In early 2026, policymakers across the US began proposing new limits on data center expansion. Lawmakers in nine states have proposed statewide moratoriums, and legislation continues to be proposed and passed at the national, state and local levels. The pushback is beginning to drive changes in behavior from both international companies and local groups. In Oklahoma, the Rock Volunteer Fire Department in Osage County turned down a $250,000 donation from Google LLC tied to a nearby data center development, citing concerns about "jeopardizing the public's support." The pushback around the US is beginning to force changes to the industry's traditional modus operandi.

The continued surge in restrictive legislation targeting data centers marks a pivotal shift in US digital infrastructure policy. What was once seen as a straightforward economic win is now subject to scrutiny over environmental impact, grid strain, water usage and community benefit. The introduction of national and state-level moratoriums, alongside moves to end tax incentives and enforce transparency, signals that policymakers are demanding that operators internalize costs and risks previously borne by the public. The regulatory landscape is fragmenting, with local and tribal authorities asserting control and state utility commissions empowered to evaluate and restrict projects. Going forward, the ability to demonstrate transparent operations, sustainable resource use, and tangible community benefits may be essential for success. Legislation and public opinion are becoming central factors in site selection and project valuation, and the US data center market may be entering a new era in which social license and regulatory agility are as important as technical capacity.

National

On March 25, Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-NY) introduced a bill (S. 4214), titled the Artificial Intelligence Data Center Moratorium Act, that would halt new data center developments countrywide. While the sweeping nature of the bill and its vague plan suggest theatrics, it is the first to propose a moratorium at the national level.

The bill would first prohibit the construction of new data centers and the upgrading of existing projects until Congress passes AI legislation. That legislation must include government review of AI products prior to release to ensure safety and effectiveness. The bill also states that policy should be put in place to prevent job displacement by AI and that wealth generation must be shared with the American people. The bill would further ensure that AI data centers cannot lead to increases in electricity bills or environmental harm, or worsen climate change. It would also mandate that the American people must be able to approve or reject data center projects at the local level, and aims to eliminate any subsidies from US taxpayers. Finally, it would mandate the use of union labor for data center construction or upgrades.

Related is a portion on transparency that would essentially eliminate nondisclosure agreements for AI data center operators. Under this mandate, the US Energy Department would collect and publish AI data center information from the point of land acquisition. This information would include everything from financial vehicles to energy and water usage, environmental information and even wage information. The bill ends with a prohibition on AI chip exports to countries that do not have similar protective elements in place, as outlined in the bill.

Maryland

Baltimore City Council President Zeke Cohen has proposed a yearlong moratorium on new data center developments of 10 megawatts or more. The moratorium would provide city agencies with time to study where and how these facilities should be sited. This comes after legislation was passed at the county level. The Baltimore County Council voted unanimously on Feb. 2, 2026, to pause data center permitting through as late as the end of 2026. The bipartisan action also requires the county's planning board to submit a study by Oct. 1 on how to regulate incoming data center projects.

Ohio

While Ohio has not passed new legislation since our last coverage, a dialogue is beginning regarding data center tax incentives in the state. A recent report by Innovation Ohio calls on legislators to end tax incentives for data centers in the state due to an annual loss of $150 million or more. Sen. Bernie Moreno (R-Ohio) has publicly called for ARK Data Centers LLC to voluntarily give up tax incentives for expansion projects at existing data centers in Akron and Independence, Ohio. Moreno claims that the tax credits would result in about $4.5 million of the $136 million total estimated for the expansion. While it is unclear how big the expansion plans are, the existing Ark locations in the area are about 1 MW apiece. It is not clear why this specific project was singled out to give up incentives when there are tens of billions in investment dollars for data center projects in the broader Columbus region to the southeast.

Pennsylvania

A bill originally introduced in October 2025, H.B. 1834, has moved to the Senate. The bill would establish a new rate class for data centers of 25 MW or more. It would also enable the Pennsylvania Public Utility Commission to establish rules for data center development and to evaluate whether data center contracts would impact the PJM Interconnection grid and ratepayers. The new rate class would prohibit public utilities from shifting the costs of new generation and transmission infrastructure onto ratepayers. In addition to the new class, the bill would also require utilities to ensure that 25% of the electricity they supply is generated from renewables. There is also a mandate that would see data centers of 100 MW or more pay $500,000 a year into a proposed fund titled the Low-Income Home Energy Assistance Program. The bill passed the House; however, it may have a more difficult road in the Senate.

State Sen. Katie Muth says she will introduce new legislation in the near future that would establish a statewide three-year moratorium. She argues that officials need more time to evaluate risk, enact protective ordinances, update their zoning regulations, and do meaningful research and planning. Muth made the announcement on Feb. 12; however, no bill has been officially introduced at the time of writing.

Minnesota

In March 2026, State Sen. Jen McEwen introduced a bill that would halt local permits for data centers until the state's Public Utilities Commission submits a report on energy usage, water usage and other impacts. While the bill has been authored, it has not yet garnered a hearing. McEwen claims that requests for hearings on the bill have been denied.

South Carolina

A previous report outlines H. 4583, which would revoke all tax incentives and exemptions for incoming data centers and force data centers to be entirely energy independent. There are also new bills in the state, S. 867 and S. 902, which would divide data centers into three tiers based on the amount of power they use: less than 10 MW, less than 50 MW and 51 MW or higher. The bills would further create an office within the state Department of Environmental Services (S. 867) or the Public Service Commission (S. 902) for these centers, restricting them to areas deemed appropriate to handle the respective resource demands.

Michigan

More Michigan cities have altered data center regulations, while legislators toy with the idea of a statewide moratorium. The city of Gibraltar, just south of Detroit, has implemented a one-year moratorium on data centers as of March 9. The city houses the site of a proposed 100-MW data center by Raeden at a former steel plant.

Mason City, south of Lansing, has repealed the recently approved (February 2026) Ordinance 266, which would allow for data center construction within a specified zoning district within certain regulations. Locals, however, thought the regulations were not strict enough, and city officials voted to repeal the ordinance on March 17 to draft stricter guidelines. While the city now has no data center footprint, reports suggest that there have been hyperscale inquiries in the area.

Oklahoma

Much like Michigan, Oklahoma jurisdictions are taking matters into their own hands while a bill (S.B. 1488) for a three-year statewide moratorium is under consideration. The city of Tulsa voted on March 25 to approve a nine-month moratorium on new data center projects. The pause is to provide the planning office time to review and update standards. The Tulsa market is not large but does have a significant existing hyperscale footprint from Google, as well as planned projects from Google, Meta Platforms Inc. and Beale Infrastructure.

On March 7, the Seminole Nation of Oklahoma's Tribal Council unanimously approved a complete ban on data centers on tribal land within the state. The council states that the vote would impede "any inquiries, discussions and/or developments concerning any entity seeking to develop a data center of any size within the Seminole Nation." The moratorium was reportedly proposed after an undisclosed company approached the council, asking that it sign an NDA and a letter of intent to develop a data center on Seminole lands. Seminole jurisdiction consists of over 400,000 acres in Seminole County, situated between and slightly south of Oklahoma City and Tulsa. Because roughly half the land within the state falls under various Tribal jurisdictions, this could mark the beginning of a significant shift in the state's data center outlook if other jurisdictions follow suit.

South Dakota

On March 30, South Dakota successfully passed S.B. 135, titled the Data Center Bill of Rights for Citizens. The bill requires data center operators to pay all costs associated with providing electricity to the data center and prohibits electric providers from increasing or allocating residential customer rates to finance data center-driven utility expenses. It also prohibits the state from preempting or limiting local government authority from adopting ordinances or resolutions that limit or regulate data center construction. The bill further bars the state from granting tax exemptions to a data center. For water use, it requires a data center operator, prior to commencing operations, to notify each relevant local water provider of projected water consumption and undergo a determination study by the Board of Water Management, which will set limits on water consumption. Finally, it mandates semiannual reporting by authorized data centers of average water usage and requires the board to make the reported water usage data publicly available.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.