Newsom Signs New Restrictions on California Data Centers Amid Growing Public Backlash

Governor Gavin Newsom has signed seven new data center bills into law, fundamentally altering California's regulatory approach to the industry. The legislation mandates that data center operators bear a greater share of the costs associated with their operations, specifically redirecting electric infrastructure expenses away from residential ratepayers. Additionally, the new laws compel operators to disclose their water and other resource consumption and eliminate automatic environmental review exemptions for data center projects, though expedited approval is possible for those meeting conservation benchmarks.

The move marks a significant shift for Newsom, who previously vetoed similar disclosure legislation. This change in stance is attributed by lawmakers, including Assemblymember Diane Papan, to a surge of public opposition to data center construction across the state, which became too substantial to ignore. Critics of the industry, such as Arnab Pal of Deploy Action, view these laws as a positive first step but emphasize the need for continued efforts to ensure data centers benefit Californians through grid improvements and clean energy investments.

Conversely, industry groups like the Data Center Coalition, which includes members such as Google, Microsoft, and OpenAI, express concern that the new regulations could deter data center development in California, potentially impacting the state's significant economic activity and job creation tied to the sector. Khara Boender, the coalition's director of government affairs, stressed the importance of balancing responsible growth with maintaining California's competitiveness in the global economy. The newly enacted bills include Senate Bill 1168, Senate Bill 886, Assembly Bill 2383 (cost shifting), Assembly Bills 2469, 1577, 2619 (resource disclosure), and Senate Bill 887 (environmental review).