California Governor Signs Seven Bills Regulating Data Center Industry

California Governor Gavin Newsom on Sept. 21 signed seven bills to regulate the rapidly expanding data center industry, imposing new requirements on electricity costs, water consumption and local oversight.

The new laws require data centers to disclose their energy usage, water consumption, land use and staffing needs, giving local communities more information to evaluate proposed projects. The rules are also intended to prevent the cost of new power generation and grid upgrades caused by data center construction from being passed on to ordinary electricity customers.

In a statement, Newsom said the legislation ensures California residents keep the upper hand and that businesses profiting from data centers cannot earn revenue at the expense of the state's people. The regulations will also require data centers to comply with the state's energy procurement rules, helping connect more clean energy to the grid.

The measures come amid growing nationwide concerns about power consumption, water use and infrastructure strain from AI-related data centers, which have drawn opposition from residents and advocacy groups in California and other states over higher electricity bills and pollution.

Industry group Data Center Coalition said its members support responsible development but warned that the new rules could push projects to other states. Khara Boender, the group's government affairs director, said legislation like this creates significant policy uncertainty and potentially duplicative regulatory requirements, making California less attractive for data centers and other industries, and that jobs, clean energy and tax revenue could flow to neighboring states.