LOCALIZE IT: States are seeing data centers as an economic bonanza. Some lawmakers are pushing back

By MARC LEVY
Associated Press

HARRISBURG, Pa. (AP) — EDITORS/NEWS DIRECTORS:

Data centers are increasingly becoming fixtures of the American landscape, with demand for the hulking structures ballooning in recent years due to the rapid growth of cloud computing and artificial intelligence.

States are now competing for big data center developments, with many lawmakers seeing them as an economic bonanza. Legislation is promising lucrative financial incentives to big tech companies and easing restrictions on construction and siting.

But as more data centers arrive and move into more densely populated areas, lawmakers are questioning who is paying for their water and electric use, and aiming to protect residents who are pushing back against the world’s most powerful corporations over concerns about the economic and environmental health of their communities.

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READ AP’S STORY

States are rolling out red carpets for data centers. Some lawmakers are pushing back.

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FIND YOUR STATE: DATA CENTERS

There is at least one data center in every state, as this map from the industry site, Data Center Map shows, though it’s worth verifying the information if you are focusing on a specific community.

The large commercial real estate companies can be good sources of information about development of and challenges for data centers, including this Cushman & Wakefield report and this CBRE report.

Data centers usually need to be near cheap sources of water, power and land. Lawmakers tend to want to attract them for their economic activity, and legislation tends to focus on tax breaks as well as water, power and land use.

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REPORTING ON DATA CENTER LEGISLATION:

State legislative websites have a number of tools to help understand a bill. That includes:

— a copy of the bill text

— videos of legislative hearings

— committee hearing agendas with copies of testimony by witnesses and sometimes the positions of certain groups on the bill, either in favor of or against.

— copies of a fiscal analysis that explains the bill’s provisions and how much it will cost taxpayers.

Types of data center legislation to look out for:

— Tax breaks. Most states offer an exemption to the sales and use tax for data center developers for the equipment, such as servers, to equip a data center and, in some cases, the materials to build them. Some states are expanding their tax break as lawmakers see more potential to attract more projects. Examples of a new tax break passed this year is one in Kansas. Examples of states expanding their tax breaks are ones in Kentucky and Arkansas.

— Land use. Data center operators are running up against local zoning laws in some states and lawmakers may get involved. In West Virginia, for instance, a new law bars local governments from adopting or enforcing rules that limit the construction or operation of certain data centers. Virginia Gov. Glenn Youngkin vetoed a bill that would have required data center developers to disclose their site’s noise impact on communities and schools and allowed municipalities to require a disclosure about water use. Lawmakers in Minnesota are considering a bill to create siting requirements for data centers, including water use, energy use and environmental impact. In Pennsylvania, lawmakers are writing legislation to fast-track permitting for data centers, and introduced legislation to speed up the construction of power plants.

— Electric or water use. A number of states are eyeing restrictions on the use of electricity and water by data centers. In Michigan, for instance, lawmakers combined tax exemption legislation with restrictions water use and electricity use. Lawmakers in Oregon are advancing legislation to order utility regulators to ensure data centers pay the cost of power plants and power lines necessary to serve them. Georgia has similar legislation under consideration. Some states — like Texas, Oklahoma and Utah — are trying to make it easier for data center developers to procure their own power, instead of going through the electric grid. South Carolina eased restrictions on the construction of power plants while New Jersey wants to study the effect of data centers on electric rates. The bill vetoed by Youngkin would have allowed municipalities to require data centers to disclose water use.

Key elements of data center legislation to report out:

— If it’s a tax break, check to see if a state agency or legislative committee has studied how much money will it save a company or how much money it will cost the state. If it’s targeted at a particular project, file a public records request for the company’s application, proposal or signed agreement from the municipality. State agencies that oversee business incentive programs will also likely have that documentation.

— If it involves electricity use, has the grid operator or a state public utility board studied the effect of data centers on electricity use and electric rates? Are data center operators reporting to any government agency or utility how much electricity they use?

— Likewise, if it involves water use, has a state water agency studied the effect of data centers on water use or water rates? Are data center operators reporting to any government agency or utility how much water they use?

— A bill often gets changed, or amendments are added or rejected. Find out what sorts of concerns drove those changes or proposed amendments.

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READ ADDITIONAL AP COVERAGE

States are rolling out red carpets for data centers. But some lawmakers are pushing back

Artificial intelligence technology behind ChatGPT was built in Iowa — with a lot of water

As data centers proliferate, conflict with local communities follows

Ireland embraced the AI boom. Now its data centers are consuming too much of its energy

Facing competition from Big Tech, states dangle incentives and loosen laws to attract power plants

US approves fast-tracking power plants in mid-Atlantic grid over complaints that it favors gas

OpenAI looks across US for sites to build its Trump-backed Stargate AI data centers

Big Tech wants to plug data centers right into power plants. Utilities say it’s not fair

DeepSeek says it built its chatbot cheap. What does that mean for AI’s energy needs and the climate?

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Localize It is a resource produced by The Associated Press for its customers’ use. Questions can be directed to the Local News Success team at localizeit@ap.org.

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