Despite growing local opposition to the electricity-hungry buildings, Maine’s Democratic governor, Janet Mills, vetoed a bill on Friday that would have made the state the first in the United States to place a moratorium on major new data centers.
The decision illustrates the challenging trade-off that political leaders must make between the potential for millions of dollars in investment and tax revenue from data centers and their effects on the environment and home energy bills.
If enacted, the plan would have delayed licenses for data centers using more than 20 megawatts of power until October 2027 while a state-appointed panel examined their effects on the local grid, electricity costs, air, and water.
In a letter to the Maine legislature, Mills expressed her support for a temporary ban on data center projects. If the bill had included an exemption for a data center project that is currently underway in the town of Jay and is crucial to employment and tax revenue, she would have signed it.
“A moratorium is appropriate given the impacts of massive data centers in other states on the environment and on electricity rates. But the final version of this bill fails to allow for a specific project in the Town of Jay that enjoys strong local support from its host community and region,” Mills said in a statement.
Hundreds of jobs were lost when the town’s Androscoggin paper mill closed in 2023 due to a boiler explosion.
More than 800 construction jobs and at least 100 well-paying permanent jobs are anticipated to be created by the $550 million data center project, which reuses existing infrastructure that would not have had a significant impact on the electric grid or energy bills. Additionally, the project would increase property tax revenue for the town of Jay, according to Mills.
Mills also said that she has signed a bill to bar data center projects from Maine’s business development tax incentive programs and that she intends to issue an executive order creating a council to assess the effects of data centers in the state.
MAINE WAS A TEST CASE
American tech giants have pledged to spend more than $600 billion on artificial intelligence data centers this year as part of a spending spree that has boosted the U.S. economy and is considered the biggest since the telecom boom of the late 1990s.
But mounting opposition to that buildout has led more than a dozen U.S. states to weigh legislation that would halt or restrain development of the facilities, even as the Trump administration pressures states to stay out of AI regulation.
To ease worries about rising electricity bills, Washington last month got big technology companies to sign a voluntary pledge at the White House that they would bear the cost of new electricity generation to power their data centers.
Two Democratic lawmakers – Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez – have also introduced legislation to halt all construction on data centers until Congress passes AI safety legislation.
Maine lawmakers passed the bill against data centers last week, sponsored by Democratic state representative Melanie Sachs. The state was seen as a test case of whether such measures could be adopted in other places.
Limiting data center development would have, however, added to the economic pressure in a rural state already grappling with mill closures that have eroded one of its key industries.
Sachs said Mills’ decision to veto the bill was “simply wrong”.
“While a veto might protect the proposed data center project in Jay, it poses significant potential consequences for all ratepayers, our electric grid, our environment and our shared energy future,” Sachs said.
Virginia, one of the world’s largest data center hubs, is among the U.S. states considering similar legislation.
