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San Jose Says Its Data Center Rules Will Be Among the Strictest in the Nation. The Real Fight Is Over Who Gets the Last Word.

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Top image: The rotunda and Council Chambers at San José City Hall. Photo: EugeneZelenko / CC BY-SA 4.0 via Wikimedia Commons

San Jose has spent the fall writing the rulebook for the machines that power artificial intelligence. On Thursday night, it showed residents the draft, and many of them told the city it was not enough.

City staff presented the proposed “Uniform Standards” for data centers and other large energy users at an Oct. 15 community meeting in the City Hall Council Chambers. San José Spotlight reported that dozens of residents spoke during a public comment period lasting nearly two hours, and that cheers erupted as speakers called for a temporary moratorium on data centers until the standards are in place. Union members spoke in support of the draft.

Mayor Matt Mahan has staked out the opposite position from the moratorium camp. “We’re proposing some of the strictest standards in the country while ensuring our residents share in the benefits of the innovation happening in our own backyard,” he said in the city’s announcement of the meeting.

What the draft would require

According to the city, the rules would create new categories in the Municipal Code for “large load” data centers and research facilities drawing 20 megawatts or more. Among the provisions in the current draft, which the city stresses is subject to change:

  • Cooling must use 100% recycled water from the South Bay Water Recycling system or low-water technology such as closed-loop or air-cooled systems; open-loop cooling with drinking water would be banned.
  • Projects must run on 100% carbon-neutral electricity, which enrollment in San José Clean Energy satisfies; projects that opt out must file annual compliance reports.
  • Backup generators must meet EPA Tier 4 standards, run only during power outages, and be tested no more than 25 hours a year on weekday business hours.
  • Annual sewer-discharge and noise monitoring near homes, third-party verification of actual energy and water use, and a 1,500-foot public notification radius.
  • An anticipated affordable-housing linkage fee of $4 to $5 per square foot and an “Energy Reliability Fee” of roughly $50,000 per megawatt, both still under study.
  • Appeals of land-use and environmental decisions on projects over 20 megawatts would be heard by the City Council.

The city has also published how it estimates the tax upside. On its standards webpage, it calculates that a 99-megawatt data center would generate about $5.6 million a year in utility user tax, while cautioning that the figures are estimates, not guaranteed revenue.

Where critics say it falls short

Opponents’ objections go beyond any single number. “You’re not covering the heat island effect at all. You’re not studying low-frequency infrasound at all,” Dashiel Leeds of the Sierra Club Loma Prieta Chapter said at the meeting, according to San José Spotlight. “The data centers getting approved by the planning director and not the city council just is not accountability.”

That last point is the crux. Data centers can currently be built in several San Jose zoning districts, including light industrial areas, with a special-use permit. Alice Kaufman, policy director at Green Foothills, told San José Spotlight that if a project in a permitted area meets every standard, the council has no legal authority to stop it, and she wants projects to require a planned development permit so they can be judged case by case. She cited the former IBM Almaden Research Center site, which the outlet reported is being acquired by a data center developer. Deputy City Manager Manuel Pineda said the city is not considering zoning changes at the moment, but added, “The data centers standards are not done, so that’s why we’re here because we’re open to feedback.”

Labor sees the same rules differently. “We’ve been building data centers right here in the Bay Area for quite some time, and we want to see that continue,” said Danny Mangan of Sprinkler Fitters Local 483, adding that the work must come with strong labor standards and a skilled and trained workforce.

What happens next

The city says it will fold comments submitted through its online feedback form by Oct. 22 into staff reports. The final proposal goes to the Planning Commission on Nov. 18, with a tentative City Council first reading on Dec. 8 and second reading on Dec. 15. The rules would apply to all planning applications still under review when the ordinance takes effect, 30 days after the second reading.

San Jose’s process is unfolding as neighboring jurisdictions take a harder line. As we reported Friday, a Santa Clara councilmember plans to bring back a proposed moratorium on new standalone data centers at Tuesday’s council meeting, and the backlash has spread to the Peninsula.

The long view

The moratorium debate is ultimately about sequencing. A pause buys time to study cumulative effects, such as heat, groundwater and grid strain, that no single permit review captures. Standards, by contrast, lock in rules quickly and keep the investment coming, along with the tax revenue and construction jobs the city is counting on.

San Jose is betting that strict, published rules are a better long-term deal than a freeze, and that a city that writes the rules can shape the industry rather than chase it. The weakness critics have identified is that rules are only as strong as the discretion behind them. If a compliant project in an industrial zone cannot be refused, the most consequential decision the council makes may be the one it is not currently considering: where these buildings are allowed to go in the first place.

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