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Published On 8 Sep 20268 Sep 2026
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SACRAMENTO — After weeks of intense negotiation, state lawmakers on Friday reached a compromise on legislation to regulate energy use by California’s growing data center industry, action triggered by community anger over the facilities and fears of high utility bills in some communities.
The goal, according to legislators and advocates, is to protect consumers from growing electricity costs driven upward by the sprawling facilities and to track the centers’ immense energy and water consumption.
Business groups representing tech companies argued that some of the proposed restrictions and requirements, along with California’s high energy costs and lack of available land, would make it difficult for data centers to open in the state.
Municipalities risk missing out on tax revenues and jobs from the centers if the industry goes elsewhere, they said.
Two bills to regulate the controversial industry consumed the state Legislature in the final weeks of the 2026 session, drawing in Gov. Gavin Newsom and industry organizations and lobbyists representing some of the world’s most influential companies, including Google, Meta, Amazon and artificial intelligence firms such as Anthropic and OpenAI.
Proposed legislation by Sen. Steve Padilla (D-Chula Vista) and Assemblymember Rick Chavez Zbur (D-Los Angeles), finalized Friday, would establish special rules for data centers’ electrical use. The legislation requires the California Public Utilities Commission to create special rates and updated rules for data centers’ use of electricity, including the costs for new power for infrastructure upgrades.
The debate in Sacramento around the data centers centered on how much they should pay for power and infrastructure, and whether that should be mandated by the state Legislature or the California Public Utilities Commission, which regulates investor-owned utilities and is controlled by a board appointed by the governor.
Unlike some other states, California hasn’t seen an overwhelming wave of new large-scale data centers, nor have state leaders sought moratoriums such as the ones enacted by governors in Texas and New York.
An aerial view of a 49.5-megawatt data center under construction in Vernon last month.
(Myung J. Chun / Los Angeles Times)
Nevertheless, advocates focused on reforming the state’s utilities sought this year to seize the moment to enact tough regulations, including forcing data centers to pay for transmission upgrades and wildfire mitigation efforts.
Utility reform advocates and environmental leaders offered mixed reaction on Saturday.
Matthew Freedman, a senior staff attorney for The Utility Reform Network (TURN), praised the final language in the two bills, saying the legislation would prevent data center costs from “being foisted on other customers” while helping California meet its clean energy goals.
Monica Embrey, the founder of Affordable Energy Campaign, called the last-minute amendments “concerning.”
In particular, she pointed to a lack of clean energy requirements for data centers who use their own energy, and a provision that allows a utility to enter into its own agreement with a data center for energy in the interim period before the state finalizes its regulations.
A representative for the Data Center Coalition, whose members include Google and Microsoft, didn’t immediately respond to a request for comment.
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.
Opposition centers on water use, air and noise pollution, and the potential for data centers to raise utility bills as they add strain to the grid requiring costly upgrades and new electricity supply.
The California Energy Commission expects data center electricity use, currently 2% of the state’s demand, to double in the next 10 years.
Monterey Park became the first city in the country in June to permanently ban data centers by a popular vote, and at least four other San Gabriel Valley cities have enacted moratoriums.
Southeast of L.A., Imperial County, Desert Hot Springs, and Palm Springs also voted on moratoriums, while Coachella permanently banned the facilities. In the Central Valley, Tulare County adopted a moratorium this month as residents voiced opposition to proposals to develop tiny data centers on local fairgrounds in the region.
And in San José, the state’s hot spot of data center development, residents flooded a recent public hearing to call for a moratorium while the city updates its data center standards.
Newsom last year vetoed legislation by Assemblymember Diane Papan (D-San Mateo) that would have required data centers to disclose and certify their water consumption. The governor said he was reluctant to impose “rigid” reporting requirements on the development of “this critically important digital infrastructure.”
Separate bills that would require the centers to disclose their energy and water use were recently approved by state lawmakers.
Like other state legislators, Papan said she wants to work with the centers, not ban them.
“I constantly say, ‘Help us help you.’ We will all get this right if we can just be transparent and methodical,” said Papan, whose district includes Silicon Valley.
Padilla’s district includes Imperial Valley, where a developer’s plans for a data center on 75 acres is sparking fierce backlash.
Advocates and lawmakers fought over two approaches on the issue of regulating data centers’ energy use.
A wider coalition of environmental groups supported the bill from Padilla, SB 886, sponsored by TURN, that would have required data centers to pay up front for broader power grid updates required to meet their demand. That approach made it into the final package.
TURN pointed to a recent transmission plan from California’s grid operator projecting that increased power demands from data centers in PG&E‘s service territory, where the majority of current and proposed data centers are concentrated, would create up to $1.8 billion in upgrade costs for the power grid, including transmission lines.
PG&E favored a less stringent approach. In an email earlier this week, a PG&E spokesperson argued SB 886 would “risk higher costs for customers and delay critical infrastructure needed to serve the state’s growing energy demand.”
The Data Center Coalition had opposed both bills for “singling out” one type of power user.
The high cost of land and power, as well as lack of available land, are just some of the reasons that California hasn’t seen a flood of data centers, said Khara Boender, a director of government affairs at the Data Center Coalition. She said dozens of states offer some type of exemption for data centers, but California does not.
Additional regulation in the Golden State, she said earlier this week, “would be another signal that the state is a more challenging place for data center development.”
Abdul El-Sayed made history this month in Michigan by becoming the first Muslim nominated by the Democratic Party to run for the U.S. Senate. But elation among many of his fellow Muslim Americans was tempered by awareness of persisting and widespread anti-Muslim sentiment across much of the nation.
Some Republicans, including President Trump, swiftly began referring to the nominee by his full name, Abdulrahman Mohamed El-Sayed, while depicting him as a danger to America. “Every single Muslim holding public office in America is a Trojan horse, and a threat to both national security and our republic,’’ said U.S. Rep. Nancy Mace, R-S.C., in a post on X.
El-Sayed says such attacks betray a weakness in those who launch them.
“We all pray for the same things. … We want what’s good for our kids and our families,” he told MS NOW after his primary victory. “They’re going to use Islamophobia, because their ideas are tired.”
The vitriol extends far beyond the political class. Tensions related to anti-Muslim sentiment have heightened in several communities around the country, where some residents have bitterly opposed proposals to build new mosques.
“American Muslims have made incredible political and societal progress in recent years,” said Edward Ahmed Mitchell, national deputy director of the Council on American-Islamic Relations, or CAIR. He cited increased visibility in entertainment and sports and the election of Democrat Zohran Mamdani as New York City’s first Muslim mayor.
“But there also is a very concerted backlash to this progress,” Mitchell said. “You’ve seen this in the resurgence of anti-Muslim hate and rhetoric, the targeting of mosques.”
McKinney, Texas, a large suburb in the Dallas-Fort Worth area, is one of the flashpoints. Despite angry anti-Islam remarks at a heated city council meeting on Aug. 4, the council voted unanimously to approve a site plan for the McKinney Islamic Association’s proposed new mosque, classroom building and gym.
Among those urging the council to give the plan fair treatment was George Fuller, a former mayor of McKinney, a nonpartisan position. Opponents of the mosque project booed him, and some shouted “traitor” as he left the council chamber. One woman could be seen on video physically accosting him.
“I have never witnessed so much hate, anger and lack of humanity in our beautiful community gathered in one place as I did today at City Hall,” Fuller later wrote on Facebook.
During the hearing, which lasted more than four hours, the speakers included U.S. Rep. Keith Self, a Republican whose district includes McKinney. To loud applause, he urged the council to reject the mosque proposal.
“I know you’re in the accommodation phase, but the intimidation phase follows quickly,” Self said. “Child marriage. Honor killings. Don’t tell me it can’t happen here.”
Fuller also went to the microphone, evoking the broader phenomenon of divisive political rhetoric.
“Sadly, we live in a time when some have discovered that the easiest way to gain attention or win elections is not by offering solutions but by manufacturing fear, dividing communities, demonizing neighbors and turning misinformation into a political strategy,” he said.
The scenario was similar in Mooresville, North Carolina, when town commissioners held a public comment session on Aug. 3 about a proposed mosque that had already been approved, with early phases of construction underway.
Angry residents at the meeting voiced hostility to Islam and assailed the commissioners for not being more forthcoming about the project as it took shape over previous months. One speaker cited violence in Nigeria by Islamist extremists as a reason for concern in Mooresville. Another depicted Islam as “a political regime with the ultimate goal of takeover in regions and nations.”
CAIR’s regional manager, Al Rieder, issued a statement denouncing “the hateful and conspiratorial anti-Muslim rhetoric” that surfaced at the meeting and expressed concern about the safety of Muslims in the area about 25 miles north of Charlotte.
“Muslims are your neighbors, your doctors, your teachers, your local politicians, your police,” he said.
A few hours after the public meeting, the town commissioners released a summary of the mosque project, which calls for a two-building Islamic center on a parcel acquired in 2019 by a local Muslim organization.
The commissioners said that the parcel is in an area zoned to allow religious assembly and that the mosque proposal was handled the same way as a proposal for a new church.
“All decisions must be based on adopted ordinances, objective standards and legal requirements, which do not allow for different rules for different religious groups,” the commissioners said. “We encourage all members of our community to remain respectful in their discussions and interactions as this project moves through the appropriate processes.”
A mosque controversy has been raging for many months in Broken Arrow, Oklahoma, Tulsa’s largest suburb.
Back in January, at a stormy meeting attended by hundreds of people, the city council voted 4-1 to reject a rezoning proposal by the region’s Islamic Society to build Broken Arrow’s first mosque. Before the vote, dozens of residents voiced anti-Muslim views while opposing the project.
Council members who rejected the mosque had raised concerns about its potential impact on infrastructure such as roads, sewers and flood plain management.
But the Islamic Society is persisting with its quest. On Aug. 3, it filed a lawsuit against the mayor and four councilors, alleging that the vote reflected “a wave of bigoted opposition from members of the community and local politicians.” The lawsuit contends that the council violated state and federal laws governing religious land use, treating the mosque proposal differently from other comparable rezoning requests.
“They did not want a mosque in their city. They did not want Muslims here,” said Meghan Murphy, an attorney with CAIR’s Legal Defense Fund, at a news conference announcing the lawsuit. ”So they made up a reason, and in doing so they violated the law.”
Opposition to mosque construction isn’t a new phenomenon: In Murfreesboro, Tennessee, an effort launched in 2010 to block a mosque project dragged on for more than three years. The mosque was built anyway as the case moved through the courts, but members of the Muslim community faced public protests, vandalism, arson and a bomb threat during that span.
The latest anti-mosque campaigns coincide with a broad wave of anti-Muslim rhetoric from Republican officeholders over the past year. In Congress, several bills were introduced targeting sharia, the moral and spiritual framework that guides Muslims in prayer and ethical conduct. Some Republicans say they’re concerned about growing Muslim populations in major cities and potential ties to terrorism — fears that CAIR and other civil rights groups say are unfounded and being exploited for political purposes.
Republican governors in Texas and Florida have endorsed efforts to shut down CAIR, saying it has ties to terrorism. CAIR has denied the allegations and filed lawsuits calling the governors’ efforts unconstitutional.
Muslim American leaders view the vitriol as political scaremongering.
“Every election year, we expect a rise in anti-Muslim hate,” said CAIR’s Mitchell. “It’s been worse this year than it has been in years.”
Crary writes for the Associated Press.