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ARTICLE · 04 DECEMBER 2025

Efforts To Regulate California Data Centers Falter—For Now

Mayer Brown
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As the self-described epicenter of the artificial intelligence (AI) industry, California has become home to one of the largest concentrations of existing data centers in the world, with more projects underway.

United StatesPrivacy
Dario Frommer
Dario Frommer
Mitchell Holzrichter
Mitchell Holzrichter
Paul C. de Bernier
Paul C. de Bernier
Stephanie M. Hurst
Stephanie M. Hurst
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As the self-described epicenter of the artificial intelligence (AI) industry, California has become home toone of the largest concentrations of existing data centers in the world, with more projects underway. However, California data center developers and operators are facing increasing logistical and political headwinds due to inadequate electric grid infrastructure and growing concerns about the impact of data center operations on retail electricity prices and water supplies. In 2025, Governor Gavin Newsom demonstrably supported the data center industry by vetoing legislation to regulate water and electricity usage while streamlining regulatory review of renewable energy data center power projects and applications for AI related electrical grid connections. However, political pressure for more regulation will continue to build in a state that suffers from chronic water and electricity shortages.

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