Does California’s Prop. 45 Apply to Data Centers?

Some have claimed that Prop. 45 – which seeks to expedite review of specified types of projects under the California Environmental Quality Act (CEQA) – includes data centers. Is that possible? This is a case of statutory interpretation of a proposal before the electorate of the state of California. As such, we need to review the language of the proposed ballot measure.

As an introductory matter, does California have a definition of “data center”? Recently enacted legislation (AB 1577) defines the term as: “’Data center’ means … a facility, or part of a facility, that houses computing infrastructure, including graphics and central processing units, servers, storage devices, networking equipment, and associated power and cooling systems, for the primary purpose of processing, storing, or distributing electronic data.”

All parties can agree that there is no mention of data centers in the language of Prop. 45, nor a definition of that term in the ballot proposition.

There are eight types of projects specified to be eligible for the expedited environmental review under Prop 45. All parties can agree that data centers are not any of the following specified projects:

• Essential housing project
• Essential water project
• Essential public health project
• Essential public safety project
• Essential education facility project.
• Essential transportation project.

That would leave us with two remaining types of qualifying projects that may provide a basis for those who claim data centers are included:

• Essential clean energy project
• Essential broadband internet access project

The first place we turn is found in Article 7. Definitions Section 21028 of Prop. 45. Initially, what is an essential project? The following is the definition:

“(m) ‘Essential project’ means a project that meets all of the following requirements:

(1) (A) The project is an essential housing project, essential water project, essential clean energy project, essential public health project, essential public safety project, essential broadband internet access project, essential education facility project, or essential transportation project.

(B) An essential project includes all related and ancillary public, private, and utility infrastructure and public service facilities required by a utility or public agency, or included in an essential project application as part of the whole of the project, to serve a project identified in subparagraph (A), including electric, telecommunication, gas, water, wastewater, stormwater, transit, police, fire, and transportation improvements that provide required public and utility services and infrastructure to the project. When a particular labor standard is applied to an essential project by other provisions of this chapter, that labor standard shall apply to the components of the essential project described in this subparagraph.

(2) The project does not include a jail or other detention facility, or involve the development of a new oil or natural gas production facility.”

The only language that may be applicable to the data center claim is “all related and ancillary public, private, and utility infrastructure and public service facilities required by a utility or public agency.” However, those facilities are “required to serve a project.” Does a data center serve either of those two categories of essential projects? It would not appear that they do.

The second place we turn is to the definitions of the two possible projects. The first one:

“(i) (1) ‘Essential broadband internet access project’ means a project to provide massmarket retail service by wire service, wireless service, or radio to customers in this state that provides the capability to transmit data to, and receive data from, all or substantially all internet endpoints, including, but not limited to, any capabilities that are incidental to and enable the operation of the communications service, excluding dial-up internet access service.”

Based on this definition, a data center does not provide “massmarket retail service … to customers.” As a result, it does not appear that data centers are eligible under this definition.

The second one: “(j) (1) ‘Essential clean energy project’ means a project that supports California’s climate, energy efficiency, reliability, electrification, sustainability, or clean energy objectives through one or more of the following: (A) (i) Producing, generating, or storing electricity derived from renewable or sustainable resources, including, but not limited to, solar, wind, geothermal, fuel cells that comply with the emissions standards adopted by the State Air Resources Board pursuant to the distributed generation certification program requirements of Section 94203 of Title 17 of the California Code of Regulations, small hydroelectric generation of 30 megawatts or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and associated transmission lines. (ii) For purposes of this section, “associated transmission lines” means a transmission line that is required for the interconnection or delivery of electricity from a facility described in clause (i). (iii) Notwithstanding clause (i), this subparagraph excludes producing or generating electricity from nuclear power. (B) Producing, generating, storing, transmitting, or distributing clean hydrogen that is not derived from a fossil fuel feedstock. (C) Developing, constructing, or installing microgrids and associated infrastructure. For purposes of this subparagraph, “microgrid” means a microgrid as defined in subdivision (d) of Section 8370 of the Public Utilities Code. (D) Capturing, transporting, or storing carbon dioxide emissions for permanent isolation from sources, including, but not limited to, energy production, manufacturing, or refining facilities. (E) Developing, constructing, upgrading, or expanding transmission or distribution system components identified in a transmission planning process approved by the Independent System Operator or in an integrated energy policy report adopted pursuant to Section 25302, including financing of those facilities, assets, or components through sale, lease, assignment, mortgage, or other disposition or encumbrance requiring state agency approval.”

Based on this definition, a data center does not produce electricity or clean hydrogen, or construct microsgrids. As a result, it does not appear that data centers are eligible under this definition.

Nonetheless, assuming a court finds some ambiguity in these definitions, we should look at intrinsic evidence of intent, which is found in the ballot measure language itself. So, third, we should take a look at Section 21011. Findings and Declarations. Courts can rely upon these statements when interpreting statutory language.

The only relevant provision is the following:

“The people of the State of California hereby find and declare all of the following: …

(e) Every year of delay means Californians wait longer and pay more for the things they need most. The act applies to the state’s most essential projects, including: … (3) Clean energy and reliable electricity to reduce energy bills and fight climate change. … (8) Broadband and telecommunications infrastructure to connect underserved communities and expand opportunity.”

Based upon these findings and declarations, “[essential] clean energy” projects are meant to reduce energy bills, which would not include a data center. And “[essential] broadband” projects are meant to connect underserved communities,” which would not include a data center.

In addition, Prop. 45 contains the following directives that are intended to guide the interpretation of its provisions:

“Article 8. Construction of Chapter and General Provisions 21029. Construction of Chapter (a) It is the policy of the people of the State of California that this chapter be interpreted and implemented to afford the fullest possible weight to the interest of, and the approval and realization of, essential projects. (b) (1) It is the intent of the people of the State of California that courts, consistent with generally accepted rules of statutory interpretation, not interpret this division or the state CEQA Guidelines in a manner that imposes procedural or substantive requirements upon essential projects beyond those explicitly stated in this division or the state CEQA Guidelines. (2) It is further the intent of the people of the State of California that this subdivision be interpreted and applied by the courts as directed by Section 21083.1, and is in pari materia with Section 21083.1 so that, to the maximum extent permitted under the law, this subdivision constrains the authority of the courts to issue a judgment or impose a remedy that is not expressly authorized by this chapter.

These provisions basically direct the judicial branch to follow the general rules of statutory construction and be confined by the language of Prop. 45. In doing so, there is no basis for finding that Prop. 45 would include data centers as projects eligible for the expedited environmental review.