California Governor Signs Seven Data Center Laws

Data center developers in California must now disclose energy and water use, pay more for grid infrastructure and undergo environmental review under seven bills Gov. Gavin Newsom signed into law Monday, which his office calls the most comprehensive data center legislation in the nation.

The laws require data centers to "pay their fair share of grid update costs," disclose water use to local governments and give up eligibility for blanket environmental exemptions, according to the governor's office. Together they hand communities detailed information about proposed facilities' energy, water, workforce and land use impacts so local officials can weigh the projects' economic costs and benefits.

The signing follows another restrictive move in the state. Los Angeles County's planning director recently ordered a temporary ban on large-scale AI data center development in unincorporated areas of California's most populous county, according to multiple news reports.

California hosts 296 data centers, the third-highest number of any U.S. state, according to Data Center Map. A 49.5-megawatt, three-level data center is currently under construction in Vernon, Calif.

"Communities are left to deal with the consequences — higher electricity demand, grid constraints, water use, and pollution," Newsom said in a statement. "With these laws, we are ensuring that Californians remain in the driver's seat — and that those profiting from data centers aren't doing so at our expense."

What the bills do

SB 1168 directs the California Public Utilities Commission to examine data centers' energy use and ensure they pay for transmission and distribution upgrades and load increases. "Californians' utility bills are already among the highest in the nation, and the rapid growth of data centers is threatening to send rates through the roof," state Sen. Jerry McNerney, the bill's sponsor, said in a statement.

SB 886 and SB 887 require data centers to pay all infrastructure upgrade and generation costs and bear a larger share of wildfire mitigation and liability costs. The bills also subject facilities to environmental review and ensure local communities have a say in data center projects, according to a news release from state Sen. Steve Padilla, the bills' sponsor. "These are some of the nation's strongest data center ratepayer protections — stopping Big Tech from sticking California families with the bill for their data centers," Padilla said in a statement.

AB 1577 requires monthly reporting of data centers' energy consumption and efficiency metrics to the California Energy Commission, plus estimated energy usage submitted to local agencies as part of permitting.

AB 2383 incentivizes data centers to use onsite clean energy resources to help California "responsibly plan for the future of our electrical grid while keeping electricity costs down for consumers," the bill's sponsor, Assemblyman Rick Chavez Zbur, said in a statement.

AB 2469 and AB 2619 strengthen oversight of data center water use. Potential developers must complete a water supply assessment and develop a water scarcity plan during permitting. The bills also establish a statewide water reporting requirement for obtaining and renewing business licenses. "Every drop counts," Assemblymember Diane Papan, chair of the Assembly Water Committee and sponsor of the bills, said in a statement. "We cannot manage what we do not measure."

The measures arrive as local governments elsewhere also push for leverage over data center development. Sweeping new rules in Pennsylvania give local governments more power over the facilities, and city leaders have published guidance on what municipalities should vet before approving new projects.

For developers, the calculus in California has shifted: projects in the nation's third-largest data center market will now carry higher infrastructure costs, mandatory environmental review and ongoing public reporting of energy and water consumption.