Full Breakdown
U.S. States Accelerate Data Center Regulation Amid Water and Energy Concerns
6/11/2026, 1:53:32 AM
Background & Context
The United States is seeing rapid expansion of large data centers that power AI workloads. New Jersey hosts 80 facilities; the Midwest projects a 64 % rise in new sites, most in rural counties. High electricity demand and water-intensive cooling have spurred scrutiny.
Legislative Actions & Official Responses
Governor Mikie Sherrill’s May 27, 2026 plan sets four pillars: clean-energy sourcing, water-and-electricity reporting, community-benefit agreements, and prevailing-wage rules. The Assembly Telecommunications and Utilities Committee approved A4096, requiring semiannual utility reports; the Senate passed the bill 34-2 in March. Ohio’s Substitute House Bill 646 creates an electric rate class, mandates a data-center tariff, and cuts the sales-tax exemption from 100 % to 50 % (or 75 % for brownfield projects). Senate Finance Chair Brian Chavez said the measure protects ratepayers. Illinois Governor J.B. Pritzker announced a two-year pause on new data-center tax credits, and Michigan lawmakers are drafting a repeal while Governor Whitmer emphasized water protection.
Data & Statistics
One New Jersey data center uses electricity equal to 80,000 homes and 5 million gallons of water daily. Ohio’s 2025 data-center tax-exemption program cost $1.57 billion, about 12 times the original estimate. The National Conference of State Legislatures notes 38 states offer data-center incentives; five are reviewing repeal. The Midwest expects a 64 % increase in data-center development, largely in rural counties.
Criticism & Opposition
Environmental groups and residents say data centers strain water supplies and raise utility rates. Sierra Club director Anjuli Ramos-Busot noted the facility’s water use is unknown to officials. In Champaign County, Illinois, a sixth-grader argued local water needs outweigh AI development. Festus, Missouri councilmember Rick Belleville urged ordinances to limit water use, and Ohio legislators raised concerns about non-disclosure agreements.
Conflicting Reports & Gaps
Ohio lawmakers differ on the tax-exemption cut, proposing 50 % reductions, 75 % reductions, or full repeal, creating uncertainty for developers. New Jersey’s clean-energy requirement will activate only after a majority of PJM states adopt comparable standards, a condition not yet met. Full texts of the Sherrill plan and Singleton’s bill remain unreleased.
What’s Next
The New Jersey Assembly and Senate will vote on A4096 in the coming weeks. Ohio’s HB 646 and Senate Bill 680 await committee action. Illinois will enforce its tax-credit pause on July 1, and Michigan’s repeal effort moves toward a floor-vote. Federal legislation by Senators Bernie Sanders and Rep. Alexandria Ocasio-Cortez to pause data-center development faces a Republican-controlled Congress, keeping state and local regulation the primary driver.
Verbatim Quotes
- “Transparency will help state agencies better understand the impacts of data,” — Kathryn Fisher, Campaign Manager, New Jersey League of Conservation Voters
- “Make sure the ratepayers are kept harmless, held harmless, and that data centers pay for whatever they're causing,” — Brian Chavez, Senate Finance Chair, Ohio
- “We need the water from our aquifer, but we do not need AI [artificial intelligence].” — Samuel Tomory, 6th-grade student, Champaign County, Illinois
- “I think 75% is too high,” — Matt Huffman, Ohio House Speaker
