Governments are becoming increasingly aware of the challenges that the next generation of large data centers presents to their energy and water infrastructure, as well as to the communities that host clusters of these facilities. Data center operators have been slow to acknowledge and address the order of magnitude shift in their operational footprint and its risk to energy and water supplies, as well as the supporting transmission and distribution infrastructure. As a result, governments are moving swiftly to pass legislation to manage planned growth.

In the first half of 2025, three US state governments (Minnesota, Oregon and Texas) passed legislation to manage large data center projects’ access to energy and/or water resources and require participation in electricity demand management programs (Table 1). These laws fundamentally change the government review and permitting processes and require large data center operators to address these issues. Navigating these processes will require increased collaboration between data center operators and governmental and private entities, such as grid operators, public utility commissions and utilities. Malaysia has enacted a similar framework of data center controls (see Malaysia manages data center growth with regulations).

Table 1 Legislative conditions governing new data center growth

Texas: Senate Bill 6

The Texas Senate Bill 6 (SB 6) establishes a set of mandates to manage the grid interconnection and operation of large load customers — greater than 75 megawatts (MW) — and includes the following provisions.

• Interconnection requests must demonstrate control of the proposed site and provide adequate financing for construction and pay a $100,000 flat fee to the relevant utility for initial transmission screening. Operators must disclose backup generation capacity.
• The Electric Reliability Council of Texas (ERCOT) can curtail large loads to maintain grid stability. Operators can be required to provide 50% or more of their backup generation capacity to augment the electricity grid generation capacity or remove load during periods of high demand.
• Behind-the-meter generation systems are subject to oversight and approval by ERCOT and the Public Utility Commission (PUC) of Texas and may be required to operate to support grid stability during periods of high demand.
• Large-load customers must bear all new transmission fees to upgrade the grid and support the ancillary services needed to ensure grid stability.
• ERCOT must establish a competitive market to procure demand reductions from large-load customers.

The law requires large load data centers to integrate their operations into the electricity grid as a condition of siting and operating the facility. Operators will need to utilize their procured and backup generation capacity to support ERCOT in maintaining grid stability and reliability.

Minnesota: Data center omnibus 25-05730

The Minnesota governor signed the data center omnibus into law on June 14, 2025, after its passage by a special session of the house and senate. It defines a large data center load as 100 MW or more, a qualified large-scale data center as a facility with 25,000 square feet of space or more, and a large water-using facility as a consumer of 100 million gallons or more per year. These facility definitions are used to set specific water and energy system connection requirements:

• Data centers classified as large water users must provide specified information to pre-approve and obtain a permit for their water supply, utilize non-potable water if feasible and incorporate measures that promote efficient water use in the facility design.
• The PUC of Minnesota will establish a specific electricity service class and review process for qualified large-scale data centers by December 15, 2026. The service class will ensure that operators bear all costs for their service, with protections for standard ratepayers in the event of default, and that sufficient generation capacity is added to the grid to support facility demand reliably.
• Qualified large-scale data centers must pay an annual fee, based on peak demand, ranging from $2 million to $5 million to support PUC-funded energy conservation and weatherization projects.

The Minnesota law establishes a straightforward process and a set of criteria for provisioning power and water resources to large data center projects. It does not set limits or control the facility's operations.

Oregon: House Bill 3546

The Oregon law, Protecting Oregonians with Energy Responsibility (POWER), declares an emergency relating to large energy-using facilities — those with a power demand of 20 MW or more. The law requires the PUC of Oregon to establish an electricity rate classification for large energy-using facilities.

At a minimum, the legislation directs the PUC to create a classification that requires a 10-year power procurement contract that fully recovers the cost of new infrastructure and generation installed to support the new load. The law is intended to protect standard ratepayers from incurring the financial burden of infrastructure and service costs required to support new large loads. The law was driven by the large number of data center projects planned for Oregon and the significant rate disparity between standard ratepayers ($0.20/kWh) and large industrial users, including data centers ($0.08/kWh).

Looking ahead

These three laws are likely to represent the first in a wave of US state legislation aimed at managing data center growth and interconnection to the electricity and water infrastructure. There laws offer several important lessons:

• This legislation was enacted quickly in response to perceived threats to the integrity of the state’s energy and water resources. Government officials will act to address perceived unmanaged risks.
• The three laws have some overlapping conditions, but each state enacted mandates tailored to the specific interests and conditions within its state.
• None of the laws set information and KPI reporting requirements or minimum performance standards. However, that will likely change as states move to ensure efficient and sustainable data center operations.

Note: The regulatory analysis provided in this Update is the opinion of Uptime Intelligence. In addition, this update summarizes the law requirements. Data center operators should consult the full legal text and validate the interpretations with their legal staff and any relevant regulatory authorities.