One of the state's most significant proposals is Assembly Bill 93 (AB 93).
The bill addressed a surprisingly basic problem: many local governments do not know how much water data centers expect to consume before approving them.
AB 93 would have required owners or operators of data centers to provide projected water-use estimates to their local water supplier when applying for a business license. Existing facilities would also have needed to submit annual reports documenting their actual water consumption. By establishing standardized reporting requirements, lawmakers hoped cities could better evaluate whether future developments are compatible with local water availability.
However, Governor Gavin Newsom vetoed AB 93 in October 2025, writing that he was reluctant to impose rigid reporting requirements on the sector without a fuller understanding of the impact on businesses and consumers. The bill's author, Assemblymember Diane Papan, has signaled the measure may be reintroduced.
Water is only part of the story.
California's electrical grid is already under pressure from transportation electrification, population growth, and climate adaptation. AI data centers add another massive source of demand.
To address this issue, Senator Steve Padilla introduced Senate Bill 57 (SB 57).
Rather than immediately imposing new regulations, SB 57 directs the California Public Utilities Commission (CPUC) to study whether the growing electricity demand from data centers shifts infrastructure costs onto residential customers. The legislation asks a fundamental policy question: if utilities must build new substations, transmission lines, or generation capacity to serve AI companies, should ordinary Californians help pay for those upgrades through higher utility bills?
Unlike AB 93, SB 57 was signed into law by Governor Newsom the same day he vetoed AB 93. The bill reflects growing concern that the benefits of AI development should not come at the expense of household affordability.
Santa Clara, home to the highest concentration of standalone data centers in California, has begun scrutinizing new projects because of mounting concerns over electricity demand and water consumption. City officials have emphasized the importance of recycled water infrastructure, efficient cooling technologies, and careful planning before approving additional facilities.
However, California's current legislative approach could be seen as not doing enough to curb the growing environmental concerns. Neither AB 93 nor SB 57 sought to limit AI development outright. Instead, both bills prioritized transparency, planning, and accountability. Legislators appear to recognize that artificial intelligence will remain central to California's economy, but argue that public agencies need better information before approving projects that could reshape local water systems and electrical grids. Researchers at the University of California, Berkeley's Center for Law, Energy & the Environment (CLEE) argue that California's current approach is only a starting point. In a 2026 policy report, they recommend requiring standardized statewide reporting of water and energy use, coordinating planning among water agencies, utilities, and local governments, expanding the use of recycled water for cooling, and ensuring that the costs of new infrastructure are borne by the companies driving demand rather than by surrounding communities.
The challenge facing California is no longer whether AI will continue to grow because it certainly will. The real debate is whether the infrastructure that supports the growth can remain sustainable as technology continues to transform.
References
California State Legislature. (2025). Senate Bill No. 57: Electrical corporations: data centers: report (Chapter, approved October 11, 2025). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260SB57
California State Legislature. (2025). Assembly Bill No. 93: Water resources: data centers (Enrolled version, September 15, 2025). https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202520260AB93
Hanson Bridgett LLP. (2025, December 3). California governor vetoes proposed data center law relating to water supply and signs law regarding data center energy use. https://www.hansonbridgett.com/publications/251201-2021-vetoes_data_center_law