A new Public Policy Institute of California survey found that seventy-three percent of Californians oppose building data centers in their own communities. Sixty-three percent worry about the environmental effects. Majorities of both parties are opposed. The divide isn’t as partisan as it is a divide between the communities enjoying the expanded the tax base and construction jobs a data center brings, and the people who write press releases about it.
That’s a political problem for a state betting its future on AI—and an even bigger problem when state leaders can’t seem to decide what the rules should be.
The backlash is already moving from opinion polls to city halls. Voters in Monterey Park did not wait for Sacramento to sort out its feelings on the matter. In June they voted to ban data centers in their city, the first such vote in the country. San Francisco has seen protests. Imperial Valley is in litigation.
This is not a fringe complaint anymore. It’s becoming a governing challenge and Gavin Newsom, whose feelings on AI have shifted more often than the Delta breeze, has not exactly provided a model of consistency.
Consider the record.
Last fall he vetoed a bill requiring data centers to disclose their water use before applying for a permit, calling it a rigid reporting requirement he was reluctant to impose. In the same legislative session, he signed a narrower bill ordering state regulators to study whether data center demand is quietly raising everyone else’s electric bill.
In May, at a conference in Washington, he waved off the idea that any of this should be stopped at all. The tech genie is not going to go back in the bottle, he said. We just have to steer it.
Two more bills, one creating a special utility tariff for data centers and one stripping their CEQA exemptions, which mandates environmental impact studies for projects, are on track to clear the Legislature this month.
Newsom’s would-be successor is not offering much more clarity. Xavier Becerra, the Democratic nominee, told a Sacramento audience recently that California hardly has any AI regulation and that he would push for real guardrails if elected, including a state-run cloud computing cluster. In the same breath, he said he wants to keep the tech industry in California the way he wants to keep Hollywood in Hollywood.
Those two goals are not automatically compatible. Capital-intensive infrastructure investment is not attracted by a promise that the rules will get stricter after the money arrives. Businesses can tolerate a lot of things, but not a moving target. Yet, California’s likely next governor is currently campaigning on one.
There is a better way that does not require choosing between Sacramento boosterism and Monterey Park’s blanket ban.
Set the rules first, in writing, before a shovel goes in the ground. If a community does not want a hyperscale facility on a particular parcel, its zoning authority already has the tools to say so, the same as it does for a warehouse or a refinery. If ratepayers believe they would be subsidizing a data center’s transmission upgrades, write a prohibition against it into a tariff structure everyone can read in advance rather than litigating it project by project. If environmental review matters, apply it evenhandedly rather than waiving it for some projects, or industries, and then weaponizing it against others depending on which way a senator is leaning that week.
None of this requires a new state cloud computing venture, and none of it needs a governor who discovers his opinion on a Tuesday but revises it by Friday.
Californians are not asking anyone to put the AI genie back in the bottle. Rather, they are asking for a rule they can rely on, that is written down, applied consistently, and settled before the bulldozers show up rather than after the lawsuits do.
Whoever wins in November, Becerra or Steve Hilton, will inherit a legislature with two data center bills sitting untouched and a public that has stopped waiting for Sacramento to make up its mind. The next governor’s first AI decision should not be another poll-tested straddle. It should be leadership.
Bartlett Cleland is a senior fellow in tech and innovation at the Pacific Research Institute.