HUNT VALLEY, Md. (TNND) -- California Gov. Gavin Newsom on Saturday vetoed a bill that would have required data centers to report their water usage.

He returned Assembly Bill 93, which Asm. Diane Papan, D-San Mateo, introduced, to the legislature with the expressed concern of its potential impact on businesses and their customers. There is an "unprecedented" demand for larger data centers throughout the country because of the widespread adoption of artificial intelligence technologies, Newsom wrote in a statement to the Assembly.

"As the global epicenter of the technology sector, California is well positioned to support the development of this critically important digital infrastructure in the state," the governor noted.

"While I appreciate the author's intent, I am reluctant to impose rigid reporting requirements about operational details on this sector without understanding the full impact on businesses and the consumers of their technology. For this reason, I cannot sign this bill."

Assembly Bill 93 would have required data centers applying for an initial business license to report how much water they expect to use to their water supplier. Centers applying for a renewal license would have needed to report how much water they use each year.

Asm. Papan said in a statement she is "deeply disappointed" that Newsom vetoed the measure.

The bill was a reasonable and transparent approach to understanding and managing the "massive" water demand driven by data center expansion, the lawmaker noted.

"Every drop matters in California," Asm. Papan added. "While I am disappointed by this veto, I remain committed to working with the Governor's Office, environmental advocates, and industry leaders to ensure we strike the right balance between technological innovation and sustainable resource management."

The Data Center Coalition trade group testified against the bill in a hearing earlier this year. Senior Manager of State Policy Khara Boender expressed concern over its potential impact on operations, particularly for existing facilities. Data centers are already trying to be more efficient with their water usage, and there are security risks to disclosing information about their infrastructure, Boender said.

Data centers use water to cool processor chips and avoid overheating. The Environmental and Energy Study Institute, an environmental advocacy nonprofit established by Congress, estimated in June that large data centers can consume up to five million gallons of water each day. That amount is equivalent to the water usage of a town of 10,000 to 50,000 people, the nonprofit said.