| STATE POLICY TOOLKITS FOR DATA CENTER REGULATION | Transparency and Accountability |
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About This Toolkit
Published: May 14, 2026
As data centers spread across the country, they are imposing striking costs on utilities, ratepayers, water authorities, and communities. State governments are looking for new tools to contain the impacts of massive data center spread, including on public health and the climate. This toolkit draws from many examples in 2025 state legislative sessions, during which the Climate XChange team reviewed over 140 bills addressing data centers across 34 states, as well as emerging examples from 2026.
This resource represents one of five installments in Climate XChange’s State Policy Toolkits for Data Center Regulation, which will be released throughout 2026. This document tackles the tools that states can use to address and mitigate the impacts that data centers have on electricity affordability and reliability. It should be considered alongside other toolkits describing state policies addressing data center impacts on water resources, electricity affordability and reliability, greenhouse gas emissions, and tax and employment justice. Look out for the complete Toolkit Series at Climate XChange’s Resources for Regulating Data Centers Page.
The Issue
While data center development is rapidly growing nationwide, the lack of public information on their environmental, economic, and community impacts has become a greater hurdle to effectively regulating these projects. In some cases, non-disclosure agreements (NDAs) between developers, utilities, and government officials further obscure projected costs and resource demands, while leaving communities completely unaware that some projects have even been proposed. Without proper data, energy and water demand forecasts become uncertain. In the electricity space, this can lead to overbuilding, resulting in costs getting passed down to the ratepayer. Additionally, states are unable to be proactive in developing and implementing data center regulations and policy.
The Toolkit
State and local governments are directly responsible for permitting and licensing the construction and operation of data center facilities, and they can also mandate disclosure requirements through these processes. Disclosed information can cover a wide range of impacts, from water resources and air quality to electric rates, grid reliability, climate targets, jobs, and state budgets. States can require disclosure through many different regulatory processes, including applications and renewals for business licenses, construction permits, grid connection requests, Certificates of Public Convenience and Necessity (CPCNs), and water permits. This toolkit focuses on state policies that increase transparency into data center development, highlighting legislative tools that aim to keep states, local governments, and communities informed of upcoming projects and their associated impacts.
Legislative Highlights
- New York A 9086 (proposed, 2026): Would establish reporting requirements before permits for data centers are granted, and subsequent annual reports, on water and energy usage, employment outcomes, and environmental and community impacts. The bill also sets public notification and town hall requirements, leaving projects open to public comment.
- Illinois SB 2181 (proposed, 2026): Would require the disclosure of water usage by data centers, public reporting of that data, and state analysis and recommendations to mitigate impacts.
- Virginia SB 1448 (failed, 2025): Would require the state to convene a regulatory advisory panel to assess statewide cumulative impacts of data centers, funded by fees collected from the facilities themselves.
- Michigan HB 5399 (proposed, 2025): Would ban elected officials from entering into an NDA with any company looking to construct a data center and impose a $1,000 fine on anyone who violates this provision.
Further Reading
For more information on policy tools that address data centers transparency, explore our list of resources from other organizations:
- AI Now Institute — North Star Data Center Policy Toolkit
- Public Citizen — Reining in Big Tech: Policy Solutions to Address the Data Center Buildout
- We Build Progress — How States Are Approaching the Data Center Boom, including their database of state and local data center policies
- Climate Mayors — Data Centers and the Climate Landscape: An Actionable Resource for US Mayors
Note: With the rapid buildout of data centers across the country, states must have strong policies to prevent their negative impacts on the environment, climate, energy systems, and local communities. Climate XChange’s policy toolkits, educational programming, and technical assistance are solely focused on addressing these impacts. Our organization is not involved in advocacy, nor does it have the expertise to assess the broader societal and economic effects of widespread artificial intelligence adoption in the United States.