County leaders push for a voice in data center regulation authority

Key Takeaways

Data centers are popping up in counties all over the country, but not all local governments have a say in how or where — or even if — they’re built. Counties in certain states, such as Texas and West Virginia, lack zoning powers or land-use authority over data centers, leaving them with little to no control over development while still bearing its impacts.

In Loudoun County, Va., also known as “Data Center Alley,” data centers generate $1.3 billion in annual tax revenue, accounting for 40% of the county’s total budget and significantly lowering residential property tax rates. The county receives 100% of the tax revenue generated.

But just next door in West Virginia, counties only receive 30% of the tax revenue generated (which is then split between county operations and education), leaving localities with all of the on-the-ground impacts of data centers — such as water and air pollution and higher energy bills — with a fraction of the financial benefits. 

That’s because the Power Generation and Consumption Act, which West Virginia Gov. Patrick Morrisey signed into law in April 2025, strips county governments of zoning and regulatory authority for data centers. 

The legislation has put county officials in a difficult place, having to answer to constituents who are frustrated or fearful about data centers without holding any power to do anything about them, said Mason County, W. Va. Commissioner Rick Handley. 

“Whether it’s sound, whether it’s water usage, whether it’s the power, we have no jursidiction over anything having to do with data centers, and it’s been a hinderance,” Handley said. “... This is my 30th year as a county commissioner, and I’ve never seen local authority taken away like this.”

There should be guardrails in place for data center development to ensure that residents are protected, and counties need a seat at the table, according to Jefferson County, W.Va. Commissioner Cara Keys, who also serves on the county’s planning commission.

“I have my feet closest to my people, and, as a proud Republican, I believe firmly that one of the core Republican principles is local control,” Keys said. “So, to have local control, that means you need to allow your constituents to be part of the decisions, for there to be transparency, these decisions being made before your local constituents, as opposed to state level or big government.

“I think these land development and land use decisions are probably one of the more important decisions that should be made by your local government and your local constituents,” she noted. “Because they have the largest burden on your community. 

“So, I’m hopeful that we can move this [legislation] in a positive direction that is led with local input first.”

The Jefferson County Commission recently drafted Good Neighbor Data Center Guardrails with local city representatives in an effort to guide and regulate potential data center development. The proposal includes recommendations around water use, noise limits, land use and air quality and pollution control. 

“Even though it’s not codified, we wanted to submit something very public,” Keys said. “So that any potential data center looking and coming to Jefferson County knows very much how the local elected officials believe these should be treated.”

Hill County, Texas is another local government without land use authority that’s created a checklist of regulations it’s hoping developers comply with. It includes regulations around noise, water use and light pollution, according to Hill County Commissioner Jim Holcomb.

“We put together a development checklist of things that the county would like to see — not that they have to adhere to any of that — but that we can give [developers] and say, ‘Look, here’s what we need to see before you guys start,’” Holcomb said. “If they really want to be good neighbors and they truly want to come and be a part of the community, then they’ll do some of those things.”

According to the Pew Research Center, 39% of planned data centers in the U.S. are being built in counties that currently have no operating data centers at all, marking a heavy shift in data center development in rural counties in the South and Midwest. 

Hill County doesn’t currently have any operating data centers, but it has eight in the pipeline, one of which is under construction, according to Holcomb. In Texas, counties don’t have the home-rule powers and zoning capabilities that cities do, so while the city of San Marcos was successful in its ban on new data centers, Hill County got hit with a $100 million lawsuit for the moratorium its County Commission passed.

Counties should be able to have a say in what’s developed in their community, according to Holcomb. 

“We had to do something, even if we didn’t have the authority to do it,” Holcomb said, about the moratorium. “We had to do something to get our hands around the issue because we got caught flat-footed, and I think all the data center guys knew this area was ripe for the picking. 

“They came down here with all guns blazing and did most of what they did under the table before anybody ever knew about it. The data center that is under construction, we never knew about it until dirt was already being moved.”

The lawsuit, filed by a developer in federal court in Austin, argued that the county “exceeded its lawful powers” in passing the moratorium, prompting the County Commision to rescind it and create the list of proposed regulations for developers.

“We just don’t have the authority that we need to regulate an industrial impact of that size, and we kind of took that one step too far, if you will,” Holcomb said. “But it did raise the issue, and I think there’s some good that has come out of that.”

Under Texas law, counties can’t increase maintenance and operations property tax revenue by more than 3.5% over the previous year’s rate without triggering an automatic public election. 

“So, if the year before, revenue was $10 billion, and the next revenue for the following year, because of data center capital expenditures, or even rollback taxes, was more than 3.5% [higher], we would be forced to lower property taxes,” Holcomb said. “Which is a good thing, but with a ‘no new revenue cap’ and a growing county and a larger strain and demand for services, you can’t make that work financially.

“… It’s just untenable. The state has done this so that they can control what happens at the county level, and it worked.”

In Pennsylvania, localities hold primary authority over where and how data centers are developed, but they’re unable to establish moratoriums on them. Lackawanna County, Pa., which has more data center and power plant proposals than any other county in the state, recently approved a $165,000 countywide study to assess the cumulative effects of the county’s existing and proposed data centers and power plants on residents’ health, air quality and water. 

“People’s lungs don’t recognize municipal boundaries,” said Lackawanna County Commissioner Bill Gaughan. “Their children aren’t breathing according to the way that a zoning map might look. The cumulative burden is the burden that matters.”

In February, Gaughan sent a letter to Pennsylvania Gov. Josh Shapiro urging for a three-year state moratorium on the development of data centers, so that their impacts could be comprehensively studied. He hasn’t received a response.

“We really want evidence,” Gaughan said. “I’ve been at a lot of these meetings, and the developers come in, and they promise this and they promise that, but the evidence should come first.”

EmPower Analytics Group, which is conducting the countywide study, already examined the health impact of one proposed data center campus in Lackawanna County, finding that it could cause between $3.3 million and $124 million in annual health damages. 

“Future generations are going to look back and say, ‘Where was everybody? Where were all the elected officials? Why weren’t there more people jumping up and down about this?’” Gaughan said.