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In June 2026, voters in Monterey Park — a San Gabriel Valley city of roughly 60,000 people — did something no California city had done before: they voted, by more than 86 percent, to permanently ban data centers within city limits, according to results reported by Fox Business and the real estate outlet The Real Deal. The measure killed a proposed 218,400-square-foot facility at 1977 Saturn Avenue, pitched by Australian investment firm HMC StratCap through its DigiCo platform. City officials had counted on roughly $5 million a year in tax revenue from the project. Residents counted something else: the facility, opponents said, would have tripled the city’s total electricity draw and consumed enough power to match 40,000 homes, all to cool servers running artificial-intelligence workloads.
Monterey Park was a preview. On September 21, 2026, Governor Gavin Newsom signed seven bills into law — the most comprehensive state-level data center regulation package in the country, according to a statement from the Governor’s office — designed to do at the state level what one Los Angeles suburb had already done at the ballot box: force an industry that has operated with minimal disclosure to show its work on water, power and land.
What the seven bills actually do
The package, signed the same week as a wave of local backlash documented by CalMatters and other outlets, breaks into three functional groups.
Electricity cost-shifting. Senate Bill 1168 (authored by Sen. Jerry McNerney, D-Pleasanton), Senate Bill 886 (Sens. Steve Padilla, D-San Diego, and McNerney) and Assembly Bill 2383 (Assemblymember Rick Chavez Zbur, D-Hollywood) direct the California Public Utilities Commission to structure electricity rates so that data center operators — not residential ratepayers — cover the cost of new grid connections and upgrades their facilities require. SB 886 creates what the bill text calls the California Technology Innovation and Ratepayer Protection Act.
Water and resource disclosure. Assembly Bill 2469 (Assemblymember Diane Papan, D-San Mateo) requires data center developers to disclose estimated water use when applying for or renewing a business license and to shoulder the cost of any new water infrastructure their project needs. AB 2619, also authored by Papan, and AB 1577 (Assemblymember Rebecca Bauer-Kahan, D-Orinda) require ongoing reporting of water and energy consumption to local governments and water suppliers, including drought-planning information.
Environmental review. Senate Bill 887 (Padilla) removes the blanket California Environmental Quality Act exemption data centers had used to fast-track approval, while creating an expedited review lane for projects that meet clean-energy and ratepayer-protection standards.
“With these laws, we are ensuring that Californians remain in the driver’s seat — and that those profiting from data centers aren’t doing so at our expense,” Newsom said in the September 21 statement from his office announcing the signings.
Why Sacramento moved now
The timing traces directly to reversed political math. Newsom vetoed a water-disclosure bill for data centers just last year; CalMatters reported that his reversal this year reflects “intensifying public pressure” after a wave of local revolts. A Gallup survey from May 2026, cited by CalMatters, found seven in 10 Americans oppose data center construction in their own communities. Monterey Park wasn’t isolated — Oakland’s city council committee advanced a proposed moratorium on new data centers, according to CBS News San Francisco, and other municipalities have reversed prior approvals under resident pressure.
Assemblymember Papan put the shift bluntly, telling CalMatters: “When you’re looking down the barrel of public outcry that says we don’t want [data centers] at all… then you know the atmosphere has changed.”
The industry disputes the premise that data centers are a net drain. The Data Center Coalition, an industry trade group, told reporters the sector generated 665,500 California jobs, $159 billion in economic activity and $14.1 billion in state and local taxes in 2024, and has warned that additional regulation risks pushing new investment to other states.
The pattern behind the policy
California’s data center fight is really a proxy fight over three systems that were never designed with AI-scale computing load in mind: an electricity grid whose interconnection costs have historically been socialized across all ratepayers; a water-rights and municipal-supply framework built around agricultural and residential demand, not industrial cooling; and a CEQA exemption regime built to move infrastructure projects quickly, with disclosure treated as optional rather than mandatory. Each of the seven new laws targets one of those gaps directly rather than banning the underlying technology, which is the structural difference between Sacramento’s approach and Monterey Park’s outright prohibition.
That distinction is the policy lever worth watching. The new laws bet that transparency and cost-allocation rules can substitute for local bans — that if a data center developer must publicly disclose water and power draw, and must pay for the grid and pipe upgrades its facility triggers rather than spreading those costs to neighbors’ utility bills, communities will have enough information and enough protection from cost-shifting to negotiate rather than reject outright. Whether that bet holds depends on enforcement the bills don’t fully spell out: which state agency audits the water-use disclosures, how the CPUC defines “fair share” of grid costs in dollar terms, and whether the expedited CEQA lane becomes a meaningful alternative or a loophole. The next test will be whether cities facing an active proposal — Oakland’s among them — decide the new disclosure and cost rules are enough, or follow Monterey Park to the ballot.
