Water and Energy

California's data center water disclosure rules start Jan. 1, with drought plans required from 2028

Two new laws tie local permits and business licenses to water disclosures. Quorum counts 42 state data center measures that became law across the 2025 and 2026 sessions.

By The Gradient Report Staff

Key points

  • From Jan. 1, 2027, California cities and counties can't permit a new or expanded data center until the applicant discloses its water supply, water use and workforce, under AB 2469.
  • From Jan. 1, 2028, applicants must also submit a drought-level water scarcity plan.
  • Under AB 2619, operators must estimate water use before getting a business license and report actual use and cooling system type at each renewal.
  • A third law, AB 1577, has data centers of 10 MW or more report refrigerant types and other energy data to the California Energy Commission.

Starting Jan. 1, 2027, California cities and counties can't approve a permit for a new data center, or for an expansion that raises peak water use, until the applicant provides a water supply assessment, projected water use and efficiency measures, and workforce disclosures, under AB 2469. From Jan. 1, 2028, applicants must also submit a water scarcity plan, which the law firm Holland & Knight describes as "a report that includes measures to be implemented across escalating drought levels."

Gov. Gavin Newsom signed AB 2469 and a second water bill, AB 2619, on Sept. 21 as part of a package of seven data center bills, CalMatters reported. Assemblymember Diane Papan, a San Mateo Democrat, wrote both. AB 2469 became Chapter 436 and AB 2619 became Chapter 437 of the Statutes of 2026.

Permits: AB 2469

The law, added to the Government Code as Section 65964.7, bars a city or county from approving "a discretionary or ministerial permit or other entitlement" for a covered project until the conditions are met. Holland & Knight says that includes charter cities. The applicant must assume "responsibility for the full cost of any required water conveyance, treatment or storage, or distribution infrastructure improvements necessary to serve the project," as the water supplier determines, and meeting the conditions does not compel approval.

The scarcity plan must set out measures for each drought level defined by the U.S. Drought Monitor, "including staged withdrawal reductions, nonessential use curtailment, recycling and reuse, thermal load reductions, and temporary load shedding where necessary." The workforce disclosures cover workforce composition, job classifications, employment duration, wage ranges and benefits, and the shares of the workforce living in the county and in the state.

AB 2469 does not define a data center or set a size threshold, as Foley & Lardner also noted. Holland & Knight wrote that the law could "apply to all data centers regardless of size or number of employees" and that it doesn't define the baseline for an increase in peak water use.

AB 2619 requires operators to report total and direct water use, by source, at each business license renewal.
AB 2619 requires operators to report total and direct water use, by source, at each business license renewal.AI-generated illustration

Business licenses: AB 2619

Before applying for an initial business license, permit or equivalent, a data center owner or operator must give its water supplier, "under penalty of perjury, a good faith estimate of the expected water use, the anticipated source of water, and the data centers projected water use volume for the maximum day, maximum month, and average year," and must put the same estimate on the license application, according to the text of AB 2619. The law adds these duties to the Business and Professions Code for both cities and counties.

At each renewal, the operator must report, under penalty of perjury, "the data centers annual water use for the preceding calendar year, including total water use and direct water use," and "the cooling system type of the data center." Direct water use covers water used onsite "including cooling, sanitation, irrigation, and any other operational use," identified by source. The law also adds "the unconstrained demand of data centers, irrigation, and other large users" to what water suppliers must address in their water shortage contingency plans.

The law defines three tiers of data center:

  • Type I, "also commonly known as a hyperscale data center": more than 10,000 servers or more than 25 MW
  • Type II: 2 MW to 25 MW
  • Type III: under 2 MW

The reporting duties apply to all three tiers alike. The law sets no separate start date, and Holland & Knight lists its licensing disclosures as taking effect Jan. 1, 2027.

A third bill in the package, AB 1577 by Assemblymember Rebecca Bauer-Kahan, a Democrat, requires data centers of 10 MW or more to report to the California Energy Commission at least once a year. The required data includes power usage effectiveness, "which types of refrigerants are used to cool information technology equipment," "cumulative cooling degree days for the data center," onsite generation and generator fuel use. The commission must publish the data each year "in an anonymized and aggregated format." AB 1577 does not cover water use, according to Foley & Lardner and Mayer Brown.

Newsom vetoed a water bill last year

Newsom vetoed an earlier Papan data center water reporting bill, AB 93, in October 2025. "I am reluctant to impose rigid reporting requirements about operational details on this sector without understanding the full impact on businesses and the consumers of their technology," he wrote in his veto message, as quoted by TurnTo10. This year he said in a written statement, "We know that we don't have to sell out Californians or sacrifice our well-being to innovate and succeed," CalMatters reported.

Khara Boender, director of government affairs west for the Data Center Coalition, told CalMatters that "the data center industry shares the goal of ensuring growth of this critical infrastructure is responsible and well managed."

Other states

Quorum, a legislative tracking company, reviewed 486 state data center measures from the 2025 and 2026 sessions and found that 42 became law and 176 were pending as of Oct. 26. Its count excludes federal bills and executive orders.

Quorum lists these other water laws:

  • New Jersey S.3379 requires water and energy reports to the Board of Public Utilities twice a year.
  • Utah H.B. 76, "Data Center Water Transparency Amendments," took effect March 23, 2026.
  • Idaho H.895 addresses data center water use and cooling and took effect April 2, 2026.
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state data center measuresStates listed in Quorum's pending table, as of Oct. 26, 2026Pending state data center measuresStates listed in Quorum's pending table, as of Oct. 26, 2026MichiganMichigan: 4444PennsylvaniaPennsylvania: 3535New JerseyNew Jersey: 2929New YorkNew York: 2121IllinoisIllinois: 1616WisconsinWisconsin: 1212Source: Quorum, "Quorum Tracked 486 Data Center Measures in 2025-2026. Only 42 Became Law."Oct. 26, 2026. Chart: The Gradient Report.

Of the states in Quorum's pending table, Michigan had the most pending data center measures, with 44, followed by Pennsylvania with 35, New Jersey with 29, New York with 21, Illinois with 16 and Wisconsin with 12. Quorum plans its next update in January 2027.

Sources

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