Artificial intelligence (AI) is having a huge impact on how states and cities deliver services and manage communities. The computing power needed to support this technology requires the construction and management of a multitude of new data centers. This infrastructure has proven to be both a blessing and a curse for localities.
Data centers can transform the economics of a region, bringing a host of benefits to communities including job creation, tax revenue, and infrastructure upgrades, including investments in clean energy. Additionally, areas with data centers tend to attract companies building technology hubs that provide additional highly paid and highly skilled jobs.
At the same time, these centers require an inordinate amount of power and water (for cooling), and without the right infrastructure investments, can be a drain on local resources. This is especially true in rural areas that are attractive locations given the open space available. These areas often lack the utility infrastructure to support these centers; as a result, local consumers end up seeing a degradation in their service, or see sharp increases in their bills, or both.
For this reason, the Unleashing Low-Cost Rural AI Act has been introduced to mandate a study on how AI data-center expansion impacts rural areas in terms of energy supply, reliability, and consumer costs. The study would examine ways to upgrade existing energy infrastructure to support data centers, utilizing existing power generation facilities. It also would look at options for nuclear and geothermal energy, hydroelectric dams, solar, wind, battery storage, and carbon capture to power these facilities.
Here's a quick look at how states across the country are looking to bridge the gap between the benefits and risks of data-center development.
- New Hampshire - Low power availability and high electricity costs have been factors preventing an influx of data centers in the state. Lawmakers are weighing the pros and cons of introducing regulations and making investments to make the state more attractive to data-center developers. They are looking at the true impact of data center-related jobs and the environmental impact of the facilities, while also allowing for the development of alternative energy sources-including small, modular nuclear reactors (SMRs).
- Pennsylvania - Legislation may soon be proposed to establish a dedicated rate class for high-load data centers to ensure these businesses cover the cost of their infrastructure and operations, rather than passing on the expense to residents or small businesses. Other proposed legislation includes making modifications to permitting and zoning procedures in order to encourage data-center development while also strengthening the state's infrastructure.
- Virginia - Google has made huge investments in data centers across Virginia, bringing jobs to rural areas that were once only available in the northern part of the state's tech corridor. The tech giant has offered 10,000 scholarships for residents to learn AI and other job certification skills that will support both these facilities, and the businesses that may follow.
- Wisconsin - Microsoft recently announced plans to expand its data-center footprint in Wisconsin via facilities specifically designed to support "frontier AI models." The new data centers will offer jobs for residents in several ways, including through training for students and partnerships with local companies.
- Missouri - The planning commission for the city of St. Louis recently called for a pause on the development of data centers in the city, citing the need for more research on impacts. The pause would allow councils to debate regulations that could govern the future development of data centers, many of which are currently built in older buildings in the city's central business district. The pause would allow time to study energy and water use to ensure these facilities do not harm neighborhoods or undermine efforts to grow the city's density.
- New Mexico - This summer, the governor of New Mexico announced a partnership that would allow for the development of a geothermal energy facility to help power the state's growing energy needs. Geothermal energy taps into heat under the Earth's surface to generate electricity using steam turbines, heat and cool buildings (such as by using heat pumps), and more. Leaders have stated that an advanced form of this technology would allow for "closed-loop" cooling systems that use less water.
To track data-center policies and trends, check out these resources:
- GovAI Coalition Summit 2025 (November 5-6, 2025; San Jose, CA) - Discover cutting-edge AI trends, ethical practices, data management, and practical applications in public safety, transit, and local government, while exploring inclusive adoption and innovative policy development.
- 2025 Energy, Infrastructure & Environment (EIE) Summit (November 12, 2025; Washington, DC) - Digital transformation and artificial intelligence (AI) will accelerate energy innovation and enhance security requirements, fundamentally changing how resources are produced, managed, supplied, and consumed. This event emphasizes the collaborative efforts of U.S. federal agencies in responding to and delivering innovative solutions that modernize, secure, scale, and address energy demands and threats.
- Small Modular Reactors: A Realist Approach to the Future of Nuclear Power (white paper) - This report outlines how SMRs could serve diverse markets including industrial decarbonization, data centers, and remote communities, while helping address global energy security.
- Sustainable Building Technologies (data sheet) - As policymakers and industry leaders explore new funding and regulatory strategies, sustainable building technologies could play a vital role in shaping a more resilient and energy-efficient future.
For more information on how states are managing data-center development, search for additional events and resources on GovEvents and GovWhitePapers.
