Local Data Center Regulations Gain Ground as State Bills Falter

Moratoriums on data center construction have started to take hold at the local level, but efforts by states to adopt similar moratoriums haven't gained much traction this year. Local governments across the political spectrum, from New Orleans to Chandler, Arizona, have passed ordinances that temporarily pause new data center construction. These local leaders are often hearing directly and persistently from constituents about their concerns with these projects (although, as we've noted in the past, these projects also generate significant revenues for localities).

Federal and State Legislative Efforts Face Mixed Results

At the federal level, Vermont Senator Bernie Sanders is calling for a similar nationwide moratorium and has found some support among progressive colleagues, but this issue does not fall neatly along partisan lines.

State Moratorium Bills Struggle to Gain Traction

At the state level, the picture is similarly mixed. Although they haven't gained much traction, state-level proposals have picked up in the last month. As of this writing, MultiState is tracking 14 bills introduced across 11 states that would impose statewide moratoriums on data center construction, typically to allow agencies to study impacts on energy, water, and local communities. Proposed timeframes range from three months (IL HB 4172) to four years (VT SB 205). None of the statewide proposals has passed their originating chamber.

Case Studies Show Bipartisan Challenges

Statewide moratoriums face a different political calculus: legislators must weigh community concerns against tax revenue and economic development interests. In South Dakota, lawmakers considered two bills (SD SB 232 & SD HB 1301) to impose a one-year moratorium on expanding or building new large data centers. The sponsor of HB 1301, a member of the minority party, framed the bill as a planning tool rather than a block on economic development. Opponents countered that statewide moratoriums improperly limit local government authority. State lawmakers ultimately passed SD SB 135, which prohibits the state from limiting local governments' authority to regulate or ban data centers. It didn't kill the moratorium concept, but instead granted that authority to localities.

Majority-party sponsorship doesn't seem to guarantee success either. A few examples:

• In Virginia, a Democratic lawmaker from Loudoun County, home to the largest concentration of data centers, introduced VA HB 1515 to create a one-year moratorium. The bill was effectively killed for the 2026 session, though the budget conference committee continues to debate eliminating the sales tax exemption for data centers.
• In Oklahoma, SB 1488, sponsored by a Republican, would impose a three-year moratorium on 100 MW+ data centers to allow utility regulators to study impacts on water supply, utility rates, and property values. The bill missed key legislative deadlines and is unlikely to advance this session.
• A pair of New York bills (NY A 10141 / S9144) would halt all data center construction for up to three years while the Department of Environmental Conservation and the Public Service Commission adopt rules to minimize rate impacts on other utility customers. Senate sponsor Liz Krueger (D) is a long-standing environmental advocate and respected legislative leader. Assembly sponsor Anna Kelles (D) successfully led the 2022 moratorium on fossil fuel-fired crypto mining. The bills have not moved since their early February introduction.

Local Governments Drive Successful Moratorium Movement

Local moratoriums, however, seem to have succeeded because they take a narrower approach that is largely driven by motivated, involved groups of citizens. Polling supports this theory: people are not strongly opposed to the construction of data centers in general, but most would oppose a project built within three miles of their residence. Dozens of localities have instituted temporary moratoriums, but protests and zoning denials of specific projects have been even more disruptive.

Industry Faces Unpredictable Policy Landscape Across Jurisdictions

Despite rapid growth, the policy landscape for the industry remains challenging and unpredictable. While the Trump administration has been broadly supportive of data center development as a key driver of U.S. competitiveness in AI, state and local policymakers are charting their own courses (and their positions don't map neatly onto familiar partisan lines). Perhaps most critically, effective engagement requires monitoring not just Congress and 50 state legislatures, but thousands of local jurisdictions where motivated community groups have proven they can move the needle.

Track State Data Center Policy

Last year, states considered hundreds of data center bills, and we expect activity to continue growing in 2026. To stay on top of this rapidly evolving landscape, we've launched MultiState Policy Watch: Data Centers – a subscription featuring legislative analysis, trend summaries, and expert insights across energy, tax, water, zoning, and other policy areas impacting data centers. Sign up here.