Data Centers Targeted By Newsom In Groundbreaking Set Of Laws

CALIFORNIA — Data centers must pay for electricity and water infrastructure upgrades under seven bills ushered in by Gov. Gavin Newsom this week.

The signing follows mounting public backlash and marks a shift from Newsom’s previous approach to regulating the data industry. Combined, the laws mark some of the most comprehensive regulations governing the environmental and consumer impact of data centers nationwide.

Three laws place electric infrastructure costs on data center operators instead of residential customers, three require disclosures about water use and other resources, and one excludes data centers from environmental review exemptions.

Proposed data centers must provide local governments and water suppliers with information about water needs, supply sources, efficiency measures, and drought planning.

The package also requires data centers to meet California’s energy procurement requirements and add clean energy to the grid.

Addotionally, projects must demonstrate they will meet state energy, water, and fuel consumption standards and avoid shifting costs to ratepayers before receiving judicial streamlining, according to the governor’s office.

Newsom contrasted the legislation with President Donald Trump’s approach to data centers and artificial intelligence.

“We know that we don’t have to sell out Californians or sacrifice our well-being to innovate and succeed,” Newsom said in a written statement. “California has proven that time and time again.”

Trump has pushed to accelerate data center development nationwide, describing the industry as an economic opportunity for states, CalMatters reported.

At last week’s All-In Summit, an invitation-only business conference, Trump called the industry the “oil of the next 20, 25 years.”

The move is a departure for Newsom. Last year, the outgoing governor vetoed a water disclosure bill over concerns that regulation could hamper AI growth. He signed only a scaled-back environmental study bill, according to CalMatters.

The seven-bill package addresses data center reporting, electricity costs, water use, and environmental review:

• AB 1577, by Assemblymember Rebecca Bauer-Kahan, D-Orinda, addresses data center reporting requirements.
• AB 2383, by Assemblymember Rick Chavez Zbur, D-Hollywood, addresses electricity and data centers.
• AB 2469, by Assemblymember Diane Papan, D-San Mateo, addresses disclosures about data center water use.
• AB 2619, also by Papan, addresses data centers and water resources.
• SB 886, by Sens. Steve Padilla, D-San Diego, and Jerry McNerney, D-Pleasanton, establishes the California Technology Innovation and Ratepayer Protection Act.
• SB 887, by Padilla, addresses environmental review under the California Environmental Quality Act, including provisions involving data centers, environmental leadership development projects, and geothermal power plant projects.
• SB 1168, by McNerney, addresses electricity rate structures for data centers.

Together, the laws require greater disclosure of resource use, place infrastructure upgrade costs on data centers, and restrict environmental exemptions, according to the governor’s office.