Data Centers

Federalism Will Save the Data Centers

State preemption worked for housing. It's unlikely to come to the rescue of incredibly unpopular data centers.

Christian Britschgi | 9.1.2026 2:45 PM

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Happy Tuesday, and welcome to another edition of Rent Free. This week's stories include: 

Federalism Is Data Centers' Best Hope 

When it comes to liberalizing land use regulations to allow more housing to be built, housing advocates have generally settled on a standard maneuver: evolve more regulatory decisions to state governments.

Rent Free Newsletter by Christian Britschgi. Get more of Christian's urban regulation, development, and zoning coverage.

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Localities, the thinking goes, have more powerful incentives to oppose residential construction, whereas state lawmakers are more inclined to support growth.

Results vary from state to state, but thus far, this strategy has proved relatively successful.

Legislation limiting local governments' ability to say no to projects is enabling more backyard accessory units, apartments on formerly commercial properties, and mixed-use developments in some of the most NIMBY areas.

State preemption would, however, appear to be of limited utility in counteracting America's current moral panic over data centers.

A year ago, most of the public was completely uninterested in data centers. Polls found that when people did express an opinion, they were evenly split between supporting and opposing these facilities. 

No longer. Survey after survey shows large majorities opposing data center development in their communities. More people would rather live next to a steel mill than a boxy building full of computer servers.

Policymakers are moving right along with public opinion. Hardly a day goes by without a new local government proposing a flat moratorium on data centers or, at a minimum, onerous new land use controls.

And anyone hoping that state governments might ride to data centers' rescue with preemption bills that override local restrictions will be disappointed.

A growing list of governors, including ones that were once enthusiastically in favor of data center development, are now issuing executive orders clamping down on these projects.

In the housing context, regulatory decisions are moving to the state level, and regulations are (to varying degrees) becoming less restrictive. With data centers, states and localities are joining in one crackdown.

One of the few major politicians to still support data centers appears to be President Donald........

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