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Real Estate Partner and Chair of the Land Use & Development Practice Sheri Bonstelle authored an article titled “Data Center Development Takes a Beat” in the Los Angeles Business Journal’s Trusted Advisors column, where she discusses the challenges facing data center development in California and the impact of new regulations on future projects.

Excerpts:

Over the past few years, the pace of AI investment, advancement, and consumer use has increased exponentially as the development of AI data centers has been hampered by limited infrastructure for water and power, community outcry, and increased state and local regulations. California has the third-highest number of data centers in the country after Texas and Virginia. Several jurisdictions, including Los Angeles County, have adopted temporary moratoria or outright bans on data center development to limit their community impact.

California State Senator Steve Padilla notes “Data centers are getting built at an extreme rate without adequate guardrails, creating air quality, water supply, and energy supply challenges for local communities across the country.” He proposes a balance that will allow the substantial economic benefit of a hyperscale project for a region while also preventing potential public health impacts and soaring energy costs. On September 21, 2026, Governor Newsom signed seven data center bills, which he termed “the most comprehensive data center laws in the nation.” None of the bills imposes a moratorium, but together they require a thorough environmental review of all data center projects that focus on constructing and funding sufficient electrical and water infrastructure. These bills will add time, paperwork, and cost for data centers, and will, most importantly, increase community involvement in the permitting process.