California ties data center permits to water disclosure and drought plans

California Governor Newsom signed Assembly Bills 2469 and 2619 on September 21, 2026. The two laws require data center developers and operators to disclose their water use before local governments can approve construction permits or business licenses. Both take effect January 1, 2027. Starting January 1, 2028, applicants must also file a plan describing how they will cut water use during drought, according to an analysis by the law firm Allen Matkins.

The bills were part of a seven-bill package that the governor’s office called “the most comprehensive data center laws in the nation.” Both follow AB 93, a bill the governor vetoed last year, Allen Matkins wrote.

Permits now require a water supply assessment

AB 2469 bars a city or county from approving any permit for a new data center unless the applicant meets a set of water disclosure and planning conditions. The same applies to an expansion that increases maximum peak water use. Allen Matkins notes that this could capture cooling upgrades that raise water demand even when a building’s footprint stays the same.

Applicants must submit a water supply assessment. Before this law, such assessments were generally required only for projects subject to the California Environmental Quality Act that crossed certain thresholds, such as more than 500 housing units. The assessment must show there is enough water for the data center on top of all existing and planned uses in the community. It must also identify the water rights the project will rely on.

Applicants must disclose projected water volumes and efficiency measures. They must also pay the full cost of any water infrastructure the local supplier says is needed to serve the project. Meeting every requirement does not guarantee approval. A permit can still be denied on other grounds.

Drought plans from 2028

From 2028, applicants must add a “water scarcity plan.” The plan must set out what the facility will do in each U.S. Drought Monitor category, from an abnormally dry year to an exceptional drought year. Measures may include reduced withdrawals, curtailing nonessential uses, recycling water and reducing thermal load.

Annual reporting through business licenses

AB 2619 works through the business license system. Before applying for an initial license, an operator must give its local water supplier a good-faith estimate of expected water use, the water source, and projected volumes for the maximum day, maximum month and average year. At each renewal, the operator must report actual water use for the prior year, the cooling system type, and whether the water was potable, non-potable or recycled. The information is filed under penalty of perjury.

The law sorts data centers into three tiers. Hyperscale facilities have more than 10,000 servers or more than 25 megawatts. The middle tier runs 2 to 25 megawatts, and the smallest is under 2 megawatts. For now, the same reporting rules apply to all three.

Urban water suppliers must also include data center demand in their annual water shortage assessments and contingency plans. Allen Matkins says this makes data centers an identified demand category in local water supply planning for the first time.

Other states are moving too

The National Conference of State Legislatures counts about 100 bills and resolutions in 39 states addressing data center water use in 2025 and 2026. Utah requires large new data centers to consult water providers before construction and to report use annually. Oklahoma bans groundwater use in open-air evaporative cooling at data centers. Florida requires a water conservation plan from data centers seeking at least 100,000 gallons a day. Kansas ties a sales tax exemption to commitments to conserve, reuse and replace water.