Government must find ‘sweet spot’ for data center and AI regulation, expert says

Data centers are a hot topic on voters’ mind across the U.S. as the Nov. 3 midterm elections approach. Dozens of data center-related ballot propositions will be put to voters across the country, and government leaders must exercise caution and responsibility as they shape the future of data centers in their communities, experts say. 

Voters in 10 states next month will decide on 41 local ballot measures aimed at advancing data center development, restricting that development or requiring certain conditions to be met before a data center project can commence. 

The centers play a key role in building the computing infrastructure needed to support artificial intelligence systems, a technology that the private and public sectors increasingly rely on to enhance operational efficiency and service delivery. While developers posture the facilities as opportunities for economic and workforce development in communities, many Americans remain fearful of their impact on the environment and residents’ health and utility bills. 

“We also need safeguards for local communities [that] mitigate impact on energy, water and noise,” said Sanjay Patnaik, director of the Center on Regulation and Markets at the Brookings Institution, during an event hosted this week by the policy research nonprofit. “I think the polling that we have seen reflects that, and, especially when we look at the midterms, it’s really important we get this right.” 

Indeed, recent survey findings indicate that data centers are considered Americans’ least favorite development project, with 46% of residents saying they would oppose the construction of such facilities in their communities. 

In Harwood, North Dakota, a proposed measure would require increased review for certain data center and other industrial developments, such as independent evaluation of the project’s technical information, a public hearing and access to public records related to the development, if approved by voters. 

Constituents in Ottawa, Kansas, will vote whether to ban the construction of data centers that use more than 25 megawatts of power. A similar measure is on the ballot in Sunbury, Ohio, regarding data centers that reach a monthly demand or peak electrical load of more than 25 megawatts. 

Also in Ohio, constituents in Grove City will decide if data center developments, expansions or property transfers for facilities using more than 50 contiguous acres, more than 20 megawatts during peak demand or more than 500,000 gallons of water daily will require additional voter approval. 

Three major factors are driving residents’ sentiments toward data centers, which has become a significant national debate over the last year, said Anthony Pipa, a senior fellow at Brookings Institution’s Center for Sustainable Development. 

As an example, he pointed to West Virginia, where a proposed data center campus in Tucker County has put residents at odds with developers and government leaders in support of the project since early 2025. 

A major issue in the Tucker County case, which is becoming “emblematic” of localities across the U.S., is “a lack of transparency, where [developers are] dealing with one or two officials in negotiating a potential deal, and then bringing the community in at the very end,” Pipa said, adding that this approach “has created a very difficult dynamic for the community to feel like they're shaping the future of their community rather than the shaping of their community being done to them.” 

Americans are also considering the potential risks data centers pose on their residential utility rates and broader land usage impacts, he said. The proposed data center in Tucker County, for example, would include a backup diesel generator located about a mile from a local elementary school. Residents in communities like Tucker County are increasingly considering whether the benefits of such facilities outweigh the risks. 

A lack of trust is a third point of contention influencing how people feel toward data centers, particularly regarding community benefit agreements in data center proposals, Pipa said. 

“Everybody's talking about community benefits agreements. There's maybe one or two that have actually been executed, and none have been tested,” he said. 

Additionally, there still remains broad public distrust toward AI that could be further fueling Americans’ backlash toward data centers, said Mark Muro, a senior fellow at Brookings Institution. 

“I think it is fair to say Americans have been feeling frustrated this summer and fall at the peremptory way the new technology has been imposed without guardrails, as fast as possible and often through questionable data center deals shrouded in [nondisclosure agreements],” he said. 

With the upcoming midterm elections, “states really have a tremendous role here, and, I think … control a lot of levers here whether it’s [deciding on] electricity hookups, environmental aspects and others,” Muro said. 

Pennsylvania Gov. Josh Shapiro, for instance, signed an executive order, to “set some standards” for data center development in the state, Pipa said. The order removes such projects from the state’s fast track permitting program, establishes energy affordability standards and prohibits the use of nondisclosure agreements for data center developments. 

Several states — led by New York’s announcement in July — and localities have increasingly turned to establishing moratoriums on the development and expansions of data centers. 

Pipa pointed again to West Virginia, which “has taken a completely opposite view” on data center regulation. 

West Virginia “has one of the more extreme laws … where [the] state government actually does a lot on the siting decisions for the microgrids and the power plants that would power” the proposed development in Tucker County, Muro explained, which “effectively preempts local control. The county commissioners and the local municipalities don't have the decision-making authority.” 

Ultimately, balancing AI and data center advancement with communities’ skepticism will be “a tricky balance to find,” Patnaik said, but government leaders must “try to find that sweet spot for regulation.”