The Data Center Rulebook Is Moving From Washington to the Carolinas

July 7, 2026

By: Colton R. Overcash

On September 30, the Federal Data Center Enhancement Act of 2023 is scheduled to expire, along with the Office of Management and Budget guidance used to implement it. Although the law applies to covered federal data centers rather than private data centers generally, its expiration could still shape the broader policy environment.

The law established requirements for uptime, cybersecurity, physical security, power resilience, natural disasters, and energy and water accounting. It also provided one of the few codified federal reference points for responsible data center operations.

Its expiration comes as states and local governments are under pressure to establish their own rules for data center siting, infrastructure use, and community impacts. The most important consequence may therefore be greater fragmentation across state and local policy.

Federal and Local Policy Are Moving in Different Directions

Federal policy has focused on accelerating data center construction and reducing barriers to large-scale infrastructure development. President Trump’s July 2025 executive order directed federal agencies to facilitate permitting and development for qualifying projects.

State and local politics are moving differently. Communities are raising concerns about electricity costs, water use, noise, land-use compatibility, tax incentives, and the infrastructure needed to serve large facilities. Those concerns are producing moratoriums, ordinance revisions, litigation, and proposed legislation.

A May Gallup survey found that seven in ten Americans opposed AI data center construction in their own communities. An Elon University survey found 44 percent of North Carolinians opposed a data center in their community, compared with 24 percent who supported one.

The federal law’s expiration will not cause these debates, but it may remove a useful reference point just as local officials are being asked to define acceptable development practices.

Why North Carolina Local Governments Are Using Moratoriums

At least 29 North Carolina counties and municipalities have adopted data center moratoriums, according to the NC Data Center Newsletter. Public opposition is part of that trend, but the state’s legal framework also helps explain why moratoriums have become common.

A provision included in North Carolina’s 2024 Helene relief legislation limited the ability of local governments to downzone property without the written consent of affected landowners. That restriction leaves some communities with fewer options for changing zoning that could allow a large data center.

When officials want time to evaluate noise, water use, power demand, setbacks, or compatibility with surrounding properties, a temporary moratorium may be one of the clearest tools available. Development risk therefore requires more than an assessment of public sentiment. It also requires a close review of local zoning classifications, uses permitted by right, conditional zoning options, and the effect of the state’s downzoning restrictions.

The political consequences are becoming more visible. In Stokes County, commissioners approved rezoning for a nearly 2,000-acre site amid substantial opposition. Both incumbent commissioners on the subsequent Republican primary ballot were defeated, and the county later voided the rezoning because of faulty public notice. In Edgecombe County, a challenger who campaigned against the proposed Kingsboro data center defeated a four-term incumbent.

These outcomes show that local officials increasingly view major data center approvals as politically consequential, particularly when residents believe the process moved too quickly or did not adequately address community concerns.

South Carolina Is Also Moving Toward Local Restrictions

South Carolina considered statewide data center legislation during the 2026 session but did not enact a comprehensive framework. County governments then began advancing their own restrictions.

Spartanburg County moved toward a one-year moratorium. Colleton County considered a pause while revisiting zoning rules associated with a gigawatt-scale proposal near the ACE Basin. Newberry and Chesterfield counties also pursued moratoriums or restrictions.

State lawmakers have since introduced broader proposals that would suspend certain permitting or approval activity until the General Assembly creates a more comprehensive process.

South Carolina’s experience shows how quickly local policy can develop when state rules remain unsettled. It also creates a more complicated operating environment because requirements may vary from one county to another.

The State Policy Question Is Coming Into Focus

North Carolina and South Carolina remain attractive data center markets, and significant projects continue to move forward. The emerging question is whether each state can establish standards that reduce local conflict while preserving a workable development process.

A durable framework would likely need to address ratepayer protections, water use and cooling, noise and setbacks, local siting authority, emergency-service demands, and infrastructure costs. It would also need to provide a clear approval pathway for projects that meet those requirements.

A framework focused only on restrictions could discourage investment without resolving local uncertainty. One that broadly preempts local authority could deepen opposition and shift more disputes into elections and litigation. A more sustainable approach would establish statewide minimum requirements while preserving a defined local role in land-use and project-specific decisions.

What This Means for Developers and Local Governments

Developers should no longer treat community engagement as a step that begins after a site has been selected and the technical case assembled. Political viability now needs to be evaluated alongside land, power, fiber, water, tax treatment, and permitting.

Companies can reduce risk by disclosing expected infrastructure demands earlier, adopting clear operating standards, identifying enforceable project commitments, and participating in ordinance development before local positions harden. Standards adopted during a temporary moratorium may govern development long after the pause has ended.

Local governments face a parallel challenge. Moratoriums create time for study, but they do not resolve questions involving utility costs, water consumption, noise measurement, setbacks, emergency response, or long-term land-use compatibility.

The federal law’s expiration will not determine how the Carolinas regulate data centers. It will, however, leave state and local officials with one fewer established reference point as they write the next generation of rules. The practical question is whether those rules emerge through coordinated state policy or through a county-by-county process shaped by individual disputes.