How Prop 45 could reshape California’s fight over data centers

California voters considering Proposition 45 will decide the fate of a sweeping infrastructure measure that opponents warn could render the state’s brand-new data center laws virtually toothless.

That would make it far easier for developers to force unwanted facilities into local communities, potentially undermining a growing wave of bans, moratoriums, and anti-data-center resolutions at the city and county level.

Data center backers insist the ballot measure will do nothing for them — even as some data center beneficiaries are spending big backing Prop. 45.

Supporters have framed Prop. 45 as a tool to accelerate critical infrastructure projects, like housing and schools and the measure does not directly name data centers among the sorts of projects it considers critical. But some legal scholars and environmental advocates say that the proposition’s technical language creates a loophole. By expediting environmental reviews under the California Environmental Quality Act for broad categories of projects — including broadband internet facilities and any additional infrastructure required to get them up and running — the measure could quietly allow data centers to bypass recent state safeguards and local scrutiny.

Julia Stein, a legal scholar and deputy director at UCLA School of Law’s Emmett Institute on Climate Change and the Environment, warns that the measure acts as a “blunt force instrument when it comes to streamlining” because of how wide its secondary umbrella extends.

“What Prop. 45 does is designate an entire class of projects that would be subject to streamlining, and then it also says that projects ancillary to those projects — so something that you might need to do in the course of the development of the project that’s exempted itself — would fall within that same streamlining bubble,” Stein said. 

Telecommunications projects are explicitly streamlined under the proposition, “and there’s an argument that the development of data centers might be necessary for projects like that,” Stein added.

Other projects, like high-speed rail, are explicitly excluded from streamlining under the proposition — but data centers are not on that list, either. Stein and three other environmental law scholars told CalMatters that this opens the door for legal challenges.

“The fact that they excluded some projects but have not expressly excluded data centers, a court would probably actually interpret that not as an unintentional oversight, but rather as intent to include data centers in the initiative,” said Matt McKerley, an attorney with Shute, Mihaly and Weinberger. 

Further, opponents argue that the proposition’s language, which includes a clause that it would supersede other related laws, would override measures like the recently-passed Senate Bill 887, which made it harder to fast-track environmental review for data centers.

Industry representatives say these objections to Prop. 45 are misplaced. The Data Center Coalition, an industry group supporting Prop. 45, insists their facilities fall outside the initiative’s scope, which focuses largely on housing development.

“The Data Center Coalition has reviewed Proposition 45 and concluded that data centers are not eligible for Prop. 45’s streamlining, nor are they a covered entity under any part of the measure,” said Khara Boender, the coalition’s Director of Government Affairs—West.

Industry representatives also point to a recent legal opinion memo from California’s Office of Legislative Counsel, which provides legal services to members of the Legislature. The memo argues that Prop. 45’s statutory definitions do not apply to data centers.

Despite maintaining that data centers fall outside the proposition’s reach, tech and utility interests benefiting from California’s computing boom are putting massive financial weight behind its passage. Corporate backers have poured over $10 million into the Yes on Prop. 45 campaign, including $3.05 million from utility giant PG&E and $500,000 from warehouse and data center developer Prologis — a cash influx that opponents argue reveals who truly expects to profit if the measure passes.

The debate over Prop. 45’s data center impact comes at a pivotal moment in California’s AI infrastructure boom. Gov. Gavin Newsom recently signed seven landmark data center laws aimed at forcing operators to disclose water usage, pay for their own grid upgrades, and undergo environmental review.

Yet local communities aren’t waiting for state regulations to take effect. Amid rising fears of rate hikes, grid overload, and water depletion, grassroots opposition has erupted across California. At least 26 cities and counties have proposed or passed moratoriums, bans, or strict limits aimed to stop data center development in their communities.

Nina Robertson, a deputy managing attorney in Earthjustice’s California regional office, said the ambiguity written into the ballot text would trigger immediate legal battles over local permitting authority.

“And who’s going to bear the cost of that litigation?” Robertson asked. “It’s going to be the local governments.”