Key Takeaways
- 1 No single agency regulates data centers—authority is fragmented across federal, state, and local levels
- 2 FERC controls grid access; states regulate utilities; localities control land use
- 3 Current frameworks weren't designed for gigawatt-scale single facilities
- 4 Location determines regulatory experience—PJM differs from ERCOT differs from MISO
The Governance Gap
When Microsoft announced a 20-year deal to restart Three Mile Island's reactor exclusively for its data centers, a question emerged: who approved this?
Three Levels of Authority
Power is divided among federal, state, and local governments—each with distinct but incomplete authority.
- Interstate transmission
- Wholesale markets
- Interconnection rules
- Utility rate approval
- Environmental permits
- Economic incentives
- Land use decisions
- Conditional permits
- Development review
The Democracy Deficit
Local volunteer boards evaluate billion-dollar projects with limited resources.
- Multi-billion dollar budget
- Sophisticated legal teams
- State political pressure
- Full-time project staff
- Small municipal budget
- Volunteer board members
- Limited technical expertise
- 3-minute comment periods
Regional Variation
Where you build determines what rules apply—and how long approvals take.
Fundamental Tensions
No framework can optimize for competing values simultaneously.
12-18 months for developers, 24-36 months for communities
Strict standards push projects to other states
AI priority framing vs. traditional local authority
Recent Federal Actions
FERC has attempted to address interconnection backlogs, but fundamental gaps remain.
Cluster Studies
- Study groups together, not sequentially
- Higher deposits to discourage speculation
- Target: 150 days for initial studies
Long-Term Planning
- 20-year forward transmission planning
- Consider load growth and retirements
- Proactive vs. reactive approach
The fragmented framework means no one asks the fundamental question: should this project happen?
Go Deeper
Chapter 12 of This Is Server Country examines how authority became fragmented across federal, state, and local levels, traces recent FERC orders, and analyzes possible reforms and the political economy challenges any reform effort would face.
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