Newsom Signs Seven New Laws Regulating Data Centers Amid Statewide Backlash
Governor Gavin Newsom signed seven new laws regulating California's data center industry, requiring operators to disclose water use, cover grid upgrade costs, and face additional environmental review. This legislation comes amid growing community opposition and concerns over electricity and water demands. Several California cities have already enacted or are considering moratoriums on new data center projects.
California Governor Gavin Newsom has signed seven bills into law to regulate the state's expanding data center industry, responding to increasing community pushback against the facilities' significant demands for electricity, water, and land. The new legislation mandates that data center operators disclose their water usage, cover the costs associated with connecting to and upgrading the electrical grid, and undergo more stringent environmental reviews.
Key provisions include Senate Bill 1168, Senate Bill 886, and Assembly Bill 2383, which direct the California Public Utilities Commission to implement rates ensuring data centers bear the full costs of grid connection and necessary upgrades, while also addressing energy procurement and clean energy requirements. Assembly Bill 2469 will prevent local governments from approving new or expanded data centers until developers provide projected water use, and Assembly Bill 2619 requires operators to report estimated or actual water consumption. Additionally, Senate Bill 887 removes data centers from broad environmental review exemptions, though projects meeting state conservation standards can still receive a streamlined review.
The legislative action follows months of growing statewide opposition, fueled by concerns over the intense resource consumption of AI-driven data centers. A July Public Policy Institute of California poll indicated significant public concern over environmental impacts and local construction of AI data centers. Several cities, including Oakley, Gilroy, and Richmond, have already enacted temporary moratoriums on new data center projects, while San Francisco and Oakland are actively considering similar measures.
Governor Newsom stated that these new rules aim to provide communities with crucial project information and prevent data center operators from shifting their infrastructure costs onto California residents. The bills received broad support in the Democratic-controlled Legislature but faced opposition from business groups like the Data Center Coalition, which includes members such as Google, Microsoft, and OpenAI, arguing that the regulations could hinder California's competitiveness in data center development. Nvidia CEO Jensen Huang also acknowledged the industry's need to engage more effectively with local communities regarding proposed projects.