Every few years an interesting new land use splashes on the scene and raises questions about impacts, regulation, and property rights. Backyard chickens, solar farms, short-term rentals . . . the list goes on. At the current moment, data centers are the focus of local policy debates and zoning discussions.
This blog does not attempt to settle the policy debates nor set forth the best approach to zoning data centers. This blog simply seeks to outline the current legal framework for zoning for data centers in North Carolina. In particular, this blog sketches the basics of data centers in North Carolina, explores how data centers are treated under current zoning, outlines the scope and limits for temporary moratoria, identifies the limits on down-zoning, and highlights considerations for new regulations.
In addition to this blog, these topics are discussed in the on-demand training Data Centers and Zoning in North Carolina, available here.
Data Center Basics
Many other sources provide the technical details of data centers, but some basic understanding is a helpful baseline for thinking about land use regulation. At the most basic level, a data center is a collection of computers, servers, and equipment providing computer processing and digital data storage. Many of us rely on data centers for daily activities like engaging on social media, streaming shows and music, and storing photos and videos. Businesses rely on data centers for things like medical records, bank records, and cloud computing. Cryptocurrency and artificial intelligence depend on the computing capacity of data centers.
The scale of data centers varies widely. An office building may have a closet, room, or floor devoted to computer servers. A particular company—like a bank or insurance company—may have an entire building devoted to servers. Various technology companies have their own data centers and sell computing services to others. Increasingly the scale and intensity of data centers is growing. In recent years major technology companies have proposed and built campus-scale data centers (sometimes called hyperscale). These projects can include many warehouse-sized buildings across a campus that may be hundreds of acres in size. Proposals for large-scale data centers are driving much of the current discussion about data center regulation.
Data centers are not new to North Carolina. For years building-scale data centers have been tucked into suburban office parks and university campuses. Major technology companies have been operating large data centers in North Carolina: Meta in Forest City, Apple in Maiden, and Google in Lenoir, for example.
Data centers require significant electric power for computing operations and for cooling the equipment. As the scale and intensity of the data centers has increased, so has the scale and intensity of the power demands. That demand for electric power can trigger additional land uses. Data centers need significant back-up generators and/or back-up batteries in case of a power outage. While many data centers rely on the electric utility for electricity, some data centers have primary or supplemental electric power generation on-site.
Depending on technical details of a particular data center, it may have additional utility and community impacts. There can be noise from equipment; specific levels depend on the equipment, location, and design. Water demands vary based on the nature of the cooling system (closed loop cooling requires less water).
Considerations Beyond Zoning
This blog is focused on land use law in North Carolina as it relates to data centers. But, of course, land use is just one of many considerations for communities and data centers. Here are just a few. A data center is a substantial investment in property and may have significant implications for local taxes and economic development. A large-scale data center will have to negotiate with the electric utility and water utility regarding capacity and costs for the electricity and water. Back-up generators and on-site power generation may require air and utility permits from state agencies. Depending on the particular technology and materials onsite (such as significant battery back-up equipment), local agencies may need to supplement their emergency response capabilities. In negotiations with technology companies, local governments must navigate the company’s desire for confidential communications and the legal requirements for public records (as discussed by my colleagues Crista Cuccaro and Tyler Mulligan in the bulletin, “Can Local Governments Approve Nondisclosure Agreements?”).
The legal framework for data centers could change. Bills in the North Carolina General Assembly have proposed to add new rules for data centers in North Carolina. In the 2026 legislative session, Senate Bill 730 and House Bill 1063 each proposed new standards and approval processes for data centers. While those bills have not become law, the General Assembly could address data center legislation in coming months. In the fall of 2026, the North Carolina Utilities Commission is evaluating large-load tariffs to standardize the rates paid by large-load users—such as data centers—to electric utilities in North Carolina.
Under Current Zoning
When a data center developer submits an application for a new data center, the local government will have to process that application under its current development regulations. Moreover, the permit choice rule provides that even if the local rules are changed, if an applicant submitted a complete application before the change to the rules, then that applicant may choose to have the old rules apply to the application. So, in many circumstances a local government will have to process a data center application under the current (or prior) rules. For more on this, see Permit Choice Rule for Development Regulations.
The challenge, though, is that many ordinances currently do not adequately address large-scale data centers. For some ordinances “data center” is not a use that is defined or listed in the table of permitted uses. For other ordinances “data center” is listed, but the rules were intended for small- to medium-scale data centers from a decade ago. Let’s consider each of those.
Use is Not Listed
How does a local government in North Carolina handle a data center application if the use is not listed in the zoning ordinance? The short answer is that the local government must treat data centers as the closest similar use.
Many ordinances have language requiring this. Something like this: If a land use is not addressed by the terms of this ordinance, the minimum ordinance standards for the most closely related land use shall apply. Under that language, the administrator must determine which listed land use is most closely related to data centers. This can be a challenging task. What has similar land use impacts (traffic, noise, vibrations, etc.)? What has similar scale to contemporary data centers? What looks like a data center?
An ordinance cannot simply prohibit an unlisted land use. As discussed by School of Government colleague, David Owens in Regulating Land Uses Not Specifically Mentioned in a Zoning Ordinance, North Carolina courts have issued a series of rulings against local ordinance provisions attempting to prohibit unlisted uses. In particular, in Byrd v. Franklin County, the North Carolina Supreme Court rejected a local government rule that prohibited all unlisted uses. 368 N.C. 409, 778 S.E.2d 268 (2015) (reversing the decision in Byrd v. Franklin Cnty., 237 N.C. App. 192, 765 S.E.2d 805 (2014), for the reasons stated in the dissenting opinion). Citing the dissenting opinion below, the Supreme Court overturned the Court of Appeals. That dissent said:
Citing long-standing common law principles of the “free use of property,” this Court rejected the philosophy embedded in the Village's ordinance, and in the UDO here, that “everything is proscribed except that which is allowed.”
Byrd v. Franklin Cnty., 237 N.C. App. 192, 200, 765 S.E.2d 805, 810 (2014), rev'd, 368 N.C. 409, 778 S.E.2d 268 (2015) (Hunter, J., dissenting)(citing Land v. Vill. of Wesley Chapel, 206 N.C. App. 123, 697 S.E.2d 458 (2010)).
New legislation in Section 39.5(e) of the 2026 Appropriations Act (S.L. 2026-41 (S.B. 257)) requires local governments to issue binding and appealable “interpretative determinations” of development regulations. With that, a data center developer might demand a formal interpretation for how a data center will be treated under the ordinance. The interpretation could be appealed to the board of adjustment or, alternatively, directly to superior court with mandatory attorney’s fees awarded to the appellant if they prevail in the appeal.
Use Inadequately Listed
Even if data centers are listed in the zoning ordinance, those provisions may be intended for the mid-sized data centers from ten years ago, not the campus-sized data centers of today. This presents a difficult matter of interpretation. Must a local government treat a hyperscale data center as if it were a small, building-sized data center? It will depend on the specifics of the ordinance and the specifics of the proposed project. In some cases, a local government may be stuck with its current definition and standards. If the plain language of the ordinance covers the current application, then that plain language will apply. In other cases, a local government might argue that the listed use does not apply (i.e., the current proposal is of a size, scale, and intensity beyond the land use listed in the ordinance). In that case, the analysis would fall back to the discussion above for when a use is not listed in the ordinances.
Temporary Moratorium
Authority
North Carolina local governments have limited authority under G.S. 160D-107 to adopt temporary moratoria on development approvals. This is not broad authority to ban unwanted land uses; rather, it is specific authority to temporarily pause land use permits while the local government resolves a clear issue.
At the time of adopting a temporary moratorium, the regulation must clearly state the details: What is the problem or conditions that require the moratorium? What approvals are subject to the moratorium? When does the moratorium expire? And, what is the plan (actions and timeline) for resolving the problem that sparked the moratorium?
The length of a moratorium must be reasonably related to the conditions necessitating the moratorium, and a moratorium may only be extended under certain circumstances. For a moratorium over 60 days, there must be a legislative hearing and notice the same as for a zoning text amendment (twice published notice in a specified time frame). A moratorium of 60 days or less requires a legislative hearing and public notice at least seven days before the hearing.
Exceptions
A moratorium does not mean that everything stops. And it does not mean that all future projects will be subject to new rules adopted during the moratorium. Under G.S. 160D-107(c), absent an imminent threat to public health or safety, the following are not subject to a moratorium: projects with a valid building permit, projects with an accepted special use permit application, developments with statutory or common law vested rights, and projects with preliminary or final subdivision plats already accepted for review. The timing details matter to determine whether a project is exempt from the moratorium. These may include timing of application submission, completeness determination, call for the hearing on the moratorium, and the effective date of the moratorium.
For other projects, the permit choice rule survives a moratorium. So, if a project has already submitted a complete application prior to the effective date of the moratorium, then when the moratorium lifts the applicant can choose for the project to be reviewed under the old rules.
Development moratoria are discussed more in the blog Hit the Pause Button: Temporary Development Moratoria in North Carolina.
Limits on Down-Zoning
Under current law, a local government in North Carolina looking to adopt new regulations for data centers will have to navigate the limits on down-zoning. G.S. 160D-601(d) states that a local government may not amend zoning regulations or a zoning map in a way that creates “down-zoning” unless the owner consents. The law goes on to define “down-zoning” broadly as a zoning ordinance that affects property in one of the following ways:
(1) By decreasing the development density of the land to be less dense than was allowed under its previous usage.
(2) By reducing the permitted uses of the land that are specified in a zoning ordinance or land development regulation to fewer uses than were allowed under its previous usage.
(3) By creating any type of nonconformity on land not in a residential zoning district, including a nonconforming use, nonconforming lot, nonconforming structure, nonconforming improvement, or nonconforming site element.
New regulations for data centers commonly will include a definition of the land use and specifications for where it is allowed. That may have the effect of “reducing the permitted uses” under some circumstances. This gets quirky when “data center” is not listed as a permitted use. On one hand, one may argue that the new rule is adding data center as a new use, so it cannot be reducing permitted uses. On the other hand, data centers (when not listed in the ordinance) may have been treated as a similar allowed use and would have been permitted on some properties before the new regulation specifically listed and restricted data centers. In that case one may argue that the new regulation is reducing permitted uses. The section below, Define, discusses a possible approach to adding “data center” as a use while (arguably) avoiding down-zoning.
If new zoning regulations increase the setbacks for data centers or decrease the height limits for data centers, arguably that may have the effect of “decreasing the development density.” There is ambiguity here. In zoning, “density” usually refers to residential density; local rules commonly regulate residential units per acre or residential units on a lot. The down-zoning law, though, does not refer to residential density. It refers to development density. So, an amendment to the zoning ordinance that reduces “development density” is a down-zoning. Depending on the details of the regulation and the particular property, an increased setback rule may reduce the amount of area of a property that may be developed (i.e., “decreas[e] the development density”) and amount to a down-zoning. If it is a down-zoning, it is only effective with owner consent.
Notably, down-zoning does not prevent everything. If new regulations do not reduce permitted uses, reduce development density, nor create nonconforming situations, the new regulations are not down-zoning. With that, the following are examples of zoning amendments that arguably are not down-zoning: increased vegetative buffering within established setbacks; placement and screening of exterior equipment; arrangement of buildings and equipment and/or setbacks for specific equipment; building design standards; lighting standards; operational limits such as noise standards; and fencing requirements.
Moreover, down-zoning limits are about zoning. New data center regulations that are not zoning likely are not subject to the limits on down-zoning. So, for example, noise regulations authorized under the general ordinance-making authority are not zoning and are not subject to limitations on down-zoning. Arguably a county without zoning could adopt county-wide (no districts) data center regulations under the general ordinance-making authority and that would not be subject to the limits on down-zoning.
With all of these legal gray-areas highlighted it is worth emphasizing: The limits on down-zoning are relatively new, the precise scope is unclear, and as of this writing we have no guidance from court decisions. Local governments should coordinate with their attorney as they navigate these uncharted waters.
Down-zoning is discussed more in this blog on the Limits on “Down-Zoning”.
Potential New Rules
Local governments across the country and across North Carolina are considering and adopting new development rules for large-scale data centers. This section discusses potential new rules that communities may consider. As discussed above, limits on down-zoning greatly constrain what North Carolina local governments may do. Some of these potential new rules would have to wait for changes to the limits on down-zoning.
Note that this discussion is not advocating for any particular policies or regulations, but simply outlining considerations for various approaches. There is no model language here.
Balancing
One overarching consideration is this: Any data center regulation must balance between many factors. Data centers come in many shapes and sizes; data centers currently exist in many communities. Any new rules for data centers likely need some nuance to distinguish between the different scales and impacts of various data centers. Additionally, regulations for data centers may affect other land uses. Any rules tied directly to power usage, for example, have the potential to impact other industrial uses. Similarly, rules on water usage may impact non-data center companies. These may be appropriate outcomes, but they deserve attention and policy balancing.
Define
A starting point of any land use regulation is to define the land use or uses. Distinguishing different sizes of data centers may be appropriate. Zoning ordinances commonly distinguish land uses based on size and intensity. An ordinance may treat large format retail (big box stores) differently than smaller retail. A multifamily building with under, say, ten units may be distinguished from larger multifamily developments. An ordinance might prohibit a full-scale office building in a residential district but allow for office-type land use in that residential district as an accessory use to the principal residential land use. Similarly, a zoning ordinance could distinguish data centers based on the size, scale, and intensity.
One common question comes up: If “data center” is not currently defined in our ordinance, can we add a definition or is that down-zoning? As is often the case, it depends. Merely adding a definition is not necessarily down-zoning. But, once a local government uses that definition to reduce permitted uses, reduce development density, or create nonconforming situations, that may be down-zoning.
It is possible to add a definition of large-scale data center without triggering down-zoning. Here are the steps.
- Make a formal interpretation of how data centers would be treated under current zoning (potentially distinguishing based on different scales)
- Adopt a definition (or definitions) of “data center” in the ordinance
- Treat that newly defined use the same as under the formal interpretation (same districts, same setbacks, etc.)
Such an approach would be a clarifying amendment to the ordinance. It would not reduce permitted uses nor decrease development density (arguably, at least).
One potential hurdle for this approach is the debate about the formal interpretation. Interested parties may, of course, see things differently and argue that the interpretation is incorrect. If a judge agreed, then the amendment could be deemed a down-zoning.
District Rules
With the use(s) defined, the ordinance can specify the zoning districts where the use is allowed. Where are data centers appropriate? That is a policy choice for each community to decide. Different scales may be appropriate in different districts.
Approval Process
The type of approval process has significant implications for predictability, public engagement, and local government discretion.
Administrative decisions, such as the typical site plan review, involve clear, objective standards. There is limited need or opportunity for public engagement because the policy standards are already set; the local government simply must determine whether or not the application meets the clear, established standards. Quasi-judicial decisions, such as special use permits, involve objective standards, but also involve some standards that require judgment and discretion (i.e., “Is the development in harmony with the area?”). Quasi-judicial decisions require a formal, evidentiary hearing, and decisions must be based on evidence, not politics. Legislative decisions, such as conditional zoning, are decisions to set the standards, not just apply them. Public input is part of the process through a legislative hearing, and the local governing board has fairly broad discretion to make the decision in the best interest of the public. But legislative decision processes can be long and unpredictable.
Considerations for approval processes are discussed more in this blog on Types of Decisions.
Typical Development Standards
The development standards that are generally applicable will also be applicable to data centers—the development will have to meet stormwater requirements, vehicular access standards, and the like. Additionally, a local government may consider a range of conventional development standards tailored to data center uses. Here are some examples (note that some may amount to down-zoning):
- Setbacks (from property lines, from sensitive properties, and/or for mechanical equipment)
- Vegetative buffers along property boundaries
- Screening for cooling and other equipment
- Building height, massing, and design
- Operational limits (such as noise and lighting)
- Standards for typical accessory uses (such as back-up generators or batteries)
Other Development Standards
As communities across the country have considered data center regulations, some have adopted innovative regulations. Examples include requirements for the data center to use renewable energy, requirements for the data center to use certain types of cooling equipment, and other development and operational standards that go beyond the conventional zoning rules. As North Carolina communities consider new rules for data centers, they must keep in mind the limits of their delegated authority. While other states delegate broad authority for cities and counties to adopt creative regulations, North Carolina has delegated limited authority for development regulations. New and innovative approaches to regulation may be possible, but North Carolina local governments must evaluate the scope of authority and ensure there are no state or federal preemption issues.
Conditional zoning does provide some (but not unlimited) flexibility in zoning standards. Conditional zoning allows for site-specific conditions for a particular rezoning to address the anticipated impacts of the development. But notably such conditions are only enforceable with the written consent of the applicant. Conditional zoning is discussed more in David Owens blog on “What Conditions Can Be Included in Conditional Zoning?”
Environmental Impact Statements
Environmental impacts have been a major focus of the public debate about data centers. Land use zoning certainly relates to environmental impacts, but the regulatory approvals for environmental impacts are mostly outside the scope of zoning regulation. Environmental permitting of data centers is handled largely by state and federal agencies (the NC Department of Environmental Quality for air permits and water discharge permits, the Army Corps of Engineers for impacts to wetlands, etc.). That said, there is authority for local governments to require certain projects to provide environmental impact analysis.
North Carolina state law authorizes local governments to require private developers to submit an environmental impact statement (EIS) for major development projects. The North Carolina Environmental Policy Act (referred to as SEPA) is set forth in Article 1 of Chapter 113A of the General Statutes. This is North Carolina’s state version of the National Environmental Policy Act (NEPA). While the primary focus of the North Carolina law is mitigating environmental impacts of state agencies, it also includes provisions relating to private development. As set forth at G.S. 113A-8, local governments may by ordinance require a “private developer of a major development project to submit detailed statements [EISs] . . . of the impact of such projects for consideration by those governing bodies in matters within their jurisdiction.”
The law, at G.S. 113A-8, sets forth the following requirements for a local standard on environmental impact statements:
- must be adopted by ordinance;
- must be applied consistently (not applied to only a particular project);
- must not apply to projects that already have to produce an EIS;
- includes minimum criteria for what projects require an EIS.
G.S. 113A-12 lists a variety of projects that are exempt from providing an EIS, including projects that obtained other permits such as a Coastal Area Management Act (CAMA) permit.
For projects required to provide an EIS, G.S. 113A‑4(2) requires that the statement must set forth the environmental impact of the proposed action, adverse environmental effects that cannot be avoided, mitigation measures, alternatives considered, the relationship between short-term use and long-term productivity, and irreversible environmental changes.
Environmental impact statements are more procedural than substantive. SEPA requires state agencies to analyze the impact of agency action and for state decision-makers to weigh those environmental impacts when they make a decision on agency action. State law does not specify how an EIS for a private development should fit into local government decision-making on development approvals. For a conditional zoning decision, an EIS may be part of the broad public considerations that the decision-making body takes into account. For a special use permit, an EIS potentially could be evidence to consider when weighing the potential impacts on public health and safety or harmony with the area. For an administrative approval on a zoning permit or site plan, an EIS could be a procedural requirement for the application, but it is not clear if or how the substance of the EIS would tie into the objective standards of the administrative decision.
Conclusion
Communities must weigh many factors when it comes to data center policies and regulations. Land use regulations are just one of those many factors, but an important one. As outlined in this blog, North Carolina local governments must understand the wide-range of data centers, consider how data centers are treated under current zoning, appreciate the limits of temporary moratoria and down-zoning, and balance various land use interests in any new regulations. Notably, this is an evolving area of law—litigation, legislation, agency rule-making, and local decisions will continue to shape the legal landscape for data centers and zoning in North Carolina.
