Governor of California Gavin Newsom signed seven bills on Monday that require greater transparency from data center developers and operators. Under these bills, California residents will have better insight into the energy, water, and land use for data centers.
According to a press release issued by Newsom’s office, developers will need to report their water and electricity use as well as workforce numbers so as to give locals the opportunity to weigh the economic cost of these projects against the benefits.
“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. California has proven that time and time again,” said Newsom. “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.”
The new laws compel developers to pay their fair share of grid upgrade costs, preventing them from passing these costs to low-income customers. They also require that data centers comply with the state’s energy procurement requirements and bring new, clean energy supply to the grid. Operators must also provide water use, supply efficiency, and drought plans to local governments. Upgrade costs for water supply infrastructure must be borne by the data center.
Developers will also be required to demonstrate that they will meet state standards on energy, water, and fuel consumption before applying for environmental exemptions.
California joins the likes of Texas and Pennsylvania, which have both introduced similar provisions for data centers. In August, w.media reported that Texas Governor Greg Abbott had directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to conduct a verification audit of all data center projects moving through ERCOT’s interconnection process. This directive aims to give Texas residents greater visibility into data center developments.
Later that month, Governor of Pennsylvania Josh Shapiro signed an executive order that he said introduced the strictest guardrails for AI data center developments in the US.
“My message to data center developers is clear: if you can’t agree to our strict requirements and get the community where you want to build to say ‘yes,’ you’re not going to have the Commonwealth’s support either. These are some of the biggest companies in the world – they can afford to be good neighbors, follow the rules, and do this right,” Shapiro said at the time.
While pushback from citizens is one constraint in the US market, according to Mordor Intelligence, power availability is what is holding buildouts back. Lead times for grid connections stretch for five to seven years, creating bottlenecks in core markets. However, with more states looking to slow down the unrelenting march of developments, legislation could soon become a bottleneck of its own and force developers to explore other geographies.