Data center regs get bipartisan traction at Statehouse

As massive computer data centers continue to explode across South Carolina, a state senator with a history of bringing lawmakers together across ideological and party lines is preparing to introduce sweeping legislation aimed at reining in what critics call their worst excesses.

The goal, Beaufort Republican Sen. Tom Davis told Statehouse Report recently, is to build a legal framework that would allow the state to compete and win in the data center-dependent AI economy of the future, while protecting the state’s energy grid, water resources and sensitive environmental areas.

To put that challenge in perspective, experts say, it helps to understand that a single large-scale data center currently uses enough electricity to power a city of 125,000 people, enough water for a town of about half that size, and often sits on hundreds of acres in traditionally rural communities.

Lots of power. Lots of water. Lots of land.

Davis said his bill, expected to be introduced in the coming week, would attack all three problems directly:

First, it would require data center operators to pay all of their own energy and infrastructure costs, rather than saddling ratepayers with the bills.
Second, it would mandate the use of “closed loop” technologies that recycle water to reduce the strain on surface and groundwater supplies.
And third, it would impose siting restrictions alongside noise and light regulations to protect the environment and residential quality of life.

“We need to be proactive on these issues and not just be laissez-faire,” Davis said.

That idea, once controversial, is increasingly popular among national and state policymakers as polls show sharply declining support for data centers in S.C. and around the country. And it received a major boost earlier this month when President Donald Trump, a strong proponent of AI-fueled economic growth, called for greater consumer protections in a social media post.

“Data centers are key to [the AI] boom,” Trump wrote on Jan. 12. “But the big technology companies who build them must ‘pay their own way.’”

An emerging bipartisan consensus?

In recent interviews with Statehouse Report, elected officials and interest groups representing both parties and a wide spectrum of political views stressed the need for action on data centers this year.

Charleston Democratic Sen. Ed Sutton is cosponsoring a data center bill by Senate Majority Leader Shane Massey, R-Edgefield. It aims to protect ratepayers, make water usage more transparent and limit certain tax incentives. He added he was struck by the broad support for new regulations.

“It’s a very bipartisan issue in the Senate,” Sutton said. “And I’ll say, that’s refreshing.”

On the other side of the Capitol, Rep. April Cromer, R-Anderson and a member of the S.C. Freedom Caucus, described a similar dynamic in the House, with members of both parties recently expressing interest in her bill, dubbed the Data Center Responsibility Act.

Perhaps the toughest legislation introduced in either chamber to date, Cromer’s bill would require data centers to generate all their energy on-site, prohibit surface or groundwater removal and require at least one employee per 1,000 feet of floor space — ideas that arose in her conversations with local residents across the state.

“I can’t find one area that’s ecstatic about having these centers and that’s a cause for serious concern,” Cromer said. “We need to slow down and think about what we’re about to put into our state.”

S.C. Small Business Chamber of Commerce President Frank Knapp echoed those concerns in a Jan. 22 interview, stressing the impacts on local communities and the businesses that serve them.

“Our argument is simply this,” Knapp said. “If data centers require utilities to build new energy generation and infrastructure, then the data centers should pay those costs so small businesses and residents don’t wind up subsidizing giant companies like Google and Meta.”

Or as Sam Aaron of the right-leaning S.C. Policy Council put it in a separate interview: “The average South Carolinian shouldn’t be forced to pay a higher power bill just because a data center wants to set up shop down the street.”

Legislating into an unknown future

Despite broad agreement on the need for action, experts note that lawmakers at every level will have to negotiate complex tradeoffs and still-emerging technical requirements to find a path forward.

For instance, notes University of South Carolina economist Joseph Von Nessen, local leaders will have to determine whether an industry that produces higher property tax revenues but few new jobs will work in their area.

“In addition to the other considerations people have raised, including energy and water usage, communities will have to factor in the fairly low number of jobs these facilities typically create,” Von Nessen said. “For communities looking to maximize their tax base without a high employment demand, that may make sense. For others, it won’t.”

But the real complexity, according to Southern Alliance for Clean Energy analyst Eddy Moore of Charleston, lies in the inexact science of predicting the future energy needs of an industry that’s evolving fast.

In Senate testimony last year, for example, state utility executives said that they’re building for a future where 65% to 70% of new energy needs will be data center-related. But as Moore points out, that’s just an estimate based on current industry trends — and if it’s wrong, S.C. ratepayers would get stuck with the infrastructure bill for power they may not need.

“The load forecasts we’re seeing from most of our utilities are of a different nature than those we’ve seen in the past,” Moore said, noting that they include large upward adjustments for data center demand that power companies have no experience estimating. “The problem is that all that growth is highly speculative.”

That’s why Moore argues utilities must be required to follow state-owned Santee Cooper’s lead in requiring long-term contracts with data center operators that cover the cost of new production. What’s more, he said, those contracts need binding financial guarantees.

“Let’s say a company signs a long-term contract but goes bankrupt in year two,” Moore said. “We need real financial assurances to make sure someone else doesn’t get stuck with that bill.”

Davis said he hopes to get it passed before the session ends in May.