INSIDE COMPLIANCE

Data centers have rapidly emerged across the country to support the AI boom. Originally, policymakers were supportive of data center construction in their communities because they promised an influx of construction jobs, tax revenue, and community investment. To compete for data center construction in their communities, policymakers relaxes permitting requirements, offered tax subsidies, and signed non-disclosure agreements to keep development plans hidden. This competitive deregulation began to devolve into a race to the bottom; then, the public realized promises of construction fell short. 

Data centers’ enormous energy consumption has spiked demand, forcing utility companies to build additional infrastructure and drive up rates for everyone on the grid. The rising energy prices—coupled with impacts on water resources, the environment, and community character—have made the public resentful of data centers in their communities. In response to the growing public resentment, elected officials facing reelection in the November midterm races are pivoting away from pro-data center policies toward increased regulation. Those officials should use the political momentum to build coordinated approaches that will prevent competitive deregulation and protect ratepayers long after the midterms.