California Bills Target Data Center Water Use After Report Reveals Transparency Gaps

Diane Papan introduced two bills in the California Legislature to mandate water-use disclosures for data center operators and prohibit development in overdrafted groundwater basins without state approval, following a report revealing that operators routinely bypass environmental reviews to expand into the state's most water-stressed regions. The report, co-authored by think tank Next10 and Santa Clara University's Water & Climate Justice Lab, found that data center companies avoid public disclosure of water consumption by using ministerial approvals and size thresholds to sidestep the California Environmental Quality Act review process. This allows facilities to proliferate in vulnerable areas like the Imperial Valley, Central Valley, San Joaquin Valley, and Shasta Lake region, where groundwater and surface water supplies are already overtapped.

The Data Center Coalition, representing the industry, countered that data centers consume less water than agriculture or power generation sectors. Critics argue that local impacts on strained community water supplies matter more than aggregate comparisons. In Monterey Park, residents successfully blocked a planned facility and are now voting on a citywide ban.

Papan's legislation follows a previous similar bill that Governor Gavin Newsom vetoed, citing concerns over imposing rigid reporting requirements on businesses. The new bills represent a second attempt to close the transparency gap identified by researchers.

The debate has expanded beyond California. In Yuma, Arizona, local officials and residents are actively debating the potential arrival of data centers, with concerns focused on water consumption, heat generation, and impacts on the region's agricultural economy. The Greater Yuma Economic Development Corporation is encouraging informed discussion on the issue as the community weighs economic benefits against environmental costs.