Governor Newsom has separately tasked the California Public Utilities Commission with developing statewide data center regulatory recommendations
Decision Focus
Multiple California counties moved to block new data center development in August 2025, driven not by power grid concerns but by groundwater stress and public opposition. Tulare County was scheduled to consider a 45-day emergency ordinance on August 18. The city of Patterson in Stanislaus County had already enacted a 45-day moratorium. Imperial County reversed its April approval of a 950,000-square-foot AI data center following public outcry and declared a moratorium of its own. The operational signal for Global Heads of Data Center Energy: water availability is becoming a site-selection constraint capable of generating regulatory stops—not just environmental reviews—and California’s permitting architecture does not yet make that constraint legible until a project is already in motion.
90-Second Brief
As the week closes, county-level moratoriums on data centers are spreading across California’s Central and Imperial Valleys, driven by community concern over groundwater depletion in basins already under state scrutiny for excessive pumping. A 2025 California bill requiring data center water use disclosure was vetoed by Governor Newsom; two successor bills, AB 2469 and AB 2619, are advancing through the 2025, 2026 legislative session. Governor Newsom has separately tasked the California Public Utilities Commission with developing statewide data center regulatory recommendations. The overlap of local moratoriums, pending disclosure mandates, and a fragmented permitting framework creates execution risk for any California expansion that has not yet cleared county-level approvals.
What Is Really Happening?
The moratoriums reflect a structural mismatch: data center siting decisions are moving faster than the regulatory and resource-accounting systems designed to govern them. In California’s Central Valley, fairgrounds and agricultural land parcels attract development proposals partly because they can fall outside standard county permitting jurisdiction—but that same regulatory gap inflamed public opposition and triggered emergency ordinances. The result is an environment where a project can reach a memorandum-of-understanding stage before any formal water or energy assessment has been filed, then face a regulatory stop from a county board that had no prior notice.
Water—specifically groundwater—is the trigger. The San Joaquin Valley sits atop basins already flagged by the state for excessive extraction under California’s Sustainable Groundwater Management Act. Local groundwater agencies are asserting they will require full accounting of what any new industrial water user pumps, regardless of whether state law compels disclosure. A 2021 study cited in local proceedings estimated that a 1 MW data center consumes approximately 18.6 acre feet of water annually—a figure that scales quickly against proposed facilities in the 99 MW to 275 MW range now under consideration in the region. Those consumption figures are from the source reporting and have not been independently verified against the specific proposed projects, but they illustrate why water managers are demanding metering parity with agricultural users.
The permitting picture adds a second layer of risk. Depending on project location—fairgrounds, military installations, oil field property, or highway right-of-way—different and sometimes non-overlapping regulatory bodies hold authority. The California Energy Commission, county planning departments, the Department of General Services, and now potentially the CPUC each control different pieces. For energy leaders accustomed to navigating FERC interconnection queues and ISO tariff structures, California’s current siting environment for new data center capacity is genuinely fragmented, with no single point of engagement.
Why It Matters for Global Heads of Data Center Energy
The immediate operating consequence is site-selection exposure in California outside established data center markets. Projects in the Central Valley, Imperial Valley, or on alternative-jurisdiction parcels carry a moratorium risk that does not appear in standard grid interconnection timelines or environmental review calendars. A 45-day moratorium is not a project death sentence, but it signals that community opposition can generate regulatory intervention faster than the approval process anticipated—and that the political cost of reversing a prior approval, as Imperial County demonstrated, is low.
The disclosure legislation creates a second pressure point. If AB 2469 or AB 2619 passes and is signed, California data center operators would be required to report actual water use—potentially the first such mandate at state scale in the US. That requirement would carry budget, reporting, and vendor-contract implications for any operator with California assets, and would create a public data record that utility regulators and future siting opponents could use. The absence of historical disclosure also means establishing baseline water figures for existing facilities would itself require internal auditing work that most operators have not yet begun.
The energy and water constraints are operationally linked. Facilities proposing on-site power—California Resources Corporation’s Elk Hills project would use 275 MW of excess oil field electricity—may sidestep grid interconnection queues, but they do not sidestep water accounting. Cooling technology choices, which determine water consumption intensity, are now a site-approval variable in California in a way they are not yet in most other US markets.
Forward View
If the CPUC develops and California adopts a statewide data center regulatory framework—which Governor Newsom’s directive has set in motion—the current county-by-county patchwork would be replaced by a single permitting pathway. That would reduce unpredictability for operators but would likely codify water disclosure requirements and could restrict development in designated overdrafted groundwater basins. Projects currently in early feasibility stages in those basins face a binary outcome: advance quickly before any framework is in place, or wait and plan against a clearer but more restrictive set of rules. Neither path is without risk. A second front to watch is whether other western states with agricultural groundwater stress—Arizona, Nevada—begin exhibiting similar local-opposition dynamics as data center density increases outside traditional markets.
What Is Still Uncertain
The CPUC process has no confirmed timeline or scope as of the source reporting. It is not yet known whether any forthcoming statewide framework would grandfather projects in active review, preempt county moratoriums, or impose water use caps in addition to disclosure mandates. AB 2469 and AB 2619 have not been confirmed as signed into law. The exact water consumption figures for the Central Valley projects under discussion have not been publicly released by developers, making it impossible to assess whether current groundwater capacity could accommodate proposed loads even if permitting were resolved. The regulatory treatment of data centers on federal land, highway rights-of-way, and fairgrounds under any future statewide framework remains entirely open.
One Question for Your Team
For each California site in your active pipeline outside an established data center cluster, can you confirm the governing permitting authority, the applicable groundwater basin status under SGMA, and your facility’s projected annual water draw—and if not, what would it take to produce that answer in thirty days?
Sources
- Fresnobee — Will AI data centers soak up the last of the valley’s water? (Link)
