Data Center Expansion Sparks Regulatory Response in U.S. States
A surge in data center construction in the rural South and Midwest is prompting legislative action across more than 20 states. Many local governments are implementing moratoriums and reassessing incentives amid growing community concerns over energy and water usage.
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Over 75% of new data center projects are concentrated in rural areas of the South and Midwest. In response, more than 20 states are introducing bills to regulate data center development, while some local governments, like Champaign County, Illinois, have enacted one-year moratoriums.
A significant example is Festus, Missouri, where residents ousted city council members following a $6 billion data center deal. Additionally, Illinois Governor JB Pritzker has proposed a two-year pause on new tax credits for data centers starting July 1. The rise of local opposition has prompted some legislators to reconsider existing incentives, yet many state governors continue to support data center growth, creating a complex regulatory landscape that may necessitate federal intervention.
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