California tightens rules on AI data center energy and water use

California Gov. Gavin Newsom signed seven bills aimed at preventing AI data centers from shifting utility costs onto households. The laws require a new data center rate classification, mandate payments for local grid and water upgrades, and force disclosure of projected water use and efficiency plans.

The package reflects growing scrutiny of AI infrastructure’s strain on public utilities, especially in drought-prone and power-constrained regions. California’s approach could become a model for other states seeking to make data centers internalize more of their infrastructure costs.