Hitting Pause on the AI Boom: What NC’s Proposed Data Center Bills Actually Do

The proposed North Carolina state bills take different approaches to regulating the data center boom. While House Bill 1189 focuses on hitting "pause" to study the impacts and evaluate tax exemptions, House Bill 1063 aims to permanently shift the financial and environmental burdens back onto the data center operators rather than the public.

Here is exactly what each bill is designed to do:

House Bill 1189: The Datacenter Transparency Act

This bill is fundamentally about buying time and tracking state revenue losses. It targets the absolute largest facilities (defined as those requiring a power load of 100 megawatts or more).

• Two-Year Permitting Moratorium: Halts the issuance of any state or local permits, certifications, or approvals for siting massive data centers from August 1, 2026, through August 1, 2028.

• Mandatory Impact Study: Directs the North Carolina Collaboratory at UNC-Chapel Hill to comprehensively study how data centers affect the state's electric grid, water supply, utility rates, noise pollution, and nearby property values, with a report due by December 2027.

• Tax Exemption Scrutiny: Requires data centers to submit detailed annual documentation to the state in order to claim their sales-and-use tax exemptions.

• Revenue Tracking: Forces the Department of Commerce to calculate and report exactly how much potential tax revenue the state is losing annually to these specific data center subsidies.

House Bill 1063: The Ratepayer and Resource Protection Act

This bill introduces strict, permanent operational and financial guardrails for "large data centers," which it defines as those requiring at least 40 megawatts of peak electricity or consuming over 1 billion liters of water annually.

• On-Site Clean Generation Quota: Forbids operation unless the facility installs its own on-site clean power generation capable of offsetting at least 25% of its peak electricity demand. It explicitly bans operators from buying off-site renewable energy credits (RECs) to cheat this requirement.

• Strict Cost-Shifting Bans: Mandates that utility companies charge these facilities the "full marginal cost" of their electric, water, and sewer services. This ensures everyday residential and small business ratepayers are entirely protected from subsidizing the massive grid upgrades needed to power the centers.

• Water Conservation Standards: Prohibits operators from using highly consumptive evaporative cooling systems. Instead, it requires the Department of Environmental Quality to mandate the use of closed-loop or reclaimed water systems to protect state surface and groundwater resources.

• Loss of Subsidies: Excludes these large data centers from receiving state or local tax incentives, subsidies, or ratepayer-funded infrastructure grants.

• Pre-Construction Disclosure: Requires developers to submit a comprehensive preconstruction disclosure statement to the NC Utilities Commission, the Department of Environmental Quality, and local jurisdictions outlining their anticipated impacts before breaking ground.