California enacts data center laws giving communities more control over facilities

By Carlos E. Castañeda

California placed new restrictions on data centers as Gov. Gavin Newsom on Monday signed a slate of bills giving local communities more control over the electricity, land and water usage by the facilities.

Newsom signed seven bills mandating that data centers provide transparency about the use of local resources so local officials and residents can better determine the economic costs and benefits of such projects, the Governor’s Office said.

The bills, sponsored by Democratic legislators, are designed to protect local residents from increased costs of utilities, through requirements such as having tech companies cover costs of energy grid upgrades and compelling strict water usage standards under the California Environmental Quality Act.

Supporters of the bills characterize them as an essential framwork that would shield consumers from data center rate spikes, grid instability, and localized droughts from excess water usage. Local communities will also have expanded oversight over site selections and zoning variances, and any proposed facilities will require a land-use permitting and environmental review process. 

“While the Trump administration moves toward deregulation, communities are left to deal with the consequences – higher electricity demand, grid constraints, water use, and pollution. Today we are once again laying the groundwork for a stronger approach, because we know that we don’t have to sell out Californians or sacrifice our well-being to innovate and succeed,” Newsom said in a prepared statement. 
“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”

Opponents of the bills argued that such regulatory burdens will jeopardize California’s position as a global tech capital and drive investments and jobs to other states. Industry groups also maintain that singling out data center infrastructure over other industries’ using large amounts of electricity and water is based on anti-AI sentiment and sets a harmful precedent.

The bills Newsom signed on Monday are: 

• AB 1577 by Assemblymember Rebecca Bauer-Kahan (D-Orinda). Data centers: reporting
• AB 2383 by Assemblymember Rick Chavez Zbur (D-Hollywood) – Electricity: data centers
• AB 2469 by Assemblymember Diane Papan (D-San Mateo) – Data centers: water use disclosures
• AB 2619 by Assemblymember Diane Papan (D-San Mateo) – Water resources: data center
• SB 886 by Sen. Steve Padilla (D-San Diego) and Senator Jerry McNerney (D-Pleasanton) – California Technology Innovation and Ratepayer Protection Act
• SB 887 by Sen. Steve Padilla (D-San Diego) – California Environmental Quality Act: environmental leadership development projects: data centers: geothermal power plant projects
• SB 1168 by Sen. Jerry McNerney (D-Pleasanton) – Data centers: Rate structures

In December 2025, President Trump issued an executive order to fast-track federal data center permitting and try to limit regulations in an effort to bolster infrastructure in the AI race.  

A recent CBS News/YouGov poll shows that more Americans oppose than favor having a new data center built in their area by over a two-to-one margin, with the lack of familiarity with data centers contributing to their unease about having one in their local area.