2026年9月28日

California’s Governor Signs Nation’s “Most Comprehensive” Data Center Laws, Reshaping Regulation Of Energy, Water, And Land Use

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As the country heads toward the next presidential race, the data center debate continues to heat up as one of several politically charged topics. On September 21, 2026, California Governor Gavin Newsom signed a package of seven data center bills in a carefully timed political power move, positioning himself as a self-proclaimed leader in data center regulation. The Governor’s press release brands these new bills as the “most comprehensive data center laws in the nation.”

In signing the legislation, Governor Newsom stated: “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.”

Notably, this represents a marked departure from the Governor’s position just last year, when he vetoed proposed legislation that would have required data centers to provide local governments with water-usage information. AB 2619, one of the bills in the newly signed package, is substantially similar to the vetoed measure—signaling an evolving political calculus on the issue.

Collectively, the seven bills seek to impose greater transparency and regulatory control over data centers’ electricity use, water consumption, and land-use impacts, while aiming to prevent infrastructure and generation costs from being shifted to existing ratepayers. The legislation arrives at a time of growing public concern over the energy and resource demands of data centers.

Below is a summary of the key provisions in each of the seven signed bills, organized by subject matter.

Why it Matters California’s new data center laws will certainly reshape the development landscape, but with the right strategy, developers and operators can address CEQA review, energy and water obligations, utility tariffs, and community engagement as part of an integrated development plan. Early engagement with local leaders and the community is an often-overlooked piece to structuring projects for success and is critical under the new framework.

Environmental Review

SENATE BILL 887 (PADILLA)

Eliminating CEQA Exemptions for Data Center Projects

SB 887 is the centerpiece of the package’s environmental review provisions and is sure to garner the most attention at the local land use level. The bill eliminates categorical exemptions that had previously insulated certain data center projects from review under the California Environmental Quality Act (CEQA). Under existing law, lead agencies could apply categorical exemptions to classes of projects determined not to have a significant environmental effect. SB 887 eliminates this option for data centers, meaning every such project will require, at minimum, an initial study and either a full environmental impact report, negative declaration, or mitigated negative declaration.

Importantly, by requiring CEQA review, SB 887 introduces a discretionary element to land-use review for all data center projects—even if local zoning allows such use by right. This is a significant change, as it closes a pathway that allowed certain projects to proceed ministerially without environmental analysis. The bill also directs the Office of Land Use and Climate Innovation to develop uniform statewide standards for data center environmental review.

Simultaneously, SB 887 authorizes the Governor to certify qualifying data center projects as Environmental Leadership Development Projects (ELDPs), which are eligible for streamlined judicial review in the event CEQA litigation is filed. To qualify, however, a data center project must meet stringent conditions, including:

Paying the full cost of interconnection to the electrical grid;
Demonstrating no net increase in fossil fuel consumption;
Providing zero-carbon energy storage with at least four hours of capacity at 100% of peak demand;
Use zero-carbon generation located behind the meter, to the maximum extent possible;
Using recycled water and water-efficient or waterless cooling systems; and
Entering into an enforceable community benefits agreement with one or more community-based organizations.

The ELDP pathway provides a potential avenue for expedited project delivery, but the conditions are among the most rigorous applied to any development category under California law. Mayer Brown’s land use team has successfully secured ELDP certification for several projects.

Reporting and Disclosure Requirements

ASSEMBLY BILL 1577 (BAUER-KAHAN)

Energy Reporting And Permitting Disclosures

AB 1577 imposes new reporting requirements on data center operators in two key areas: (1) disclosures to local agencies during the permitting process; and (2) ongoing annual reporting to the California Energy Commission (CEC). At the permitting stage, data centers must provide local agencies with information about estimated energy consumption, electricity generation, and sound levels to support land use decisions and environmental review. Annually, operators must report a detailed set of operational metrics to the CEC, including power-usage effectiveness (PUE), fuel consumed by on-site generators, cooling system data, renewable and carbon-free energy procurement, and noise levels.

ASSEMBLY BILL 2619 (PAPAN)

Water Use Reporting For Business License Applications

AB 2619, which is similar to a bill Governor Newsom vetoed last year, creates a comprehensive framework for data center water-use reporting tied to the business license process. Data center operators must provide water suppliers with estimates of expected water use, anticipated water source, and projected water-use volumes prior to applying for a business license. Upon renewal, operators must report actual annual water consumption, including total and direct water use. The bill also integrates data center water demand into urban water-management planning and water-shortage contingency plans for the first time, requiring water suppliers to account for data center consumption as a distinct demand category.

ASSEMBLY BILL 2469 (PAPAN)

Water Use And Workforce Disclosures

AB 2469 layers additional disclosure requirements on top of AB 2619. Beginning January 1, 2028, data center applicants must prepare a water-supply assessment and a water scarcity plan as part of the permitting process. The water scarcity plan must address various drought conditions, including staged withdrawal reductions, nonessential use curtailment, and water recycling and reuse strategies. Additionally, the bill requires the applicant to assume the full cost of water conveyance, treatment, storage, and distribution infrastructure improvements necessary to serve the project.

Notably, AB 2469 also requires disclosures regarding the applicant’s estimated workforce needs—including workforce composition, job classifications, employment duration, wage ranges and benefits, and the proportion of the workforce expected to reside in-county and in-state. This represents one of the first instances in California law of tying workforce transparency to the data center permitting process.

Tariffs, Rate Structures, and Ratepayer Protection

SENATE BILL 886 (PADILLA AND MCNERNEY)

California Technology Innovation And Ratepayer Protection Act

SB 886 is the most structurally significant of the rate-related bills. It requires the California Public Utilities Commission (CPUC) to establish new tariffs by January 1, 2028, ensuring that data center operators pay all infrastructure upgrade and generation costs associated with their electrical service. The tariffs must cover interconnection, transmission, distribution, and generation services, with the cost methodology to be determined by the CPUC.

To prevent the creation of stranded costs or cost shifts to existing ratepayers, the bill imposes an early termination fee against any data center customer that departs the electrical system within 10 years of initial interconnection, or who fails to achieve adequate load ramp-up.

ASSEMBLY BILL 2383 (ZBUR)

Comprehensive Tariff And Cost-Shifting Protections

Recognizing the parallel concern in California with wildfire damage, AB 2383 requires data centers to pay tariffs covering wildfire mitigation, wildfire liability, electrification and environmental programs, and “other societal cost obligations typically collected from distribution-level ratepayers.” The bill addresses a concern that data centers interconnecting at the transmission level could bypass distribution-level charges that fund critical public programs.

The bill requires the CPUC to direct each electrical corporation to file transmission, distribution, and generation service tariffs applicable to data centers. Community choice aggregators and electric service providers must adopt corresponding generation tariffs by January 1, 2028. Echoing certain provisions in SB 886, AB 2383 sets a minimum peak demand threshold at a maximum of 25 MW and requires ten-year minimum payment mechanisms with early termination fees and upfront collateral requirements.

SENATE BILL 1168 (MCNERNEY)

Rate Structures And Residential Ratepayer Protections

SB 1168 is specifically aimed at alleviating cost pressures on residential ratepayers. The bill directs the CPUC to assess existing rate structures to ensure data centers pay their fair share for transmission and distribution needs, regardless of whether they interconnect at the transmission or distribution level. It also requires data centers to pay a proportionate share of costs associated with load increases and energy procurements driven by their demand.

Looking Ahead

The signing of these seven bills reflects a growing nationwide backlash against the data center industry as the AI arms race continues. Moratoriums and outright bans have emerged in several local jurisdictions, with Los Angeles County being the most recent to impose a temporary ban on data center development in unincorporated parts of the county while it codifies a permanent prohibition. As noted in our previous Legal Update on this topic, the Los Angeles County Board of Supervisors is also studying revisions to its Renewable Energy Ordinance, which could further restrict energy-intensive development.

At the federal level, the Federal Energy Regulatory Commission in June 2026 ordered all six regional grid operators to justify or reform tariffs applicable to data centers—signaling that scrutiny of data center energy impacts is not limited to California. The CPUC’s own rulemaking on California Advanced Electric Rate Design, which opened on April 9, 2026, will provide the procedural vehicle for implementing several of these new statutory requirements.

As with any new legislation, it will take time to understand how these bills are interpreted, implemented, and enforced. Many of the key provisions delegate significant authority to the CPUC, the CEC, and the Office of Land Use and Climate Innovation to develop implementing regulations, methodologies, and standards. The industry is expected to mount challenges to specific provisions, and the CPUC’s tariff proceedings will be closely watched.

Mayer Brown will continue to monitor these developments as the regulatory landscape takes shape, and can help stakeholders assess the new framework and position pending or future projects for successful development.

Why it Matters California remains a premier market for data center investment, and these new laws do not change that opportunity—they make thoughtful planning and coordinated execution more important. Developers, operators, investors, and lenders should ensure they understand the interplay of CEQA, CPUC tariff proceedings, water planning, and community engagement, to translate those requirements into a workable path for each project.