Governors’ attitudes on data centers shift
Governors across several U.S. states are shifting their stances on data center development due to public backlash over energy and water consumption. Pennsylvania Governor Josh Shapiro announced new, stricter standards for projects, while Texas Governor Greg Abbott ordered regulators to address electricity costs and plans new legislation. Other states like New York and Arizona have enacted temporary bans or halted tax exemptions for data centers.
Governors in several key U.S. states are revising their approaches to data center development amidst increasing public opposition and concerns over the industry's significant energy and water demands. This shift comes as midterm elections approach and the rapid expansion of AI-driven computing intensifies the environmental and community impact of these large server farms.
Pennsylvania Governor Josh Shapiro, a Democrat, announced his administration would implement stricter "guardrails" for data center projects. These new standards include requirements for developers to cover the full cost of their electricity, demonstrate advanced water-saving technologies, and secure local approval before seeking state permits or tax exemptions. Shapiro criticized what he called "predatory developers" attempting to push through dozens of projects, citing over 100 reported proposals in Pennsylvania, including six large campuses in the tiny Archbald Borough, which has led to a community uprising and a developer-initiated lawsuit.
Similar policy changes are unfolding in other states. Texas Governor Greg Abbott, a Republican, has directed regulators to prevent data centers from increasing electricity bills for Texans and has indicated plans for legislation to impose new regulations and eliminate the state's generous tax breaks for the industry. Arizona Governor Katie Hobbs, a Democrat, secured a three-year moratorium on sales tax exemptions for data centers, while New York Governor Kathy Hochul, also a Democrat, ordered a one-year ban on large data centers to establish environmental and energy grid protections. Illinois Governor JB Pritzker, a Democrat, halted new sales tax exemptions until stricter operational standards are implemented.
Community opposition, often centering on the loss of open space, noise from generators, water depletion, and skyrocketing utility costs, has resulted in numerous data center projects being rejected at local zoning and permitting board votes nationwide. In Arkansas, Governor Sarah Huckabee Sanders has taken a different approach, emphasizing technology investments while also focusing on protecting affordable electricity and water, with Google reportedly covering full energy costs for its West Memphis facility and investing in energy generation.