Water resources: data centers.

Assembly Member Papan’s measure ties data-center licensing to water-use reporting and sets the stage for tiered efficiency standards, signaling a shift in how licensing processes incorporate water-resource considerations. The bill would add two new sections to the Business and Professions Code to define data centers and their water suppliers, and would require data-center operators to provide, or certify having provided, water-use information as a condition of applying for an initial city or county license or permit and again at license renewals. Specifically, prior to an initial city license application, operators must supply a water supplier with an estimate of expected water use; on initial city-license applications, operators must self-certify that this estimate has been provided; and on renewal applications, operators must self-certify that the water-use report has been provided to the water supplier, all under penalty of perjury.

The bill defines a data center as a room (or portion) housing information-technology equipment with a total IT-load exceeding 10 kilowatts and 20 watts per square foot of conditioned floor area, and it defines water suppliers to include urban water suppliers or community water systems. It also parallels the city- and county-level reporting requirements for counties through a separate added section. Additionally, as part of the state’s efficiency standards program, the Department of Water Resources would be authorized to identify different data-center tiers and to set appropriate standards for each tier, based on factors affecting water consumption. The measure explicitly states that it applies to all cities, including charter cities, by framing water conservation as a statewide concern.

In terms of implementation and impacts, data-center operators would need to determine and document their water usage and ensure communication with their water suppliers before licensing actions and on renewal, with enforcement potential through perjury provisions. Water suppliers would receive estimated usage data and annual reports and may need to establish processes to verify and relay information to licensing authorities. Local licensing bodies would integrate the new self-certification and reporting requirements into licensing workflows, with associated administrative considerations and potential enforcement actions for misrepresentation. The Department of Water Resources would oversee potential tiered standards, and there is no required state reimbursement to local agencies, framing costs as localized to the criminal-penalty framework rather than general funding.

The proposal sits within a broader conservation and infrastructure context, aligning data-center water-use considerations with the state’s conservation framework and water-supply reliability objectives. The findings emphasize statewide concern and regulatory coordination between the Water Code and Business and Professions Code, while the administrative provisions anticipate a state-mandated local program due to enhanced penalties. Drafting ambiguities noted in the bill’s analysis include how to handle data centers served by multiple water suppliers, the specific format and timing for annual water-use reports, and transitional rules for licenses in process prior to enactment.