The State of Data Center Policy in the United States
Summary
The regulatory landscape for data centers in the United States has dramatically shifted from aggressive economic incentives to intense scrutiny and restrictions, according to an analysis of over 700 federal, state, and local policies by the DIGS Lab at the University of Virginia. This review, covering 2025-2026, identifies four major trends: a pivot from incentives to restrictions, with jurisdictions repealing tax breaks (e.g., Virginia's SB30, Maryland's HB560); a rise in temporary moratoriums, with at least 20 proposed since 2025 across local and state levels (e.g., DeKalb County, GA, Oklahoma's SB1488); increased use of zoning ordinances to restrict data centers, moving them from "by-right" to "special use permits"; and state-level interventions overriding local preferences or establishing new frameworks (e.g., Virginia's HB153 for noise/water assessments). Policymakers are primarily addressing utility rates and grid reliability, water consumption, environmental impacts like noise and air pollution, and transparency issues, including the push to ban NDAs in economic development deals.
Key takeaway
For IT Professionals and Policy Makers evaluating data center siting or expansion, recognize that the regulatory environment is rapidly tightening. You should anticipate increased local scrutiny, potential moratoriums, and stricter zoning requirements, moving away from historical incentive-based models. Proactively address community concerns regarding utility rates, water usage, and environmental impacts, and advocate for transparency in project details to mitigate risks of project delays or cancellations.
Key insights
US data center policy is shifting from incentives to restrictions, driven by community concerns over environmental and economic impacts.
Principles
- Local zoning is a primary regulatory tool.
- Transparency is limited by proprietary claims.
- Policy is fragmented across governance levels.
Method
The DIGS Lab reviewed over 700 federal, state, and local policies to identify trends in data center governance, focusing on legislative changes, moratoriums, zoning, and state interventions.
In practice
- Mandate closed-loop cooling systems.
- Require detailed water usage reporting.
- Implement noise and air quality studies.
Topics
- Data Center Policy
- Zoning Regulations
- Utility Cost-Shifting
- Water Consumption
- Environmental Impacts
- Policy Transparency
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Editorial summary, takeaway, and curation by AIssential. Original article published by Tech Policy Press.