'In every part of our lives': NC lawmakers look to balance data center concerns with economic growth

Decisions on whether to allow data centers to be built can require a tricky balancing act, between promoting economic growth and protecting local residents, state lawmakers said Tuesday as they advanced a bill they think will help create the proper balance.

The bill wouldn’t ban data center construction in North Carolina but would add many restrictions, most notably around electricity and water use, noise pollution and land-use planning.

The proposal was first made public in May and is speeding through the legislature. The House of Representatives plans to vote on the measure Wednesday, after which it would head to the Senate.

The tech industry opposes much but not all of the bill, a lobbyist told lawmakers in a committee hearing Tuesday. Meanwhile, several members of the general public also spoke up to say it was a good start but doesn’t go far enough in cracking down on data centers. Lawmakers indicated that that middle ground — between the concerns of residents and the promise of new economic growth — was exactly where they were aiming.

“We really tried to make a balanced approach because the data centers are in every part of our lives,” Rep. Matthew Winslow, R-Franklin, said. “This is not restricting data centers from here in North Carolina, but to have a balanced approach that doesn't affect our critical infrastructure — our water and our electricity.”

“We see the pushback in the communities about the data centers. But we’re very much aware that AI is here, and AI is not leaving. … We know the data centers are not going to go away.”

Some local governments around North Carolina have banned data centers from being built in their boundaries, while others have sought to lure them in with favorable land-use changes, economic incentives or other strategies.

Data centers can add millions of dollars to a county’s tax base, allowing local leaders to lower property tax rates for everyone else, or spend more on services like public safety and education. But critics have raised concerns that they could use too much water or electricity, and that the loud hum they produce is annoying to people who live nearby.

One of the provisions in the bill requires local governments to look into everything within 500 feet of a proposed data center to assess how loud it would be for those neighbors.

“It's very much needed,” said Rep. Jay Adams, R-Catawba. “Particularly with the use of water and electricity, but also the noise issue. I've heard people speak to that, so I hope we'll look carefully at the impact of noise and where these facilities are located.”

Several data centers are under construction around Adams’ Hickory-area district, and he said that he’s learned it’s important to focus not just on how loud they are but also which frequency the noise coming from them is. He suggested the legislature give that further consideration as the bill moves forward.

The tech industry isn’t a fan of many of the changes. A lobbyist for The Data Center Coalition — a group that represents Google, Amazon, Microsoft, Meta and others — told lawmakers Tuesday the changes would hurt North Carolina’s ability to compete with other states for new data center construction. That would be bad for the state’s economy, said the lobbyist, Khara Boender.

“n 2024 alone, the data center industry contributed 18 and a half billion dollars to North Carolina's GDP, supported more than 117,000 jobs, and generated approximately $1.4 billion in state and local tax revenues,” Boender claimed. “These investments often occur in rural communities seeking jobs, tax base growth, and infrastructure investments.”

Senate Bill 730 isn't the only way state leaders are beginning to eye data centers with more skepticism.

Duke Energy is currently seeking an 18% rate hike, despite reporting an extra $1 billion in revenue in the first quarter of 2026 compared to 2025, which the company said was due in large part to new, power-hungry data centers coming online. Attorney General Jeff Jackson, a Democrat, is fighting that request — including with a counter-proposal filed Monday that he said would save North Carolinians $1.4 billion over the next two years. 

Jackson also recommended Duke Energy be required to set up different rates for data centers than it charges all other people or businesses, to reflect their unique strain on the power grid.

Separately, Democratic Gov. Josh Stein has called for eliminating the tax loopholes that allow the companies that own data centers to avoid paying sales and use taxes on the energy they purchase or their building materials.

State Senate leader Phil Berger, R-Rockingham, has said he agrees with eliminating their tax exemption for energy. That provision isn’t in the current version of the bill, however.

The wide-ranging proposal would require large data centers to cover electricity and infrastructure costs associated with building and operating them, while also tightening rules on where they can be built, who can own them and how much water they use. It would also ban local governments from paying companies incentives to build data centers in their community, and it contains unrelated provisions aimed at boosting the construction of new power plants in the state.

State Rep. Dean Arp, R-Union, previously said the bill’s combined goals of creating more power in the state, while also requiring data centers to provide more of their own power, were intended to help fight rising electrical bills.

"The whole bill is about reducing rate-payer costs for energy," Arp said when the bill was first debated in committee last month. "They're getting squeezed. We're having to build new generation. And so what we're trying to do is look at all-of-the-above, where rate payers are affected by energy policy."

At the core of the new proposal in Senate Bill 730 is a requirement that electric utilities structure contracts so data centers pay the incremental costs of serving their load, including new generation, transmission upgrades and grid expansion.

Data centers have faced opposition from many communities. Critics cite water and noise pollution and fears of higher utility bills caused by their intense power usage. Just 24% of North Carolinians said they’d approve of one being built in their community, according to an April poll from Elon University. 

The bill under debate seeks to address the water concerns by mandating a closed-loop system that would require data centers to recycle water for cooling, rather than constantly churning through fresh water. One member of the public who spoke on the bill Tuesday, Mark Swallow of the group Democracy Out Loud, said that provision should go even further by banning data centers from using any fresh water at any point for their cooling needs.

“Large stations still consume 50,000 gallons of water with closed loops,” he said. “The bill should preclude groundwater usage, so that residents and farmers are not competing with data centers.”

The massive power needed to run a data center has also become a growing focus in Raleigh as lawmakers, utilities, regulators and local governments debate how to manage rapid electricity demand growth tied to artificial intelligence and large-scale data center development while protecting ratepayers and maintaining grid reliability.

The bill would seek to address that by letting Duke Energy ramp up construction of new nuclear power plants, a goal the company has sought for years. Some lawmakers members of the public questioned that provision Tuesday, saying the state should do more to promote renewable energy. But Arp said Tuesday that nuclear energy would give Duke Energy the most reliable option.

“The last thing we want is another Christmas Eve brownout,” he said, referring to 2023 when Duke shut off power to hundreds of thousands of people in freezing cold weather, using rolling blackouts on Dec. 23 and 24 of that year, a strategy it attributed to colder-than-expected temperatures straining the power grid.