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As North Carolina communities grapple with the rapid expansion of data centers, state lawmakers have introduced three bills aimed at protecting utility customers, monitoring water and electricity use and determining whether the industry’s tax incentives are worth their cost.
House Bills 1063, 1180 and 1189 take different approaches, ranging from comprehensive environmental and ratepayer protections to a two-year moratorium on the state’s largest proposed facilities. None would permanently prohibit data centers in North Carolina, and none has advanced beyond the House Rules Committee.
The proposals come as local governments debate whether to pause development while they study an industry that promises billions of dollars in investment, but often requires enormous amounts of electricity, water and infrastructure. In Greensboro, that debate culminated at the July 21 Greensboro City Council meeting in a divided council vote of 5 to 4 against beginning the process of establishing a temporary moratorium.
Although artificial intelligence is driving much of the demand for new facilities, the house bills generally define data centers according to their electricity or water consumption, not whether they are used exclusively for AI. Data centers house thousands of servers that store, manage and process digital information for services ranging from cloud computing and financial transactions to streaming platforms and generative AI.
The facilities can expand a community’s tax base and generate construction work, but they typically create fewer permanent jobs than traditional manufacturing projects of comparable size. Their round-the-clock operations may also require new substations, transmission lines, power generation and water infrastructure. Residents across North Carolina have raised additional concerns about generator emissions, constant mechanical noise and whether households will ultimately pay for utility expansions built to serve private companies.
House Bill 1063, the Ratepayer and Resource Protection Act, proposes the broadest set of regulations. It would require operators to disclose their projected peak and annual electricity use, annual water consumption, cooling technology and planned on-site clean-energy generation before construction.
The measure defines a large data center as one with projected peak electricity demand of at least 40 megawatts or annual water consumption exceeding 1 billion liters, which is measured at about 264 million gallons. Those facilities would need certification from the N.C. Utilities Commission and would be subject to public notice and hearing requirements.
Operators would have to demonstrate that residential customers and other ratepayers would not face higher electric, water or sewer costs because of their projects. Utilities would also be required to establish special rates that recover the full cost of infrastructure and operations needed to serve the facilities.
The bill would require large data centers to install enough on-site clean-energy generation to offset at least 25 percent of their projected peak demand, although the Utilities Commission could grant variances. It would direct state environmental regulators to establish water-use standards, encourage reclaimed-water and closed-loop cooling systems and prohibit evaporative cooling.
HB 1063 would also repeal certain sales-tax exemptions, restrict state and local incentives and require annual public reports on facilities’ energy and water use. In essence, the measure would allow data centers to continue locating in the state but require them to disclose their resource demands and bear more of the costs they create.
House Bill 1180, titled Data Center Amendments, takes a narrower approach centered on electric rates and tax exemptions. It defines a large-load data center as a facility with electricity demand above 20 megawatts.
The bill would require public utilities to establish special data center rates designed to prevent residential customers and small businesses from absorbing the cost of power plants, transmission lines, substations and other infrastructure. Service contracts would have to last at least 10 years, and data centers would be required to pay for at least 85 percent of their requested electric capacity during that period.
Operators would also have to provide financial guarantees protecting other customers if a facility closes, scales back or abandons a project after a utility has invested in infrastructure to serve it. The bill would repeal selected sales-tax exemptions for data center equipment, software and electricity beginning in 2027.
House Bill 1189, the Datacenter Transparency Act, would impose a two-year statewide moratorium on certain state and local approvals for new data centers designed to use at least 100 megawatts of electricity.
During the pause, the North Carolina Collaboratory at UNC-Chapel Hill would study the facilities’ effects on the electric grid, water supplies, wastewater systems, air quality, noise and property values. The Collaboratory would report its findings and recommend legislation by December 1, 2027.
The bill would also require data centers receiving sales-tax exemptions to obtain and annually renew certificates from the N.C. Department of Revenue. Existing facilities and projects under construction would have to provide information covering as many as five previous tax years.
The Department of Commerce would then report annually on the amount of state revenue lost through data center exemptions. State officials have estimated that existing operators receive approximately $45 million to $57 million each year in electricity and replacement equipment sales-tax exemptions but current reporting limitations have prevented exact accounting.
Rep. Amos Quick, a Guilford County Democrat and co-sponsor of HB 1189, said lawmakers and residents share concerns about the environmental and economic consequences of large industrial projects, particularly when they are concentrated in Black and Brown communities.
Quick, who lives in Greensboro’s District 1, pointed to the warehouses and industrial facilities already located in predominantly Black areas of east and southeast Greensboro.
“We know we need industry, and we know we need jobs and the positive things that industry brings,” Quick said. “But if they are so positive, why are they so concentrated?”
Quick said he supports a temporary moratorium to give officials time to examine energy consumption, rising utility costs and other effects before allowing major projects to proceed.
“Let’s stop, let’s pump the brakes, let’s see what the impacts are, let’s hear from all sides about it, and then let’s make a better-informed decision,” he said. “There’s such a thing as smart growth that we have to make a part of our calculus.”
Greensboro City Council took a different path July 21, voting 5-4 against a motion to begin the process of establishing a data center moratorium. Because a moratorium lasting longer than 60 days requires a public hearing under state law, the vote did not immediately approve or reject a final ordinance. It determined whether city staff would move forward with drafting one and scheduling the required proceedings.
Mayor Marikay Abuzuaiter, Mayor Pro Tem Denise Turner Roth and council members Tammi Thurm, Adam Marshall and Hugh Holston opposed moving forward with a moratorium. Council members Crystal Black, Cecile Crawford, Irving Allen and April Parker supported a pause of at least six months.
“I want to hear everything before we take a vote,” said Mayor Abuzuaiter, saying she wanted to hear more from experts on the other side of the issue and community members before taking action.
The narrow vote places Greensboro outside several North Carolina communities that have temporarily halted new data center approvals. Charlotte adopted a 150-day moratorium in June, while Durham and other municipalities and counties have enacted or considered similar pauses.
Quick questioned the argument that uncertainty was a reason not to establish a moratorium.
“I heard the mayor say that she doesn’t know enough about it to impose a moratorium, and I would say that in and of itself is a reason to impose a moratorium, because we don’t know,” he said. “We just don’t know what we don’t know.”
Sen. Gladys Robinson, a Guilford County Democrat, stopped short of supporting or opposing Greensboro’s proposed pause but agreed that officials need more information before making long-term decisions.
“I think people are moving ahead with little information,” Robinson said. “It’s bad to make decisions on partial information, partial data.”
Robinson said any review should examine the size and type of facility proposed, the resources needed to operate it and its potential advantages and disadvantages. Because the three proposals are House bills and have not advanced to the Senate, Robinson has not voted on them.
“You need to have a comprehensive approach to looking at what it means for the community, what are the detriments, what are the effects of it,” she said.
The day after the moratorium vote failed, Greensboro City Council members attended a work session featuring Christopher Lloyd, senior vice president and director at Virginia-based McGuireWoods Consulting. Lloyd, who advises companies and communities on economic development and data center projects, emphasized the industry’s potential trillion-dollar investment and tax-base benefits while also discussing its resource demands.
Lloyd presented estimates comparing annual water consumption among industries, including 17 billion gallons for data centers, nearly 12 billion gallons for soft-drink production and 547 billion gallons for golf courses. However, water demands can vary considerably depending on a facility’s size, cooling system, climate and electricity source.
However, the presentation did not resolve the larger questions that citizens are concerned about such as, what type of facilities may be proposed, where they could be built, how much water and electricity they would require and who would pay for the supporting infrastructure.
Until lawmakers or local governments vote on the pending bills, it is up to local municipalities to continue making decisions on AI data centers under existing utility, zoning and environmental laws.
