FITSForum: Data Center Development Act is a Balanced Path Forward

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by TOM DAVIS

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Data centers are the backbone of the digital economy – massive facilities housing thousands of servers that power everything from streaming services to online banking to artificial intelligence applications. As AI transforms industries from manufacturing to healthcare to logistics, companies using AI-intensive operations locate near data centers to minimize latency and maximize computing speed.

South Carolina faces a critical choice. An outright ban on data centers would surrender future economic development to other states. When major AI-driven industries decide where to locate, they’ll choose states with robust data center infrastructure. Banning data centers means forfeiting the next generation of high-tech jobs and investment.

But unchecked development under our state’s current lax rules is equally problematic. Data centers can consume 50-100 megawatts or more, equivalent to a small city’s electrical demand. Without proper regulation, utilities can shift the massive costs of new power plants and transmission lines onto existing customers. These facilities also consume enormous amounts of water for cooling, generate noise, and create light pollution and vibrations affecting nearby communities.

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Equally critical is ensuring data centers are sited appropriately, away from environmentally sensitive areas like the ACE Basin. This nationally significant estuarine reserve supports irreplaceable wildlife habitat, commercial fisheries, and coastal ecosystems. Allowing large-scale industrial development in such areas would permanently damage resources that have taken generations to protect.

S. 867, the Data Center Development Act that I filed yesterday in the South Carolina Senate, charts a middle course, establishing sensible standards that enable responsible development while protecting ratepayers, communities, and the environment. The text is available here.

The bill’s centerpiece ensures data centers pay their full infrastructure costs, not existing utility customers. Through upfront contributions, minimum contract obligations, or hybrid arrangements approved by the Public Service Commission, these facilities bear the expense of new generation and transmission capacity they require.

The legislation creates a tiered permitting system: Tier 1 facilities (1-10 megawatts) receive 60-day reviews, Tier 2 facilities (11-50 megawatts) undergo 90-day reviews, and Tier 3 facilities (over 50 megawatts) face 120-day comprehensive assessments. A Data Center Development Office within the Department of Environmental Services coordinates multi-agency reviews and establishes performance standards.

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The act strongly incentivizes Brownfield redevelopment with tax credits up to 25% of remediation costs (capped at $5 million) plus an additional two percent investment credit (capped at $10 million). Directing data centers to these locations transforms environmental liabilities into productive assets while protecting greenfield sites and agricultural land.

The Department of Environmental Services reports South Carolina has over 400 open Brownfield sites – contaminated or underutilized industrial properties that sit idle, generating no tax revenue, providing no jobs, and posing ongoing environmental risks. Allowing these sites to remain dormant is economically wasteful and environmentally irresponsible. 

S. 867 requires comprehensive decommissioning plans with financial assurances covering complete site remediation, preventing abandoned facilities that burden taxpayers with cleanup costs. The bill mandates water efficiency standards and imposes noise limits, vibration controls, and buffer requirements to protect sensitive areas and residential communities.

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This legislation has been assigned to the Senate Agriculture and Natural Resources Committee chaired by Senator Wes Climer, who plans to hold subcommittee hearings to thoroughly vet the bill and solicit testimony from experts, stakeholders and the public, with an eye toward moving it to the Senate floor by the end of February.

The timeline is tight and demands urgent action. Once the Senate passes S. 867, the bill must move to the House for debate, where amendments will likely require reconciliation through a conference committee before reaching Governor Henry McMaster’s desk. All of this must occur before the Legislature adjourns on the second Thursday in May.

If we fail to enact meaningful data center regulation this session, these massive energy-consuming facilities will continue to be built across South Carolina on a relatively unregulated basis, locking in decades of strain on our electrical grid, water resources, and natural environment without adequate protection for ratepayers or our most sensitive ecological areas.

Inaction on S. 867 is not a neutral outcome; it is a decision to allow data center development to proceed unchecked, and that is simply unacceptable for the future of our state.

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ABOUT THE AUTHOR…

Tom Davis represents Beaufort and Jasper counties in the South Carolina Senate. He chairs the Senate Labor, Commerce and Industry Committee.

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