Data Centers and Land Use – Public Opinion and Action

This alert analyzes current moratorium proposals, zoning restrictions, land use litigation, and community engagement trends to provide practical guidance for data center stakeholders like developers, operators, and investors to navigate this shifting landscape.

Various tools are available to assist developers in minimizing the impact of state or local opposition to their projects, many of which are analyzed in this alert. 

• Monitor State-Level Moratorium Proposals: With moratorium bills introduced or under consideration in more than 10 states, developers should track legislative activity in all target jurisdictions and assess the potential impact on project timelines. Many proposals include specific energy capacity thresholds that may or may not affect a given project.
• Engage Communities Early: Community opposition has proven to be a decisive factor in project outcomes, particularly in Virginia, where it has contributed to project cancellations and political shifts. Proactive, transparent engagement with local stakeholders, including hosting informational sessions and developing community benefits plans, can help build support and reduce permitting risk.
• Stay Current on Zoning Changes: As Virginia counties like Loudoun and Montgomery update their zoning frameworks, developers should review applicable zoning ordinances carefully and engage with local planning processes to anticipate changes that could affect project feasibility or require additional approvals.
• Anticipate and Mitigate Litigation Risk: Data center siting litigation is accelerating on all sides, with communities challenging approvals and developers contesting denials. Stakeholders should ensure strict compliance with all procedural requirements, including public notice and public hearing, as even minor procedural deficiencies have been held sufficient to void project approvals. Developers should also evaluate whether a target jurisdiction’s zoning framework accommodates data center uses and be prepared to address exclusionary zoning arguments. 
• Consider the Broader Regulatory Landscape: Moratoria and zoning changes are part of a wider regulatory trend that includes proposed cost-shifting requirements, special tariff frameworks, and tax incentive revisions at the state level. For a comprehensive overview of these state-level regulatory developments, see our companion alert: “State Regulation of Data Centers in 2026 – A Shifting Landscape.”

Below, we break down relevant efforts by state and local governments to impact data center development, which include moratoria, revising zoning codes, and increased efforts to formalize public participation, each of which can directly affect project timelines and siting strategies.

Proposed Moratoria

Recent months have seen lawmakers in many states propose moratoria on data center development. 

While no legislation has yet been enacted, introduced bills seek to pause data center development to allow time for states to evaluate related issues like electricity price surges and public concerns for health and safety. Enacted moratoria could delay data center developments, but the long-term outcome could result in greater clarity and predictability for the data center industry, as well as a better public opinion towards the industry.

Examples of proposed moratoria include: 

• New York: S9144 proposes a minimum three-year moratorium on permits for the construction of proposed data centers, would require the New York State Department of Environmental Conservation and the Public Service Commission to issue reports and enact related regulations, and would ensure that data centers will bear the costs of maintenance thereof. Its stated purpose includes allowing the state to continue its achievement of clean energy targets. 
• Oklahoma: Legislators have introduced SB 1488, which would place a moratorium on data center development until November 1, 2029. If enacted, the bill would allow the Oklahoma Corporation Commission to study the long-term data center impacts on water supply and utility rates, among other areas of interest. The proposal notes that it is intended to allow for the collection of empirical evidence to better inform future policies for data centers to protect all parties involved. 
• Maryland: Maryland’s proposal, outlined in HB0120, would enact a moratorium on construction and approval of data centers in the state until the General Assembly enacts legislation addressing co-location and on-site power generation requirements for data centers.
• Virginia: HB1515 would pause local authorities from granting final approval to data center applications, including rezoning, special exceptions, special use permits, site plans, and plans of development for two years or until interconnection requests are fulfilled. 

The Evolution of Zoning Ordinances to Accommodate Data Centers

Local governments have also modified zoning ordinances in ways to address concerns about data centers, sometimes resulting in litigation by developers against local government entities which is similar in nature to litigation in the renewable energy space (to read about a similar case, see our team’s alert: Landmark Appellate Victory for Illinois Solar Energy Developers). Data center focused zoning ordinances and litigation in the space are summarized below. 

• In 2021, Fairfax County, Virginia, amended its zoning ordinance and defined data centers as its own separate use. 
• Montgomery County, Maryland, has considered amending its zoning ordinance to define “data center” as a distinct use subject to specific zoning requirements, designate the zones in which data centers may locate as conditional uses, and establish minimum siting standards. 
• In Loudoun County, Virginia, one of the largest data center markets in the world, by-right approval for data centers has been eliminated (except for some projects which are to be grandfathered in); the county now requires a special exception process that includes public hearings. 
• Fairfax County, Virginia, allows data centers by right if they are compliant with certain visual façade requirements in specific industrial and commercial districts. Special exceptions are available otherwise, which require public hearings and approvals from the Planning Commission and Board of Supervisors. According to a planner at the county, many of the restrictions have to do with mitigating the visual impact to residential areas. 
• Pasadena, California, has no data center land use in its zoning code, meaning that applications by developers would be decided on an individual basis. The city’s permissive zoning code, and others similar to it around the country, typically mean that uses which are not expressly stated in the code are generally disallowed. 

Some changes in zoning ordinances are being challenged by data center developers. 

• A developer and group of property owners in Michigan sued a township after its board voted to deny rezoning about 575 acres of farmland, alleging that such denial constituted exclusionary zoning under Michigan law, as the township’s zoning ordinance excluded any location where a data center could be built. 
• A developer in Pennsylvania filed a challenge against a township’s zoning ordinance, arguing that its ordinance was too restrictive, citing that the height and noise limitations made data center construction impractical. 

Many data center standards are localized, as examples in this alert show, but there are some statewide regulations that are becoming realized, like Virginia’s SB253, which would require data center operators, rather than residential ratepayers, to bear the costs of grid transmission and capacity upgrades necessary to serve their facilities. 

The legislative pipeline is focusing on the intersection between tax policy and data centers. For example, in Virginia, two bills, which ultimately failed in the 2026 General Assembly Session, HB978 and SB730, aimed to apply the Sales and Use Tax Exemption on software and digital services. 

Currently, certain data centers are enjoying an exemption from the 5.3% sales tax on data center equipment under the Retail Sales and Use Tax Exemption. However, the US Senate is looking to repeal this exemption, and the main topics surrounding these conversations and negotiations involve budget and the need to fund state priorities like state employee raises and transportation funding. 

Recently, ArentFox Schiff represented a data center hyperscaler in establishing the investment and job creation criteria to qualify for the Retail Sales and Use Tax Exemption at the county level with counties throughout Virginia.

Community Opposition and Stakeholder Engagement in Litigation

Data center developers are also seeing increased local opposition to projects based on concerns about electricity costs, environmental impact, and noise, and the visual footprint of large-scale facilities have prompted community groups in several states to organize and advocate for greater oversight. 

• In Virginia, local opposition has been cited as a contributing factor in the cancellation of at least 25 proposed data center projects and has had political consequences for officials who are deemed to favor data center development without prioritizing public opinion. 
• A Virginiaappellate court affirmed a lower court’s finding that Prince William County failed to comply with Virginia’s public notice requirements before voting to approve a 22-million square foot data center complex, halting the project.
• In Monterey Park, California, the City Council unanimously voted to extend a data center moratorium on permitting for another 10.5 months pursuant to quick and thorough local organized pushback. The council will also have a special election so that a ban on data centers in the city can be voted on by the people. 

These dynamics underscore the importance of early deployment of stakeholder engagement strategies, designed to offset concerns about a lack of transparency or insufficient public participation. 

If you have any questions, please reach out to your ArentFox Schiff contact or an author of this article. For more insights, visit our Data Center Legal Solutions webpage.