California Enacts Seven Data-Center Rules on Water and Power
California Governor Gavin Newsom has signed a package of seven bills imposing new reporting, water-planning, utility-cost, and environmental-review obligations on data center development. These laws aim to increase transparency regarding resource demands and ensure data centers pay for necessary grid and water infrastructure upgrades. This represents a significant intervention in how data centers are regulated, with detailed implementation by state agencies still to come.
California Governor Gavin Newsom has signed a comprehensive package of seven bills designed to regulate data center development across the state, introducing new obligations for reporting, water planning, utility costs, and environmental review. The legislation, signed on September 21, aims to integrate the data center industry more directly into the state's efforts to manage electricity infrastructure, enhance drought resilience, and ensure equitable cost allocation for grid expansion.
The new laws, including AB 1577, AB 2383, AB 2469, AB 2619, SB 886, SB 887, and SB 1168, mandate disclosures on water and electricity use, provide communities with more information on proposed projects, and address the costs associated with necessary grid and water system upgrades. The governor's office emphasized that these measures are intended to prevent the financial burden of data center infrastructure from shifting to low-income customers and other ratepayers.
Key provisions include directives for the California Public Utilities Commission to establish specific data-center tariffs by January 1, 2028, which will determine how utilities allocate service costs, including new infrastructure. Additionally, starting January 1, 2028, projects are expected to require water-supply assessments and water-scarcity plans during permitting, and SB 887 removes categorical California Environmental Quality Act (CEQA) exemptions for data centers, requiring at least an initial environmental study for new projects.
While the laws are now enacted, their practical impact will largely depend on the subsequent regulatory work by agencies like the California Public Utilities Commission, California Energy Commission, and the Office of Land Use and Climate Innovation. These bodies are tasked with translating legislative intent into concrete operating requirements, standards, and review practices for developers, local governments, and utilities over the next few years.