New restrictions on data centers in North Carolina are a step closer to becoming law after the state House of Representatives voted to approve them Wednesday.
The wide-ranging proposal seeks to address concerns over how much energy and water data centers use, ban local governments from paying them incentives to come to town, mandate more attention to noise pollution and more. At the core of the new proposal in Senate Bill 730 are requirements that supporters say should help stop utility bills from rising for everyone due to the immense power and water demands of a new data center.
“North Carolinians are seeing higher electricity bills driven by rapid data center growth and aggressive energy mandates,” Rep. Matthew Winslow, R-Franklin, said Wednesday. He added that the bill “puts our families and small businesses first by making data centers pay their fair share, and strengthens [electrical] grid reliability.”
A tech industry lobbying group has criticized parts of the bill as going too far, while members of the public who came to legislative committees on the bill criticized it as not going far enough.
Republicans found tentative support Wednesday across the aisle from Democrats; some said the data center changes were a good first step and worthy of praise.
However, debate over the bill turned deeply acrimonious Wednesday as Democrats and Republicans lobbed accusations at each other over unrelated provisions in the bill aimed at requiring the state to fast-track Duke Energy’s construction of new nuclear power plants.
The top House Democrat, Rep. Robert Reives of Chatham County, said that and other energy-related provisions in the bill will raise people’s power bills, even though GOP leaders call the bill the “Ratepayer Protection Act.”
“I hope one day to get people to trust us again,” Reives said. “… We have an opportunity. Data centers are a problem here, and I commend us for jumping on the data centers. But we just can’t help ourselves.”
Rep. Maria Cervania, D-Wake, cited a Georgia nuclear plant that ran more than $20 billion over budget and years behind schedule, and a South Carolina nuclear project that wasted billions before ultimately being canceled.
“I’ve gone to legislators and talked to them in Georgia and South Carolina — both Republican-led states like ours — and they have said that their grandchildren’s children will still be paying for these large scale nuclear projects,” Cervania said, urging for more caution in North Carolina around new nuclear plants being approved, not less.
Republicans shot down concerns over the energy provisions of the bill, saying that helping Duke create more power is paramount.
“Do you remember the Christmas Eve blackout?” Rep. Dean Arp, R-Union said, referring to a 2022 incident. “Roughly half a million customers in the Carolinas without power, some for hours, in freezing temperatures. That’s what running short of dependable power looks like.”
‘AI is not leaving’
Winslow previously said the goal of the data center portion of the bill isn’t to ban them in North Carolina, but rather to find “a balanced approach because the data centers are in every part of our lives.”
The artificial intelligence arms race has created a need for more data centers, and tech companies are increasingly looking to certain states, including North Carolina, where power and land are relatively cheap.
“We see the pushback in the communities about the data centers,” said Rep. Carla Cunningham, U-Mecklenberg in a committee hearing Tuesday. “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.”
Data centers have faced opposition from many communities around the state. 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.
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.
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.”
Boender also specifically criticized a provision of the bill that would’ve forced data centers to recycle their water for cooling by using a closed-loop system, saying the companies her group represents don’t want to pay that extra cost. The next day, GOP leaders amended the bill to remove that provision and instead say that state regulators could require closed-loop systems for data centers in certain conditions, but that they don’t have to.
Cervania proposed amending the bill Wednesday to say that, if data centers are told to use closed-loop water recycling systems, they should be required to prove that they’re actually doing so, and to report how much water they use. Republicans shot it down with no debate.
Other efforts on data centers
It’s not 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.
On Wednesday Rep. Tim Longest, D-Wake, proposed an amendment to the bill that would’ve repealed data centers’ tax loopholes. It also would’ve also banned the state government from paying incentives to data centers, in addition to the bill’s ban on local government incentives. Republicans shot it down without debate.