NEWS PIECE TO PONDER SERIOUSLY: States Tighten Regulations on Data Center Development | SFP Insider Site & Facility Planning

PLEASE NOTE: These legislative actions reflect a growing trend of states striving to balance the economic benefits of data center development with environmental sustainability and consumer protection. 

The term "New Rules for the Cloud Rush" often refers to the evolving regulations and standards surrounding cloud computing, particularly in areas like cybersecurity, data privacy, and compliance. These new rules aim to ensure the responsible and secure use of cloud services, especially as more organizations and individuals rely on them

 

New Rules for the Cloud Rush

What developers need to know about how states are regulating data centers—and utilities are shifting the cost burden. Read More.

States Tighten Regulations on Data Center Development

As the demand for artificial intelligence and cloud services surges, data centers have become critical infrastructure.  However, their substantial energy and water consumption has prompted several U.S. states to implement new regulations aimed at mitigating environmental impacts and protecting consumers from associated costs according to experts from Chamberlain Hrdlicka writing for Area Development.  Wednesday, May 7th, 2025 Here’s a few highlights:   Virginia:  Virginia, home to the world's largest concentration of data centers, passed House Bill 1601 requiring comprehensive site assessments for new data centers, focusing on impacts to water resources, agriculture, and historic sites. However, Governor Glenn Youngkin vetoed the bill, citing concerns over regulatory burdens.   Texas:  In response to the 2021 winter storm and growing energy demands, Texas introduced Senate Bill 6. The bill mandates that large electricity users, like data centers, bear the costs of infrastructure upgrades and install equipment for remote disconnection during emergencies.   Georgia:  Georgia's Senate Bill 34 aims to prevent utilities from passing the costs of serving data centers onto residential and small business customers. The bill prohibits including such costs in general rates unless directly charged to the data centers.   Ohio:  Ohio's House Bill 15 and Senate Bill 2 seek to modernize the state's energy policy by ending subsidies for unprofitable coal plants and requiring utilities to justify expenses, ensuring that data center-related costs are not unfairly transferred to consumers.   Illinois:  Illinois Senate Bill 0094 proposes restricting foreign companies from constructing data centers unless a joint study confirms that the energy consumption won't affect the state's power supply.  Utah:  Utah's Senate Bill 132 allows data centers to contract directly with utilities, ensuring that the incremental costs of their significant energy demands are not passed on to other ratepayers.  Minnesota:  Minnesota's House File 3007 introduces stricter permitting processes for data centers expected to consume over 100 million gallons of water annually, addressing concerns over water resource management.

FOR YOUR INFORMATION: AI OVERVIEW

States are enacting stricter regulations on data center development, driven by concerns about energy consumption, environmental impact, and community concerns. These regulations often involve stricter zoning rules, energy efficiency mandates, renewable energy requirements, and increased scrutiny of data center projects. 

Here's a more detailed breakdown:

• Zoning and Siting:

  Many states are implementing stricter zoning ordinances, requiring greater setbacks from residential areas and other sensitive areas like parks and schools. Some localities are also requiring additional local approvals before data centers can be built. 
• Energy Efficiency and Renewable Energy:

  States are introducing regulations to ensure data centers are more energy-efficient, using renewable energy sources, and reducing their environmental footprint. Some states are also considering requiring data centers to self-regulate their power consumption, particularly during peak demand periods, to prevent grid overload, according to Tech Policy Press. 
• Increased Scrutiny and Review:

  Data center projects are facing more rigorous review processes, including environmental impact assessments, water usage studies, and sound profile evaluations. 
• Addressing Concerns:

  These regulations are often driven by concerns about the potential impacts of data centers on local communities, including noise pollution, visual blight, and potential water shortages. 
• Protecting Ratepayers:

  Some states are also enacting legislation to protect ratepayers from potential increases in electricity costs associated with data center energy demand. 
• Tax Incentives and Moratoriums:

  Some states are reevaluating tax incentives offered to data centers, and some have even introduced moratoriums on these incentives