pro subscribers receive it daily. Learn more at www.politicopro.com.