Data center
At least 375 data center-related bills had been introduced across state legislatures through July 15, more than the total introduced during the previous three years combined. Getty Images

State lawmakers are introducing restrictions on data centers at a record pace, a sharp reversal from years of tax breaks and other incentives used to lure the facilities as communities push back over electricity costs, water consumption, noise and the rapid expansion of infrastructure needed to power artificial intelligence.

At least 375 data center-related bills had been introduced across state legislatures through July 15, more than the total introduced during the previous three years combined, according to an analysis by The Washington Post. Roughly three-quarters sought to restrict the facilities in some way, although many failed to pass or remain pending. That is a major change from 2023, when about 57% of bills tracked by the outlet sought to encourage data center development through tax breaks, expedited approvals or other incentives.

Pennsylvania has imposed some of the toughest requirements so far, with Gov. Josh Shapiro signing an executive order last month requiring developers seeking state permits to make legally binding commitments on energy affordability, environmental protections, workforce development, transparency and community engagement. The Pennsylvania governor's office said projects must also secure local approval before the state Department of Environmental Protection will review their permit applications.

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Shapiro's order removes AI data centers from the state's fast-track permitting program and prohibits nondisclosure agreements for proposed projects. Developers must pay for the electricity generation and grid infrastructure required by their facilities and cannot pass those costs to other customers, while projects must meet requirements covering water use, emissions and local hiring.

Virginia, already home to the country's largest concentration of data centers, has also added new requirements this year. Legislation approved by the Virginia General Assembly establishes emissions limits for certain backup generators used at data centers, while the state's budget directs regulators to establish noise rules for the facilities and sets requirements for water-efficient cooling technology in areas where water supplies are under pressure.

Virginia also imposed a temporary electricity consumption tax of 1.1 cents per kilowatt-hour on data center operators beginning July 1, according to the state budget. The tax is scheduled to remain in place until July 2028.

The statehouse push is unfolding alongside federal efforts to prevent growing AI electricity demand from increasing household power bills. President Donald Trump has strongly backed construction of data centers in the U.S., while Amazon, Google, Meta, Microsoft, OpenAI, Oracle and xAI signed his administration's Ratepayer Protection Pledge in March.

Under the pledge, companies agreed to build, bring or buy the additional electricity required for their data centers and pay for grid upgrades needed to connect them. They also committed to negotiate separate rate structures with utilities and state governments and pay for power and infrastructure brought online for their facilities even when they do not use all of it.

The legislative pressure is continuing despite few states embracing outright bans. Fourteen states have introduced proposals for full moratoriums on data center development, according to the Post's review, but only one such measure, in New York, had passed as of its analysis.