Data centers emerge as flashpoint in Prop. 45 CEQA fight

Whether Proposition 45 would make it easier to build data centers has emerged as one of the most contentious questions surrounding the November ballot measure, with both sides offering competing interpretations of its provisions and the possibility of a court fight if voters approve it.

The latest dispute centers on an opinion from the Office of Legislative Counsel that supporters say undermines opponents' claims that the initiative would accelerate data center construction.

In a news release Tuesday, the Yes on Prop. 45 campaign cited the opinion's conclusion that the definition of "broadband internet access service" in Section 53167(a) of the Government Code does not include a data center.

"Opponents are doing everything they can to distract voters from the merits of Prop 45 and a failing status quo they cannot defend, even if it means misleading Californians about what the measure actually does," said Jennifer Barrera, president and CEO of the California Chamber of Commerce, a leading supporter.

Opponents countered that the opinion addresses a provision of California's net neutrality law, not Proposition 45 itself.

"Let's be clear: this document is not an analysis of Prop 45," said No on Prop. 45 spokesperson Woody Little. "And the Yes campaign's misuse of this opinion is not only irregular, it's dishonest."

The disputed provision was enacted in 2018 through SB 822, California's Internet Consumer Protection and Net Neutrality Act, following the Trump administration's repeal of federal net neutrality rules. The law restricts internet service providers from favoring certain types of online traffic.

"Net neutrality is a policy about conduct," said Severn Williams, another No campaign spokesperson. "Prop 45 is a law about building things. Saying that a provision in net neutrality law that regulates conduct governs what types of buildings can be built, and where, doesn't make sense -- it's an apples-to-oranges comparison."

Proposition 45 would impose a 365-day deadline on California Environmental Quality Act reviews for designated "essential projects," including certain housing and infrastructure developments. It would also establish a 270-day limit for litigation challenging those projects.

The measure seeks to capitalize on frustration over the difficulty of building housing and infrastructure in California. A July Public Policy Institute of California poll found that 73% of respondents supported a hypothetical initiative modifying environmental review for certain projects.

But support fell to 49% when voters were asked specifically about Proposition 45 in a subsequent poll.

Much of the campaign has focused on which developments qualify as essential projects under the initiative's 45 pages of legal text. Some exclusions are explicit, including high-speed rail. Data centers, however, are not expressly excluded.

"Prop. 45's backers had the chance to exclude data centers from the measure along with the rest of their poll-tested list of exclusions," Little said. "They didn't."

Supporters maintain that an explicit exclusion is unnecessary because data centers do not fall within the initiative's definition of eligible projects.

"The argument that Prop 45 should have expressly excluded data centers also fundamentally misunderstands California statutory interpretation," initiative proponent Kurt Oneto wrote in an opinion piece published this month in The National Law Review.

"A facility only needs to be excluded from the definition of an essential project if, absent the exclusion, it would otherwise fall within the boundaries of that definition."

The dispute has intensified amid growing scrutiny of data centers, whose expansion has been fueled by demand for artificial intelligence infrastructure.

With the campaigns unable to agree on what the initiative's language means, the question of whether data centers qualify for expedited environmental review could ultimately be decided by the courts.