Where Is America Open for Data Centers?

The United States is the world’s largest hub for data centres. It accounts for nearly 50% of all facilities worldwide and 75% of the global computational power.

However, data centre development is an expensive enterprise. It requires substantial investments, reliable power connections, and access to large amounts of water for cooling. Building and operating data centres is nearly without state government support.

While states initially welcomed new projects, public concern over utility costs, water use, and noise pollution has driven a wave of new regulation.

Governments are deploying a range of policy approaches to contain the backlash. New York has put a moratorium on new large data centres, and Texas has followed suit with a freeze on new grid connections and environmental permits. Meanwhile, California, New Jersey and Tennessee are taking steps to ensure data centres cover a greater share of their electricity and infrastructure costs.

The November 2026 midterm elections could further reshape the landscape, determining which restrictions advance and where new projects face uncertainty. Gubernatorial races are especially important to watch.

This report maps which states are welcoming data centres and which are turning them away, identifies the governors and lawmakers to watch, and examines the four main approaches states are using to shape data centre development.

The Short Answer

Local backlash has become a major obstacle for data centers, and states are becoming increasingly restrictive — though most are though most are adding bans instead of imposing bans. Generally, we are seeing states take one of three responses:

• Pause: Texas and New York have paused approvals for new large data center projects pending audits and reviews.
• Tighten: Most states — including California, Virginia, Illinois, Ohio, Pennsylvania, Arizona, New Jersey, Tennessee, Maryland, and Nevada — are making the rules stricter or reviewing tax breaks, instead of banning new development outright.
• Open, with conditions: Georgia and Indiana remain open to new projects, but even they now come with conditions.

The broader trend is clearly toward stricter rules, greater scrutiny of electricity costs and water use, and more pressure on developers to address local concerns before they break ground. The November midterms are expected to play a key role in shaping where individual states land next.

The Numbers That Tell the Story

The Boom

Data centre development is booming in the US. By August 2026, U.S. data centre construction was running at an annual rate of roughly $85 billion, even as spending on other private construction fell by $120 billion from December 2023 levels.

The Backlash

The US public has turned against data centres, with 72% opposing new facilities in their own communities, a recent poll found.

Understanding the Policy Approaches

States are using different policy approaches depending on their priorities and concerns. We have categorized state actions into four primary levers:

1. Moratoriums: Putting a pause - States are pausing new projects or tightening approval rules while reviewing their impact on power, water and local communities.
2. Cost-sharing: Making developers pay more - States are making data centres cover more of the electricity and grid costs linked to their operations, rather than shifting those costs to ratepayers.
3. Tax incentives and subsidies - States are pausing, reducing or reviewing tax breaks previously offered to attract data-centre investment.
4. Community and resource safeguards - States are introducing community commitments, water-use rules and greater disclosure of resource consumption to address local concerns.

Where America Stands

Following strong public backlash, most states now recognise the need to put checks and balances on data centre development. However, they differ in policy approach.

Paused or Near Pause (Moratoriums)

Texas and New York are the clearest examples of state-level pauses. Following strong public backlash, they have halted approvals while seeking to balance development with grid and environmental realities.

Tightening the Rules (Cost-Sharing, Community Safeguards, Reviewing Tax Incentives)

Most states are trying to find a middle ground: addressing public concerns without outright banning new data centres. They are focused on making developers accountable for utility costs, environmental impacts, and creating a fair taxation structure.

Open with Conditions

Some states are resisting the public backlash against data centres and remain open for new development, instead imposing relatively lighter conditions on developers. However, the midterm elections could change this.

Impact of Mid-term Elections and Gubernatorial Races

The November midterm elections are expected to play a crucial role in shaping state-level data-centre policy, influencing whether lawmakers pursue tighter regulations or continue to encourage investment.

Depending upon who wins, several stalled or failed bills could make a comeback in the 2027 legislative session. On the contrary, some states may move away from restrictive measures as the threat of political backlash subsides after the elections.

Gubernatorial races will be particularly important, as incoming governors have considerable sway over what legislation gets passed, can veto any bill, and can take unilateral executive action without consulting the legislature.

Gubernatorial Races To Watch

The November 3 elections could change data-center policy in multiple states:

• Texas: Greg Abbott’s permit halt and push to end tax incentives put infrastructure costs and approvals at the centre of the race. His opponent, Gina Hinojosa is expected to have a much tougher stance against data centre development.
• New York: Kathy Hochul supports the permit pause; Bruce Blakeman opposes a statewide moratorium and wants local governments to strike deals.
• Georgia: Keisha Lance Bottoms supports a construction pause, while the wider debate centres on developer-paid costs.
• Ohio: Amy Acton supports a conditional moratorium; Vivek Ramaswamy proposes pausing approvals by executive order until lawmakers pass specific requirements.
• Oregon: Tina Kotek and challenger Christine Drazan both support moving toward a statewide moratorium.
• Nevada: Joe Lombardo supports development with community backing; Aaron Ford opposes projects on federal land.
• Additional races: Data centre policies are active issues in the Pennsylvania (Shapiro vs. Garrity), Maryland (Moore), and Kansas (Holscher vs. Masterson) races.

Why other states may see less change: California, Arizona and Tennessee already have major rules in place, and the focus will be on implementation. Virginia, New Jersey and Indiana have no gubernatorial election in November 2026.

The 2027 Bill Tracker

State legislatures are expected to see a wave of new data centre-related bills in the 2027 legislative session.

States like Texas and New York may seek to codify recent gubernatorial orders into law. Meanwhile states like California and Arizona had already enacted important laws, with focus now on implementation.

Track the latest updates on these bills on PolicyNote.

What to Watch in 2027

• Which pauses become permanent? Texas, New York, Arizona, Illinois and Ohio all made pauses or tough new rules in 2026. The 2027 sessions will show whether these were quick answers to political pressure or the start of lasting rules. Check this out on PolicyNote.
• Who pays for the next infrastructure? States and regulators are asking developers to cover more of the cost of their utility usage, whether water, electricity or land. That can change a project’s math even where building is fully legal.
• Whether pressure spreads from “can we build it?” to “what does it cost?” In 2027, the focus is expected to be on tax breaks, electric rates, water and community benefits. A state can stay open to data centres and still make them much more expensive.
• Whether local pauses keep spreading? Even where states stay open, towns and counties are adding their own pauses. This could become the next big story of 2027.
• Could data centres move to new states? While some states are tightening rules, others are still attracting data-centre investments from major companies.
  • Louisiana: Attracted major new commitments in 2026, with Amazon expanding its planned investment to $18 billion and Meta’s Hyperion project exceeding $50 billion.
  • Missouri: Secured Google’s $10 billion Project Mica in Clay County, financed through Port KC’s authorization of $10 billion in taxable revenue bonds.

Methodology: How We Pulled the Data

Tools used: PolicyNote’s legislative tracker (via PolicyNote MCP), state bill-tracking pages, official statements, and news reports.

State selection: The core comparison covers TX, NY, CA, VA, IL, OH, PA, AZ, NJ, TN, MD, OR, NV, GA, and IN. They were selected for their importance to the data-centre market and the intensity of recent policy activity. Together they illustrate the range of policy approaches states are actually using.

Sourced on: October 26th, 2026