SACRAMENTO — California’s growing data center industry will have more oversight after Gov. Gavin Newsom signed seven bills to regulate the industry’s electricity costs and track water consumption.
The new laws come amid growing public concerns about environmental and economic impacts of the massive facilities, and are aimed at protecting consumers from growing electricity costs and tracking the centers’ immense energy and water consumption.
Newsom on Monday criticized President Trump for dismissing calls to curtail or regulate the facilities and heralding them as “money machines,” even as states and communities across the nation take action to ban or regulate the centers.
“While the Trump administration moves toward deregulation, communities are left to deal with the consequences — higher electricity demand, grid constraints, water use, and pollution,” Newsom said in a written statement Monday. “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.”
Senate Bill 886 by Sen. Steve Padilla (D-Chula Vista) and Assembly Bill 2383 by Assemblymember Rick Chavez Zbur (D-Los Angeles) establish special rules for data centers’ electrical use. The law orders California Public Utilities Commission to create special requirements and rates for data centers’ use of electricity, including the costs for new power and for infrastructure upgrades.
Scores of other states have already passed similar legislation, according to utility groups.
Two bills by Assemblymember Diane Papan (D-San Mateo) will require oversight of data center water consumption. One measure will require data center operators, when applying for a business license or permit, to disclose an estimate of their water use and the expected source of water. Another will bar cities and counties from approving a new or expanded data center unless the developer submits a water assessment and a water scarcity plan, and will require developers to cover the cost of any water system upgrade that is necessary.
Newsom vetoed a similar Papan bill last year that would have required new data centers to disclose their expected water use. The governor said he was “reluctant to impose rigid reporting requirements” on “this critically important digital infrastructure” without understanding the full impact on the businesses.
But over the past year, a wave of data center pushback has swept the nation, including California, where dozens of cities and counties have proposed or adopted moratoriums on the facilities. While California lawmakers have hesitated to pursue outright moratoriums and bans that the public is calling for, the political tide has nevertheless turned against the facilities.
Data centers have existed for decades but are rapidly expanding because of the rise of artificial intelligence, or AI. The centers help power everything from streaming services to videoconferencing calls.
Data centers in California are typically smaller than the mammoth, 500+-megawatt AI facilities making headlines in other parts of the country. Electricity costs and state regulations on gas-powered generators limit the vast majority of them to under 100 megawatts.
But as proposals increase in number, opposition has been fierce and growing. A Public Policy Institute of California poll from July showed that 73% of residents oppose the construction of data centers in their communities.