California’s governor signed seven bills on September 21, 2026 that set new rules for data centers on electricity, water and land use. Governor’s office The laws take effect January 1, 2027. Law firm analysis Each duty lands at a different point in a project’s life, and a different body enforces it.
What a developer tells the city or county first
A city or county may not approve a permit to build a data center until the developer hands over a water supply assessment. That is a study, done under the state Water Code, of whether local supplies can meet the project’s needs. AB 2469 Until now that study was required only for projects above certain size or water use thresholds. UC Berkeley report The same rule covers an expansion that raises peak water use. The developer must also give projected water use, water saving measures, and an estimate of its workforce, including wages and how many workers live locally.
A second law adds an energy and noise estimate. With a discretionary permit application, the developer gives the local agency its expected yearly electricity use and expected onsite generation, backup generators included. AB 1577 It must also estimate average and maximum noise at the loudest point on the property line.
Before applying for a first business license, the operator sends its water supplier a good faith estimate of water use. The estimate names the water source and the expected volume on the peak day, the peak month and an average year. AB 2619 The operator signs it under penalty of perjury, meaning a knowingly false figure is a crime.
What goes to the state once the power is on
The California Energy Commission, the state’s energy planning agency, collects ongoing figures from any facility with at least 10 megawatts of electrical capacity. A megawatt measures how much power a site can draw at once. When first switched on, the owner files basic facts such as floor area and expected peak demand. After that it reports at least yearly, broken out by month, covering electricity use, backup fuel burned and cooling refrigerants. AB 1577 The law gives the commission no deadline to set up this filing process.
At each business license renewal, the operator also reports last year’s actual water use and its cooling system type. AB 2619
Who pays for new pipes and power lines
The developer pays the full cost of new water pipes, treatment or storage needed to serve the site, in the amount the water supplier sets. AB 2469 Electricity costs run through the California Public Utilities Commission, which must adopt new tariffs for data centers by January 1, 2028. SB 886 A tariff is the official price list and rulebook a utility files for a class of customers.
For a data center taking power from high voltage lines, the tariff assigns it the cost of every transmission upgrade. Refunds of its upfront payment are capped at 75 percent of the yearly transmission revenue it brings the utility. A site that leaves within 10 years, or never reaches its projected load, owes an early termination fee. That fee cannot be less than the revenue the utility expected to lose.
A companion law covers the power supply itself. Each utility’s generation tariff must make a data center pay, for at least 10 years, for new supply its load requires. AB 2383 It requires upfront collateral or prepayment, and a minimum payment based on projected load. The commission cannot set the size threshold above 25 megawatts.
| What changed | Before the laws | After the laws |
|---|---|---|
| Water study before a local permit | Only projects above set size or water thresholds | Every data center permit, with no size threshold |
| Water estimate to the supplier | Not required, after a 2025 veto | Required before a first business license, under penalty of perjury |
| Energy report to the state | No data center specific report | Yearly filing for sites of 10 megawatts or more |
| Transmission upgrade costs | Settled in one off utility filings | Assigned to the data center by tariff |
| Water infrastructure costs | Left to the water supplier and developer | Paid in full by the developer |
When each duty starts
The permit, license and reporting duties start January 1, 2027, except the water scarcity plan. That plan becomes a permit condition on January 1, 2028. It must set out staged cuts in water use for each level of drought, from abnormally dry to exceptional. AB 2469
The transmission tariff reaches only a data center that signs a new high voltage connection agreement on or after January 1, 2027. A project needing service before the commission finishes may get a one off contract approved, if it follows the same rules. SB 886 Community energy providers that buy power for local customers face a January 1, 2028 deadline for their own data center generation tariffs. AB 2383
Tomorrow’s topic
New Jersey’s $1.1 million fine over an AI data center’s unpermitted generators.