North Carolina Lawmakers Advance Multiple Bills to Regulate Data Center Boom
Why It Matters
As data centers multiply across North Carolina, lawmakers and local governments are grappling with the facilities’ growing demands on the electrical grid and public finances. The policy debate — spanning tax exemptions, consumer utility rates, and local land-use authority — has national relevance as states from Pennsylvania to the Carolinas confront a surge in large-scale digital infrastructure investment.
What Happened
Bipartisan legislation is moving through the North Carolina General Assembly to place new requirements on data centers, following a push from Democratic Gov. Josh Stein, who urged lawmakers in April to reform or eliminate existing sales tax exemptions for the facilities. Stein cited the potential impact on consumer electricity bills and lost public revenue.
Three bills are pending in the House Rules Committee, while a fourth awaits a hearing in the Senate Appropriations/Base Budget Committee. The measures address tax breaks, utility rate protections, disclosure requirements, and — most dramatically — a potential two-year statewide permit moratorium.
House Bill 1063, the “Ratepayer and Resource Protection Act,” would repeal existing sales tax exemptions and require prospective data center owners to file disclosure statements with state environmental and utility regulators, as well as local governments. Those filings would need to include projected electricity and water consumption figures.
House Bill 1180, the “Data Center Amendments,” would direct the state Utilities Commission to impose tariffs on large-load data centers, shielding residential customers from absorbing disproportionate energy costs tied to the facilities’ round-the-clock power demands.
The most sweeping proposal, House Bill 1189 — the “Datacenter Transparency Act” — would impose a two-year statewide halt on data center permits while the General Assembly evaluates the full scope of the industry’s impact.
In the Senate, Senate Bill 844, the “Affordable Energy Omnibus,” mirrors some House provisions but would also require data center approvals through a local referendum and prohibit utilities such as Duke Energy from cutting off residential service during extreme weather events.
By the Numbers
- $50 million — estimated annual value of state sales and use tax exemptions currently flowing to data centers, per the North Carolina Department of Commerce.
- $450 million — projected annual exemption cost if all proposed data centers in the state are built, according to Commerce estimates.
- 2006 — year the original sales tax exemptions were enacted, later expanded in 2015 to attract data center investment.
- 8+ localities — including Apex, Chatham County, Gates County, Canton, Durham, Harnett County, Spring Hope, and Northampton County, have enacted moratoriums ranging from 60 days to 32 months.
- 2 years — the statewide permit pause proposed under House Bill 1189.
Diverging Views on Local Control
House Speaker Destin Hall (R-Caldwell) said the original rationale for tax incentives no longer applies. “Now they’ve proliferated everywhere, so I don’t know that there needs to be an incentive,” he told reporters, adding that large technology companies “ought to pay the same taxes as any other business.”
Hall also expressed support for allowing local governments to set their own rules. “I think it’s more of a local decision,” he said, noting that community impacts vary widely by location.
Not everyone agrees. John Szoka, CEO of the Conservative Energy Network and a former state House member, argued that local moratoriums are counterproductive, saying municipalities may lack the expertise to evaluate complex energy infrastructure. He warned that overly restrictive local policies could undermine North Carolina’s competitiveness in artificial intelligence-related development.
Rep. Zack Hawkins (D-Durham), a member of the state’s AI Leadership Council, said the group has not issued formal recommendations but is actively discussing how to accommodate data center growth without straining the power grid. “These partners are going to need to come up with a long-term sustainable plan,” Hawkins said.
Zoom Out
North Carolina is not alone in wrestling with the infrastructure demands of the data center industry. Pennsylvania is similarly evaluating how to manage a potential surge in data center development, with questions about energy costs, grid capacity, and local impacts emerging across the state. Nationally, the rapid expansion of artificial intelligence has accelerated demand for data center capacity, placing new pressure on utility regulators and state legislatures to develop frameworks that did not exist when the original tax incentive structures were designed.
What’s Next
House Bills 1063, 1180, and 1189 remain in the House Rules Committee, while Senate Bill 844 awaits a hearing before the Senate Appropriations/Base Budget Committee. No floor votes have been scheduled. With multiple local moratoriums already in effect and the legislative session ongoing, state officials are under growing pressure to establish a unified regulatory framework before the data center pipeline advances further.