About this Resource
We've compiled a comprehensive resource that brings together key insights on state data center policy to help you navigate this complex and rapidly evolving landscape — including key terms, legislative trends, and more. Updated March 2026.
Why Data Center Policy Matters
Data centers, which have long been the backbone of internet infrastructure, have increasingly captured the attention of lawmakers. This is due in large part to the proliferation of artificial intelligence (AI), which requires substantial processing power and a more urgent need for data centers. Data centers use large amounts of energy and rely on backup generators in the event of a power outage. This has prompted policymakers to consider how to provide sufficient electricity to data centers while minimizing the impact on residential customers.
Key Takeaways
- State lawmakers are increasingly focused on data center policy as AI drives demand for more processing power. In 2025, over 40 states considered 267 related bills. Legislative activity has continued into 2026, with energy, water, zoning, and tax issues all active across multiple states.
- Energy concerns remain the dominant issue, with states weighing how to provide sufficient power to data centers while protecting residential ratepayers. South Carolina and Maryland enacted rate negotiation laws in 2025; similar proposals are moving in additional states in 2026.
- Water usage legislation is gaining momentum in 2026, with states increasingly requiring data centers to disclose and manage water consumption. Minnesota established a separate water permitting requirement for data centers in 2025, and more states are following suit.
- Local regulation is emerging as a significant battleground. State-level moratorium bills have been introduced in 11 states in 2026 but face resistance; meanwhile, dozens of municipalities have moved ahead with local construction pauses, shifting the center of gravity toward local government action.
- Tax incentives for data centers are under renewed scrutiny. States that previously offered generous incentives are reassessing their value as construction costs soar and community opposition grows.
Subscribe to Policy Watch: Data Centers
Data centers are impacted by a wide variety of state policy issues, often sitting at the intersection between energy, environmental issues, zoning, and taxation. As such, it's difficult to be an expert in all of the issue areas. Our newest subscription, Policy Watch: Data Centers, will help government relations professionals make sense of the evolving policy landscape around data centers by summarizing major legislative trends, sharing deep dives on key issues, and offering a landing page for quick reference to previously covered topics, all from MultiState's seasoned policy experts. As these debates continue into 2026 and beyond, staying informed about legislative trends and regulatory developments will be critical for anyone working in this space. Reach out to our team to learn more or subscribe.
Latest Data Center Policy Insights
Our team continues to track state data center policy developments as they unfold. Here are the latest posts from the MultiState Insider:
- Local Data Center Regulations Gain Ground as State Bills Falter — March 13, 2026
- State Data Center Water Usage Legislation Gains Momentum — March 3, 2026
- Local Government Data Center Oversight Becomes Flashpoint in State Capitols — March 3, 2026
- State Data Center Legislation in 2026 Tackles Energy and Tax Issues — February 20, 2026
- States Rethink Data Center Tax Incentives as Costs Soar — February 4, 2026
- State Data Center Legislation Faces Local Zoning Battles — January 15, 2026
- States Look at Ways to Encourage Off-the-Grid Power for Data Centers — December 16, 2025
- Lawmakers Are Regulating Data Centers and Here's All the Terminology You Should Know — December 2, 2025