California and Texas regulate data center development

Governors Gavin Newsom of California and Greg Abbott of Texas recently took steps to regulate data center development within their states.

Newsom signed laws requiring data centers to report water and electricity usage, ending environmental exemptions, and preventing increased energy costs for consumers. He stated these measures would ensure Californians benefit from data centers rather than bear the costs.

Meanwhile, Abbott ordered the Texas Commission on Environmental Quality to pause all new permits for data center construction until the Electric Reliability Council of Texas and the Texas Water Development Board complete audits. This action builds on a previous moratorium restricting data center connections to the state’s power grid. Abbott emphasized the need to prioritize Texans and ensure data centers do not strain the state’s resources.

Both states are responding to growing concerns about data centers’ high water consumption, contribution to rising electricity costs, and potential for noise pollution. The Data Center Coalition expressed disappointment with the new California laws, predicting they will discourage data center development and shift jobs and revenue to other states. The group indicated its Texas members are cooperating with the ongoing audit.