This week, AI developer Anthropic (ANTH.PVT) became the latest company to announce a cost-reduction policy, stating that it would “pay for 100% of the grid upgrades needed to interconnect our data centers, paid through increases to our monthly electricity charges.” The company said this will also include “the shares of these costs that would otherwise be passed onto consumers.” ChatGPT maker OpenAI (OPAI.PVT) announced similar plans in January.

But that hasn’t stopped state and federal legislators from seeking to more heavily regulate the industry and, in some cases, block development for several years while legislation catches up.

Legislation introduced in Georgia would pause new construction through February 2027. Virginia’s proposal would pause certain local approvals until July 2028. Bills in Oklahoma, New York, and Vermont have even longer moratorium periods. The end date for the data center pause proposed in Maryland is contingent on when the legislature passes regulatory guidelines.

“When one of these energy-guzzling facilities comes to town, they drive up utility prices and have significant negative impacts on the environment and the community — and they have little to no positive impact on the local economy,” Sen. Liz Krueger (D-N.Y.) said about the bill she introduced.

For state governments — and their constituents — data center developments can cut both ways.

Data center development in Georgia created more than 8,500 construction jobs and more than 1,600 operations jobs, adding a combined $1 billion or more to the economy, the Georgia Department of Audits and Accounts said in a recent report.

At the same time, the report found, state leaders lost out on nearly $500 million in funding by exempting data centers from certain taxes to incentivize development in their states.

In a post on X.com on Feb. 11, US Senate candidate Mark Moran, who is running to represent Virginia, wrote that Virginia could miss out on more than $2 billion in funding in 2026 due to data center tax exemptions, in addition to $4.5 billion lost between 2020 and 2025.

“We have 663 data centers, the most in the U.S., with another 595 planned,” Moran wrote on X. “It’s time to tax them.”

States and grid operators also face uncertainty about whether funding will come through for all proposed projects.

Given constraints on everything from AI chips and power access to specialized construction labor, “the pipeline of proposed data centers across the US far exceeds what the industry could realistically deliver,” Brendan Pierpont, director of electricity at California-based research firm Energy Innovation Policy and Technology, told Yahoo Finance.

And this only complicates the job of utilities and other grid operators.

If a utility agrees to a proposal and begins buying transformers, building out connection infrastructure, and committing to other necessary spending, the utilities and ratepayers often end up bearing that cost if the proposal falls through, analysts said.

In an effort to counteract the fallout from a major developer walking away from a development in progress, several bills include specific mandates for studies of ratepayer electricity bills and water impacts. Others include proposals that would require developers to fully fund their power use so those costs aren’t passed on to ratepayers.

“Risk allocation is a major drive behind the proposed bills,” Global Location Strategies’ Caldwell told Yahoo Finance.

Legislation, she said, is like “not only to slow things down, but also to shift risks to data center developers through cost-allocation reform, interconnection deposits, and stronger load-commitment requirements.”

And these proposals are already shifting site selection planning for Big Tech’s largest AI developers, Caldwell added.

Hyperscaler developers are increasingly moving from more concentrated markets where opposition has strengthened to “second- or third-tier” states that can offer generation capacity, such as Kentucky or Indiana, where Meta is developing a new 1GW data center.

Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.

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