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Gov. Gavin Newsom vetoed a bill closing an exemption to the California Environmental Quality Act for advanced manufacturing facilities that generated considerable opposition from industry groups throughout the legislative session.
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His veto, announced late Friday, will likely extend a fight over regulations for the facilities, which were granted exemptions at the end of last year’s legislative session over the objections of many lawmakers who had vowed to come back with a fix in the session that just concluded.
National environmental groups, including the Sierra Club, Natural Resources Defense Council and League of Conservation Voters had lobbied Newsom in recent days amid fears he was likely to reject the measure, which was sponsored by Sen. Catherine Blakespear, D-Encinitas.
“While widespread CEQA exemptions enacted last year are important to stimulate economic development and encourage advanced manufacturing, California must provide basic protections for the environment and vulnerable communities,” Blaksepear told The Sacramento Bee earlier Friday.
Newsom, though, said her bill went too far and conflicted with his administration’s goals. “Just last year, we enacted the most significant reforms of California’s housing and environmental review law in decades — a long-overdue overhaul to get California building again,” he wrote in his veto letter, in which he indicated he wanted to see those changes play out. “If implementation reveals problems, they should be addressed through targeted, evidence-based changes — not by preemptively rolling back our progress.”
Prominent business and manufacturing organizations had called on the governor to hold the line against the environmental groups and reject the bill. The decision, for Newsom, pitted in some ways his attempts to hold California up as an antidote to President Donald Trump’s widespread environmental rollbacks against his desire to spur the state’s industries ahead of a potential presidential campaign in which economic issues are likely to be top of mind. And Newsom has often been an ally to the state’s striving technology industry chiefs. Opponents see the existing exemption as helpful in the development of new businesses tied to the state’s ongoing artificial intelligence boom, California Manufacturers and Technology Association CEO Lance Hastings said.
“We have tremendous intellectual property in this state that would really support and embrace advanced manufacturing,” he said.
In an Aug. 31 letter, that group had urged Newsom’s veto.
“California is actively seeking to attract and retain advanced manufacturing, clean technology, and industrial investment,” the letter read. Signing the bill into law would instead continue the “erosion of quality, high paying manufacturing jobs,” California has seen, it continued.
Last-minute legislation last year
Senate Bill 954 has roots in last year’s legislative session, when Newsom threatened not to sign the state budget bill if lawmakers didn’t pass separate legislation creating exemptions in CEQA, California’s landmark environmental protection law, for housing and infrastructure development.
Some lawmakers at the time felt a rushed process under the pressure of Newsom’s threat led to overly broad exemptions becoming law. Those lawmakers pressed legislative leaders to revisit that exemption this year, and SB 954 is the resulting compromise, its proponents say.
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“In practice, projects as wide-ranging as lithium mining, hydrogen production, water bottle manufacturing, and carpet recycling,” could fall under the definition Newsom signed into law, 35 senators and Assembly members wrote in a letter to Assembly Speaker Robert Rivas, D-Hollister, and then-Senate President Pro Tempore Mike McGuire, D-Healdsburg last year.
“At the time of the bill’s passage, commitments were made on the Senate floor to clean up these outstanding issues,” the lawmakers wrote in the letter.
Blakespear worked out significant amendments to the bill throughout the legislative session, and affordable housing groups that opposed it earlier in the year changed their position to neutral. Sen. Scott Wiener, D-San Francisco, and Assemblymember Buffy Wicks, D-Oakland, among the architects of last year’s legislation, ultimately voted in favor of the bill’s final passage, along with 76 other Democrats in the Assembly and Senate. A handful of members of the supermajority party withheld their votes, and Republicans voted en masse against the bill.
Opponent calls SB 954 ‘a repeal’
Opponents said the legislation still went too far and was antithetical to the ongoing effort to spur more building projects in California.
“It’s not a cleanup,” said Adrian Covert of the Bay Area Council which has opposed the bill. “It’s a repeal.” The bill puts so many new requirements on facilities seeking to access the CEQA exemption that businesses would no longer bother trying to access it, he said, speaking before Newsom’s veto. Instead, Covert argued the legislation was likely to spur more businesses to choose Texas or other states, spurring building in places with less climate and environmental protections.
So far, a proposal by Google to build a quantum computing research facility in Goleta and an expansion to an industrial park in Lakewood have received exemptions under the law. A nuclear fusion testing facility planned for Livermore also received the exemption, but ultimately the company appears to have chosen a site in New Mexico for the project.
Last year’s legislation “was intended to make California more competitive,” Covert said. “Just as soon as we’re starting to see some green shoots, Senate Bill 954 is promising to poison the well.”
But the environmental groups and others backing the legislation had sought to keep up the pressure on Newsom. “It’s really a test for Gov. Newsom whether he supports the safety of our community and our air and water, as opposed to facilitating industrial development at the expense of community health,” Corey Brown, a spokesperson for the Planning and Conservation League, a bill proponent, told The Bee. “This is a legacy issue for him.”
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This story was originally published September 18, 2026 at 5:38 PM.