Recent/upcoming developments… Concern about data centers has continued to intensify, with an increasing number of candidates and elected officials at both the state and federal level going so far as proposing moratoria on the construction of data centers.  Despite this, numerous governors are welcoming to data centers in their states and a new dynamic has emerged with labor unions (e.g., IBEW) pushing-back on those who seek to constrain growth in data centers.  Meanwhile, Senate Minority Leader Schumer (D-NY) and House Minority Leader Jeffries (D-NY) have pointed to rising utility costs as a priority issue if Democrats retake Congress.

* A growing number of candidates for governor across the country have called for a data center construction moratorium in their states.  On the Republican side, candidates in FL, IA, KS, MI, PA, and SC have all publicly called for moratoria of various lengths; similar proposals have been floated by Democratic candidates for governor in CA, GA, ME, MI, and WI.

* Many incumbent governors in office have taken a more moderate approach to addressing concern about data centers.  Govs. Healey (D-MA) and Whitmer (D-MI) have been openly supportive of data centers in their states, and Govs. Shapiro (D-PA) and Sherrill (D-NJ) have sought to balance attracting investment in their respective states with plans to insulate consumers from energy price hikes by requiring data centers to provide their own power.

* Congressionally, Sen. Sanders (I-VT) and Rep. Ocasio-Cortez (D-NY) remain the most visible proponents of a nationwide data center moratorium, though we have not seen a notable proliferation in support in Congress for this approach.  Other proposals range from guaranteeing “no increase in consumer utility prices due to data centers” and directing FERC to calculate a “reasonable” rate of return for utility investments to creating reporting requirements for energy and water usage.

* The Trump Administration has generally been supportive of enabling data center construction, though this has somewhat moderated in the last year.  Their initial position, typified by the July 2025 Executive Order (EO) aimed at facilitating the rapid buildout of data centers and DOE asking FERC to initiate a rulemaking to expedite data center interconnection, shifted to calling for hyperscalers to  “build, bring, or buy the new generation resources and electricity needed to satisfy their energy demands.”  President Trump also joined a group of governors earlier this year in pressuring PJM to hold an emergency auction to address rising electricity prices.

Our outlook… Democrats’ likely control of the House – and potential control of the Senate – after this fall’s midterm elections is likely to create more headline risk for data centers as they focus attention via hearings, legislation, and letters.  However, given the significant role of states and RTOs in determining interconnection, cost allocation, etc., actual policy risk is more likely to remain focused at the state level.  Push-back from labor unions and voluntary steps taken by industry, such as building on-site generation, will slow momentum for more draconian policy responses, and means that the primary implication will be that data centers will have to absorb more of their energy costs.  But given the intensive concern that exists about data centers among voters, we do anticipate some proliferation of moratoria in a number of states.

Watch for these developments… We are watching for the agenda on data centers articulated by key Democratic players on energy policy in Congress (e.g., House Energy and Commerce (E&C) Ranking Member Pallone (D-NJ), Senate Environment and Public Works (EPW) Ranking Member Whitehouse (D-RI)).  The likelihood of data center-related legislation (other than permitting reform) being enacted in Congress will be limited next year given limited bipartisan consensus, but the degree to which these Democratic committee leaders are willing to embrace policies that are punitive to data centers will be an indicator the direction of Democratic politics on this issue more generally and will be correlated to the direction of policy change at the state level.