Gov. Gavin Newsom put his signature on seven new data center bills Monday, marking a notable shift in California’s approach to an industry that has increasingly drawn public frustration over its strain on local resources and utility bills.
The package of laws requires data center operators to shoulder more of the costs tied to their operations, rather than passing them along to everyday ratepayers. Three of the bills redirect electric infrastructure expenses away from residential customers and onto the companies building and running these facilities. Another three require data center operators to disclose how much water and other resources their operations consume. The seventh law strips data centers of automatic environmental review exemptions, though it does offer a faster approval path for projects that meet the state’s water and energy conservation benchmarks.
In a statement announcing the signings, Newsom drew a sharp contrast between California’s approach and that of the Trump administration, which has largely encouraged unchecked data center expansion nationwide.
“We know that we don’t have to sell out Californians or sacrifice our well-being to innovate and succeed,” Newsom said. “California has proven that time and time again. 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.”
President Trump, for his part, has been an outspoken champion of rapid data center growth, calling the sector the “oil of the next 20, 25 years” during remarks last week at the All-In Summit, a business leaders’ conference.
The move represents a considerable reversal for Newsom, who last year vetoed a bill that would have required water usage disclosures, citing worries that added regulation might slow the growth of artificial intelligence. At that time, he approved only a single, watered-down measure calling for environmental studies.
Lawmakers and environmental groups say the change in course reflects a surge of public opposition to data center construction that grew too loud to ignore — even as tech companies poured money into lobbying efforts to blunt the legislation.
“When you’re looking down the barrel of public outcry that says we don’t want [data centers] at all, and you’ve got localities that are saying they’re going to ban them, then you know the atmosphere has changed,” said Assemblymember Diane Papan, a San Mateo Democrat who authored two of the bills Newsom signed Monday.
California isn’t alone in this reconsideration. Other state legislatures, along with Congress, are weighing similar restrictions. A Gallup poll from May found that seven in 10 Americans oppose having data centers built in their own communities, while a July survey from the Public Policy Institute of California found comparable resistance among state residents. Across the country, hundreds of cities — including Monterey Park locally and Pittsburg in the Bay Area — have either banned data centers outright or reversed prior approvals after residents pushed back.
Arnab Pal, executive director of the clean-energy nonprofit Deploy Action, called the new laws a meaningful step but said there’s more work ahead to ensure data centers genuinely benefit Californians through grid improvements and clean energy investment.
“I don’t think these bills are the end of this fight; I think we’re gonna have to do a lot of implementation on the back end, and as other states roll out their policies next year, I think California is going to look back and be like, ‘maybe we should have done more,'” Pal said. “I’m interested to see what we do next year on this.”
Industry groups, meanwhile, warn the new rules could drive data center development out of state. The Data Center Coalition — whose members include Google, Microsoft and OpenAI — points to the sector’s economic footprint in California, which it says supported 665,500 jobs, generated more than $159 billion in economic activity, and produced $14.1 billion in combined federal, state and local tax revenue in 2024.
Khara Boender, the coalition’s director of government affairs for the western U.S., said the industry supports responsible growth but cautioned that policymakers need to strike a balance.
“The data center industry shares the goal of ensuring growth of this critical infrastructure is responsible and well managed,” Boender said, adding that more needs to be done “to promote responsible data center growth while maintaining California as a key, competitive market in the global economy.”
The bills Newsom signed include Senate Bill 1168, Senate Bill 886 and Assembly Bill 2383, all aimed at shifting electric infrastructure costs from residential ratepayers to data center operators; Assembly Bills 2469, 1577 and 2619, which require disclosure or estimation of water and other resource usage; and Senate Bill 887, which eliminates blanket environmental review exemptions for data centers while providing expedited approval for projects meeting state conservation standards.
Original source: CalMatters
