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Less than halfway through the year, data centers have emerged as one of the hottest technology-related issues in state legislatures.
As of May 15, nearly 300 bills with “data center” in the title or summary had been introduced in 39 states this year—up from 170 bills and 30 states in early February—according to the LexisNexis® State Net® legislative tracking system.
Some of that legislation has been drawing headlines recently.
As of May 15, bills with “data center” in the title or summary had been introduced in at least 39 states this year, according to the LexisNexis® State Net® legislative tracking system. Ten of those states had enacted such measures.
While Virginia is arguably the state with the most data center concerns, Maine last month became a focal point in the debate over the facilities.
In April, the Maine Legislature approved LD 307, a bill that would have made the state the first to impose a statewide moratorium on large data centers.
More specifically, the bill would have frozen approvals for new data centers requiring 20 megawatts or more of power until Nov. 1, 2027, and authorized a council of government officials, experts and other stakeholders to develop plans for future data center development.
“AI data centers are increasingly drawn to locations with available land and strong connectivity, qualities that Maine is well positioned to provide,” said Rep. Melanie Sachs (D), the author of the proposal. “But if these centers aren’t thoughtfully planned and coordinated, they can place extraordinary demands on electric infrastructure, the surrounding environment and host communities.”
The lawmaker-approved moratorium was short-lived, however.
The state’s governor, Janet Mills (D), vetoed the measure, saying in a message to lawmakers that while she supported a temporary freeze on data center construction, the final version of the bill failed to include an exemption for a $550 million data center project that could aid the economic recovery of the town of Jay, where a paper mill that employed hundreds of residents closed in 2023.
The Legislature failed to override Mills’ veto, but the conversation about data centers is far from over in the state. Indeed, shortly after vetoing LD 307, Mills signed an executive order establishing the Maine Data Center Advisory Council, which is charged with making recommendations on data center development to protect ratepayers, maintain grid reliability and minimize impacts on the environment.
“It is necessary, important and urgent that the State plan for potential impacts of large-scale data centers on our state, given the serious conversations about them here and around the country,” Mills said. “Through this order, this work starts today. I look forward to this Council’s work to examine the serious questions and concerns about data center development in Maine and provide recommendations about how best to protect our environment and ratepayers while providing for responsible economic development that benefits communities.”
Several other states are considering data center moratorium bills, including New York, where legislation (AB 10141/SB 9144) amended this month would impose a moratorium on the issuance of any “permit, certificate, license, or other form of approval ... for the siting, construction, or commencement of operation” of a covered data center, for at least three years and ninety days.
As we’ve previously reported, Virginia is the largest data center market in the world.
In 2023, state legislators there commissioned a study to document the impact of the centers on the state. It found that data centers provide numerous construction jobs during the 12 to 18 months it usually takes to build them, as well as a limited number of high-paying permanent jobs.
“Overall, the data center industry is estimated to contribute 74,000 jobs, $5.5 billion in labor income, and $9.1 billion in GDP to Virginia’s economy annually,” stated a summary of the study’s findings.
In addition, the summary noted: “Localities with data centers can collect substantial tax revenues from the industry, primarily from business personal property and real property (real estate) taxes.”
But the study also noted that data centers are expected to drive an “immense increase in energy demand”—and “building enough infrastructure” to meet that demand “will be very difficult.”
Last fall, data centers became a primary point of contention in Virginia’s elections.
In April, the state’s governor, Abigail Spanberger (D), signed two pairs of bills to address the environmental impacts of data centers:
Around the same time, Spanberger joined a bipartisan coalition of governors who called on PJM Interconnection, the operator of the nation’s largest electric grid, to protect ratepayers while making sure that data centers pay for the infrastructure they require.
“As we move Virginia into our energy future, we are working to make sure that our energy grid remains the reliable backbone of our economy, not a burden on Virginia ratepayers,” Spanberger said. “PJM must continue to collaborate with the Commonwealth to keep affordability at the forefront and deliver the lowest possible electricity rates for Virginians through the pursuit of innovation.”
Pending legislation in Minnesota seeks to block local government officials from withholding information about data centers and other projects through nondisclosure agreements.
HF 4077 by Rep. Emma Greenman (D) and a bipartisan group of other legislators, and SF 4379 by Sen. Erin Maye Quade (D) and other senators from both parties would both prohibit local officials from entering into NDAs that restrict public disclosure about land-development projects, economic-development projects or projects involving municipal tax revenues, obligations or taxing powers.
It’s worth noting that the bills are not data-center-specific, although they appear to have been driven by NDAs involving such facilities.
“Data center developers are using non-disclosure agreements (NDAs) that prevent the transparency that is a cornerstone of our democracy,” the Minnesota Center for Environmental Advocacy said in endorsing the legislation. “In one recent case, a data center proposer in Hermantown made non-disclosure agreements with over 20 government staff, and at least 4 elected officials. Elected officials and city staff should be accountable to the people, not to private developers. Constituents deserve to know the whole truth about what's being proposed in their community.”
Data center developers and their advisers say NDAs are needed to protect sensitive business information, including utility-usage data and trade secrets.
“The developer needs to know that their information is going to be protected and not released to competitors,” said real estate attorney Adam Weaver, a partner and head of the Data Centers & Digital Infrastructure practice at Pillsbury Winthrop Shaw Pittman LLP, in an interview with Law360.
Weaver noted that state and local governments don’t want to disclose details about incentive packages before they are finalized either because they are competing against one another for private investment dollars.
Government entities “want the ability to talk openly about job numbers and investment and all of these things they want to move the scale on,” he said.
In April, voters in Port Washington, Wisconsin, approved what appears to be the first local data-center-related ballot measure, requiring voter approval for certain future large development incentives.
Three other proposals that would prohibit, limit or add voter-approval steps for data-center-related projects are on the ballot this year in Augusta Township, Michigan; Janesville, Wisconsin; and Monterey Park, California. Alternatively, a ballot measure in Boulder City, Nevada, asks voters to allow data center development.
A proposed measure in the state of Ohio seeking to prohibit the development of data centers with aggregate power demand exceeding 25 megawatts has been cleared for signature gathering.
Other potential ballot measures related to data centers are in the works in Ashville and Wilmington, Ohio, and Frederick County, Maryland, where data center projects or zoning decisions have prompted referendum efforts.
Data centers have become “public enemy number one,” wrote Evan Milberg for the niche industry news publisher SmartBrief.
“Wind farms used to bear the brunt of local opposition,” Milberg wrote. “However, data centers have overtaken wind projects as the most contested infrastructure type in local zoning fights due to their massive power consumption, water use and thin job creation numbers.”
States and communities are no longer simply competing to attract data centers but increasingly focusing on how to manage their costs, from electricity demand and water usage to transparency, incentives and local control. With AI and cloud computing continuing to drive demand, the debate over who benefits from the facilities—and who pays for the infrastructure they require—is likely to remain a fixture in statehouses, city halls and ballot boxes.
—By SNCJ Correspondent BRIAN JOSEPH
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