California regulators pass bills requiring data centers to pay for grid infrastructure upgrades and bear a larger share of system costs.

California Governor Gavin Newsom on Monday signed seven bills aimed at giving communities more information about proposed data centers' energy, water, workforce, and land use to help weigh their economic costs and benefits. The new laws require data centers to "pay their fair share of grid update costs," disclose water use to local governments, and forfeit eligibility for blanket environmental exemptions.

The bills follow Los Angeles County's planning director ordering a temporary ban on development of large-scale AI data centers in unincorporated areas of the state's most populous county.

California is home to 296 data centers, the third highest number in the U.S., according to Data Center Map. "Communities are left to deal with the consequences — higher electricity demand, grid constraints, water use, and pollution," Newsom said. "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."

SB 1168 directs the California Public Utilities Commission to examine data centers' energy use and ensure they pay for transmission and distribution upgrades and load increases. "Californians' utility bills are already among the highest in the nation, and the rapid growth of data centers is threatening to send rates through the roof," state Sen. Jerry McNerney, the bill's sponsor, said.

SB 886 and SB 887 require data centers to pay all infrastructure upgrade and generation costs, bear a larger share of wildfire mitigation and liability costs, and undergo environmental review. The bills also ensure local communities have a say in data center projects. "These are some of the nation's strongest data center ratepayer protections — stopping Big Tech from sticking California families with the bill for their data centers," state Sen. Steve Padilla, the bills' sponsor, said.

AB 1577 requires monthly reporting of data centers' energy consumption and efficiency metrics to the California Energy Commission and estimated energy usage to local agencies as part of permitting. AB 2383 incentivizes data centers to use onsite clean energy resources to help California "responsibly plan for the future of our electrical grid while keeping electricity costs down for consumers," according to Assemblyman Rick Chavez Zbur, the bill's sponsor.

AB 2469 and AB 2619 strengthen oversight of data center water use by requiring potential data center developers to complete a water supply assessment and develop a water scarcity plan during permitting and establishing a statewide water reporting requirement to obtain and renew business licenses. "Every drop counts," said Assemblymember Diane Papan, chair of the Assembly Water Committee and sponsor of the bills. "We cannot manage what we do not measure."