Washington spent years restricting China’s access to advanced semiconductors and the equipment used to manufacture them. Those controls protect an important American advantage. They do not tell states and communities how to evaluate the facilities needed to install, power, and cool those chips at home.
New York exposed that omission on July 14, when Gov. Kathy Hochul (D-NY) ordered a one-year pause on certain incomplete state environmental permit applications for data centers capable of drawing 50 megawatts or more. The order does not halt previously permitted construction and expressly leaves local approvals in place. New York is using the pause to develop standards on electricity costs, environmental effects, and community benefits because those rules were not settled before projects arrived.
Public concern is too broad to dismiss as hostility to technology. A Reuters/Ipsos poll released in June found that 57% of Americans would oppose a data center in their community, while 14% would welcome one. Seventy-seven percent worried that artificial intelligence would raise electricity costs. That last figure concerns AI generally, but the concern behind it is understandable. When utilities build generation and grid capacity for one exceptionally large customer, households and existing businesses can bear part of the risk unless rates and contracts assign those costs to the customer that created them.
States do not need to wait for a national model. Oregon law requires a separate utility classification for data centers and other large energy users of at least 20 megawatts, with tariffs that allocate the cost and risk of serving them to that class. Pennsylvania has chosen a different method. Its GRID standards require developers seeking state support to disclose power and water demands, pay costs caused by their electricity use, engage local governments, and satisfy continuing reporting requirements. Legislation to codify those standards passed the Pennsylvania House in June.
Clear rules also protect elected officials from being forced to approve a project before its obligations are understood. Utah’s June primaries removed Senate President Stuart Adams and two Box Elder County commissioners associated with the Stratos data-center approval. The project was not the only issue in those races, but one commissioner said he believed the vote cost him reelection. Another faulted the developer for seeking approval after buying the property instead of engaging residents earlier.
The White House’s Ratepayer Protection Pledge adopts the same approach to electricity costs. Amazon, Google, Meta, Microsoft, OpenAI, Oracle, and xAI agreed in March to fund new generation and delivery upgrades for their projects, negotiate separate rate structures, and pay for contracted capacity even when they do not use it. The pledge remains voluntary. It cannot establish a state retail rate, determine whether a site has adequate water or power, or issue a local land-use permit.
States should turn that principle into rules that apply before a project reaches its first decisive hearing. Utility commissions should publish large-load tariffs or contract standards covering minimum payments, collateral, exit costs, and stranded infrastructure. State agencies and local governments should require standardized estimates of peak power demand, annual water use and source, backup generation, expected employment, and decommissioning obligations. Permitting should follow a firm timetable and end with a recorded decision.
A deadline for a decision is not automatic approval. Communities must retain the authority to reject projects that cannot be served responsibly, conflict with land-use plans, or impose unacceptable local effects. A predictable process gives developers notice of the evidence they must provide and gives residents a clear account of the protections that will be enforced.
TRUMP’S BIG TECH PLEDGE IS A GREAT FIRST STEP TO END THE TAXPAYER-FUNDED FREE RIDE
Congress can reinforce that work without displacing state authority. On July 21, the House Energy and Commerce Committee approved the bipartisan Ratepayer Protection Act by a 52-0 vote. The bill would require state regulators to consider standards making customers with demand of at least 100 megawatts cover the full incremental cost of generation, transmission, and distribution upgrades, along with financial assurances against stranded costs.
The House should pass the bill. State legislatures and utility commissions should establish the cost, disclosure, and permitting rules that local officials can apply before the next major proposal arrives. America has protected access to advanced chips. It now needs a fair and predictable process for deciding where the infrastructure that uses them can be built.
Colton Overcash is the founder of Vertex Strategies, a Charlotte-based government relations and strategic advisory firm with a presence in Washington, D.C. He previously served in a presidential appointment at the Department of Homeland Security during the Trump administration and is a former staffer in the offices of Sen. Thom Tillis (R-NC) and U.S. Rep. Virginia Foxx (R-NC).