Gavin Newsom Signs Seven Bills Regulating AI Data Centers

Governor Gavin Newsom signed seven bills on Monday to regulate the energy and water consumption of AI data centers, establishing what he called the most comprehensive data center laws in the nation. The legislation prevents operators from passing utility costs to residents by requiring the California Public Utilities Commission to create a new rate classification for these facilities. Under the new laws, data center operators must pay for upgrades to local power grids and water systems and disclose estimated water use, energy efficiency data, and drought planning to local governments.

This move marks a reversal for Newsom, who previously vetoed similar water disclosure measures to avoid stifling AI growth. The Governor stated that the laws ensure Californians remain in the driver's seat and that those profiting from the industry do not do so at the expense of the state's residents. The legislation also removes blanket environmental review exemptions for these facilities.

The Data Center Coalition, representing companies such as Google, Microsoft, and OpenAI, warned that these regulations could drive the industry out of California, noting the sector's $159 billion economic contribution in 2024. Conversely, clean energy nonprofit Deploy Action supported the measures as a way to prevent consumer harm. The action follows a national trend of pushback against AI resource demands; Data Center Watch reports that 49 states are scrutinizing development, while Governors Kathy Hochul of New York and Abigail Spanberger of Virginia have implemented their own restrictions and accountability frameworks.