Before approving a data center, local officials should establish what is actually proposed, whether power and water can serve it, what environmental and neighborhood effects require review, which agencies have authority, and whether public benefits outweigh public costs over time. Ask for project-specific figures and supporting analysis—not just headline investment or capacity claims—and map the approvals before setting conditions. This U.S.-focused framework is not a substitute for current local law, legal advice, utility review, or project-specific permit analysis.
1. What exactly is being proposed?
Start with a complete project description. A building’s size alone does not reveal its likely demands or impacts. Ask the applicant to identify:
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- The site, acreage, existing site conditions, and proposed use of surrounding land.
- Each construction phase, its schedule, and the intended operator, end user, and computing use.
- Expected and peak electricity demand, how those figures were calculated, and when each phase would reach that demand.
- Water sources, projected withdrawals and consumption, cooling design, wastewater needs, and seasonal assumptions.
- Backup-generation equipment, anticipated operating assumptions, and the status of utility service, interconnection, and permits.
- Supporting plans and analyses behind claimed investment, employment, capacity, and resource needs.
Maryland’s executive-order material identifies the end user, electricity and water needs, energy plan, and timeline as first-contact questions, and calls for screening speculative proposals. Pennsylvania’s Department of Community and Economic Development provides a planning toolkit for municipalities from initial inquiry through zoning, permitting, and long-term planning.
2. Can the power system serve the project, and who pays?
Do not treat a developer’s load estimate as confirmation that service is available. Ask the relevant utility to confirm the project’s load assumptions and service and interconnection status, and to identify available capacity and any required transmission or distribution work. Request analysis of reliability effects, energy sourcing, and backup plans.
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Separately, establish who would pay for construction, upgrades, and ongoing service—and whether the proposed allocation is enforceable. Ask the utility and applicant to explain potential effects on rates and public infrastructure costs. Nashville’s review framework names electrical demand, grid capacity, utility reliability, and public infrastructure costs; Michigan identifies electricity costs and reliability among the concerns communities raise. Those sources do not establish the engineering or rate effects of any particular project, which require review by the relevant utility and qualified advisers.
3. Is water available without harming other users or resources?
Request both withdrawal and consumption estimates. Withdrawal is water taken from a source; consumption is water not returned to that source, such as water lost through evaporation. The distinction matters when assessing supply and effects on other users.
Ask for the supply source, seasonal and drought assumptions, system capacity, wastewater requirements, and analysis of impacts on existing users. Require a comparison of feasible cooling choices, including closed-loop, air-cooled, and reclaimed-water approaches, and ask whether actual water use can be publicly reported under applicable law. Maryland’s order calls for demonstrating adequate water, analyzing cooling alternatives to reduce potable-water use, and ongoing public disclosure. Tennessee identifies water use and wastewater as possible environmental-permit subjects.
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4. What environmental and neighborhood impacts need review?
Request site plans and project-specific assessments of land disturbance, stormwater, wastewater and discharges, backup-generator emissions and operating assumptions, noise, heat, traffic, and compatibility with nearby uses. Identify which permits are required and which agencies administer them. Consider nearby homes and other sensitive uses, public health, quality of life, and whether burdens could fall disproportionately on particular communities.
For a previously used industrial or contaminated site, establish applicable cleanup standards, the status of cleanup, any engineering controls, and who will maintain them over time. EPA’s guidance on data-center reuse of brownfields and Superfund sites emphasizes responsible siting and planning, engagement, alignment with cleanup standards, maintenance of engineering controls, conservation, and environmental protection. Its reuse guidance is particularly relevant where those site conditions apply; it is not a substitute for the permits or review required for a specific project.
5. Which body has authority over each decision?
Map the decision-making roles before promising outcomes or drafting conditions. Land use and zoning, environmental permits, utility service and grid planning, and other state or federal approvals may sit with different bodies. The allocation depends on state law and local code, so municipal counsel should identify the applicable approvals and limits on local authority.
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Tennessee’s Department of Environment and Conservation (TDEC) states: “TDEC’s permits are not specific to data centers, and TDEC does not approve a data center project as a whole.” Its Tennessee-specific guidance assigns zoning and land use to local government, environmental permits to TDEC or local programs where applicable, grid planning to utilities and other authorities, and noise usually to local government. This division is an example, not a nationwide rule.
| Decision area | Who to identify | What to clarify |
|---|---|---|
| Land use, zoning, and local noise rules | Local planning, zoning, and code authorities | Applicable local standards, hearings, and lawful conditions |
| Environmental permits | State environmental agency and any local permitting program | Required permits, responsible agency, and review sequence |
| Electric service and grid planning | Serving utility and other relevant authorities | Capacity, interconnection, upgrades, reliability, and cost allocation |
| Other state or federal approvals | Agencies identified by counsel and project review | Applicable approvals and how they relate to local decisions |
Nashville’s executive order illustrates one local review structure involving codes, health, planning, transportation, water and sewer, and electric service, with finance and legal staff supporting review. Its definition of a large-scale data center—at least 20,000 square feet, expected demand of 5 megawatts or more, or a planning determination of substantial impacts—is specific to that jurisdiction and order, not a national threshold.
6. What is the net fiscal and community return?
Compare public benefits with public obligations across a stated time horizon. Request the assumptions and sensitivity analysis behind projected jobs, wages, tax base, and investment. Set out projected local revenues alongside incentives or abatements, infrastructure and service costs, ongoing utility and emergency-service demands, and the opportunity cost of land and public capacity. Pennsylvania’s toolkit addresses fiscal, economic, and service impacts; Nashville calls out revenues, expenditures, utility costs, and land opportunity costs; Maryland’s material identifies incentive interaction, long-term tax-abatement analysis, reopener terms, service costs, and community-benefit agreements.
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Any proposed public benefit or applicant commitment is more useful when it has measurable standards, reporting, successor obligations, remedies, or periodic review, where local law allows. Put the obligation, responsible party, verification method, timing, and consequences for nonperformance in clear terms rather than relying on an informal assurance.
One Michigan Treasury data point illustrates why statewide tax figures should not be mistaken for a project forecast: for 2020–2024, the state reported 5 to 10 qualified/enterprise data-center exemption filings annually, $212 million in exempt purchases, and less than $13 million in combined sales/use tax impact. These are Michigan statewide exemption figures, not an estimate of the costs or benefits of a proposed facility or a national benchmark.
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7. How will residents participate and commitments be tracked?
Make understandable proposal materials available and provide an opportunity for questions before the key decision. Identify nearby sensitive uses and examine whether impacts may be disproportionate. Where local law permits, establish public reporting and monitoring for relevant impacts, water use, energy commitments, and community benefits. Clarify who reports, how often, and how the public can access the information. EPA emphasizes thoughtful planning and engagement for brownfield reuse; Nashville’s framework includes neighborhood compatibility, disproportionate effects, public health, and quality of life; Maryland’s material addresses disclosure and measurable community-benefit terms. The required process and available conditions depend on local law.
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How to compare project alternatives
If the applicant offers multiple sites, designs, cooling systems, or energy plans, compare them on the same basis. Require consistent assumptions and show who supplied each estimate.
| Comparison area | Evidence to compare |
|---|---|
| Electricity | Demand by phase, energy source, grid effects, reliability, and responsibility for costs |
| Water | Withdrawal and consumption, source, cooling design, wastewater, and drought resilience |
| Site and neighborhood | Site condition, land-use compatibility, cleanup needs, and environmental and community impacts |
| Public return | Revenues and employment against incentives, public costs, and opportunity costs |
| Commitments | Specificity, transparency, monitoring, enforceability, and remedies |
When an alternative is not documented, ask the applicant to provide the missing analysis rather than treating the options as equivalent. Pennsylvania, Michigan, Nashville, Maryland, Tennessee, and EPA guidance collectively identify these subjects for local review.
Quick Recap
A practical sequence for local review
- Define the proposal. Obtain the site, phases, end user, demand and resource estimates, schedule, and supporting documents.
- Map authority and process. Have counsel identify local decisions, outside permits, responsible agencies, hearings, and lawful conditions.
- Request technical review. Obtain utility-confirmed power information and project-specific water, environmental, infrastructure, and neighborhood analyses from responsible agencies and qualified reviewers.
- Compare costs and alternatives. Evaluate public revenues, incentives, service and infrastructure costs, opportunity costs, and feasible project alternatives using consistent assumptions.
- Set transparent terms before a decision. Where lawful, specify measurable commitments, reporting, monitoring, responsibility, and remedies; provide residents an opportunity to review and ask questions.
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