Data Centers Dominate the Agendas of State Lawmaker Group Meetings

During the summer, state lawmakers travel the country to policymaker group conferences to network with peers in other states and learn about emerging policies and trends ahead of next year’s session. This year, data centers dominated summer meeting agendas, as they remain a high priority for both lawmakers and technology stakeholders.

The two largest state lawmaker meetings, the American Legislative Exchange Council’s Annual Meeting (ALEC) and the National Conference of State Legislatures’ (NCSL) Legislative Summit, featured multiple sessions on data centers, their impact on regions, and the challenges and benefits they provide communities. 

At ALEC’s Annual Meeting, state lawmakers and private sector groups unanimously approved a model resolution that opposes statewide moratoriums and urged regulators against shifting rate increases from data centers onto residential ratepayers. ALEC model resolutions allow its staff to advocate on behalf of the organization on legislation that deals with the topic. 

Most lawmakers at ALEC acknowledged the need to build data centers, but some had ideas on where data centers should be located. During one of the panels, a lawmaker from Missouri raised the question of using brownfield properties for data centers. This is a strategy that is starting to gain traction, as state lawmakers see an opportunity to incentivize brownfield redevelopment for data centers. In April, Michigan lawmakers introduced a comprehensive package of bills regulating data center operations, and HB 5790 and HB 5791 provided this incentive strategy by extending tax exemptions for redevelopment in brownfield zones.

Meanwhile, NCSL’s Legislative Summit held a data center debate on state legislation addressing data center construction, energy and water use, tax incentives, and moratoriums. Most discussions focused on data centers' strain on resources, such as an already short construction workforce and electric utilities facing unprecedented load growth.

Specifically, about 13% of Associated Builders and Contractors’ member companies are currently under contract on data center projects. The sector’s order backlog runs about 11 months, compared to an eight-month average for the rest of the construction industry. NCSL also highlighted how states are taking different approaches to legislating data centers: 38 states offer preferential tax treatment for data centers, 39 states have introduced data center legislation on data centers and power, 31 states have introduced legislation on water use and New York is the first state to enact a moratorium on new data center development.

Additionally, the Democratic Legislative Campaign Committee (DLCC) and the Council of State Governments (CSG West) both held meetings this summer with data centers as the top discussion item. DLCC’s meeting panel primarily focused on the environmental impacts of data centers and on working to protect both consumers and the climate. Similarly, CSG West focused on policy frameworks that manage water and energy use along with workforce and economic impacts.

Data centers’ prominence this summer signals the issue will not only be a top legislative priority for next year’s session, but also a prominent election issue this November. A POLITICO poll found that 41% of Americans oppose data centers being built near them. Despite challenges facing the industry, many lawmakers still point to the benefits that data centers bring to their states, including boosting local economies through added tax revenues and high-paying construction and engineering jobs.