The Data-Center Fight Is a State Problem Wearing a Federal Costume

More than a hundred people packed into the Champaign County Board chambers in east central Illinois this spring, close enough to read each other's signs: "Protect Our Water." "Approve the Moratorium." They'd come because a wave of data center proposals had hit the county the way these things hit rural counties across the Midwest lately, fast and well-lawyered and light on specifics. The board voted unanimously in April for a one-year pause, buying a new task force time to write zoning rules nobody had needed before. It felt, for one meeting, like local government working exactly as advertised: a community sees a problem coming and slows it down to look at it properly.

The trouble is what happened next door. Kate Stoll, who works with county commissioners nationally through the American Association for the Advancement of Science, has watched this play out enough times to have a name for it. A county tries to be careful. It asks questions, takes its time, drafts standards. The developer, unimpressed by due diligence, drives twenty minutes to the next county over and signs the deal there instead. "They were trying to be deliberative and take their time," Stoll said, "and in the end, they got the externalities without the benefits." The careful county gets the water-table drawdown and the transformer hum. The other county gets the tax base.

That is the mechanism running underneath Kansas right now, and it is worth understanding before anyone reaches for the word "federalism" as if it explains itself.

Kansas has genuinely tried to build a smarter version of the deal than most states. Senate Bill 98, passed in 2025, bars data centers from the standard 40 percent/20 percent economic development discount rate that other large industrial customers can claim on their power bills. That rate break, in Virginia, helped push Dominion Energy into its first base-rate increase since 1992, an $8.51-a-month hit to the typical household, with data center buildout named as a contributing driver. Georgia has seen something similar. Kansas's answer was to make data centers finance their own infrastructure and pay market or above-market rates, on paper protecting residential ratepayers from subsidizing server farms they'll never work in. The state's own commerce department publishes a document defending this in language a plaintiff's lawyer would recognize ("the above protections are real and specific to Kansas") while conceding, in the next paragraph, that regulators need to watch the utility rate cases closely, because the national pattern is not reassuring.

Then there is Emporia, a town of 25,000 that has lost 1,200 manufacturing jobs in recent years and was, until June 2, not part of this conversation at all. A project called Emporia Compute Stadium was announced that day. The city commission voted to annex the land the next morning. Civic leaders said they'd been negotiating for eight months but couldn't name the developer, citing nondisclosure agreements, an odd position for a public body to defend in public. It got odder. The man behind the deal, identified as Pinkston, had filed personal Chapter 11 bankruptcy in federal court in Georgia on May 14, along with matching filings for his family trust and fifteen separate LLCs, less than three weeks before Emporia's commissioners voted to fast-track his project. By mid-July residents were gathering signatures outside the county offices to force a public vote, and state officials were convening a two-day summit in Topeka to teach local governments how to spot a "bad actor" before annexing land for one — while protesters rallied outside the same building.

The people showing up to these meetings are not wrong on the substance, and their case deserves its full weight. Two-thirds of the data centers planned nationally are sited in rural communities, and Pew's research puts the Midwest on track for a 64 percent jump in development. These facilities draw enormous water for cooling and enormous power for the servers, and the benefits (jobs, tax revenue, the halo effect the KC Tech Council likes to point to for businesses that cluster nearby) flow unevenly, often past the community absorbing the noise and the drawdown and toward whichever out-of-state firm holds the lease. A federal moratorium bill exists, sponsored by Bernie Sanders and Alexandria Ocasio-Cortez, and it is going nowhere in a Republican Congress. Which leaves the only bodies actually legislating on this question in real time as county boards and city commissions built for zoning variances and pothole budgets, not for evaluating the bankruptcy filings of anonymous developers.

Kansas has run this experiment before, just wearing different clothes. States spent the better part of the 1890s and 1900s racing each other to the bottom on corporate charter law. New Jersey liberalized its incorporation statutes to capture the franchise-tax revenue, Delaware undercut New Jersey, and when New Jersey tried in 1913 to reform its own law and pull businesses back toward something stricter, the businesses simply reincorporated in Delaware within a couple of years and stayed there. Nobody in Trenton had done anything wrong exactly. They had just discovered that a state acting alone against its neighbors' permissiveness is a state acting alone, period.

That is the file Kansas's data center fight belongs in. SB 98 protects ratepayers from a subsidized rate, a real and specific and defensible fix. It does nothing about a city commission approving annexation in eighteen hours, and it cannot stop Emporia's neighbors down the highway from waving in the next anonymous developer if Emporia's petitioners actually win their vote. Jan Kessinger's case for the boom — that Kansas built the nation's rail and grain infrastructure once and can build its digital infrastructure now — is not wrong on the history. It just skips the part where the last time Kansas built infrastructure at this speed, the railroads wrote their own regulations too, until somebody in Topeka finally noticed.

The Sanders-AOC bill will die in committee, which leaves the only jurisdiction currently equipped to ask the hard questions about Emporia Compute Stadium as Emporia itself, a town that didn't know the name of its own developer until reporters found his bankruptcy filing. Whoever wins the governor's race inherits that gap, not the Congress. Somebody still has to decide who runs the machine after the ribbon gets cut, and right now that somebody is a city commission that voted in a single morning.