Maine Gov. Janet Mills on Friday vetoed a bill that would have made Maine the first U.S. state to impose a moratorium on large new data centers, despite growing local opposition to the power-hungry facilities.
The decision reflects the difficult trade-offs political leaders face as they must weigh data center exist environment and home energy bills versus the millions of dollars in investment and tax revenue they can generate.
If signed into law, the bill would freeze approvals of data centers with power needs above 20 megawatts until October 2027 while a state-appointed commission analyzes the impact on the local grid, electricity rates, air and water.
Mills said in a letter to the Maine Legislature that she supports a temporary moratorium on data center projects and would sign the bill if it included an exemption for ongoing data center projects in Jay Township that are critical to jobs and tax revenue.
“The moratorium is appropriate given the impact that large data centers in other states have on the environment and electricity prices. But the final version of the bill fails to allow a specific project in Jay Township that has strong support from the local community and region,” Mills said in a statement.
The town’s Androscoggin paper mill closed in 2023 after a boiler explosion, leaving hundreds of people jobless.
Mills said the $550 million data center development will repurpose existing infrastructure, will not have a significant impact on the grid or energy bills, is expected to create more than 800 construction jobs and at least 100 high-paying permanent jobs, and will contribute property tax revenue to the Town of Jay.
Mills also said she plans to issue an executive order to create a commission to review the impact of data centers in Maine and signed a bill that would ban data center projects from participating in Maine’s business development tax incentive program.
Maine is a test case
U.S. tech giants have pledged to spend more than $600 billion on artificial intelligence data centers this year as part of a spending spree to stimulate the U.S. economy, thought to be the biggest since the telecoms boom of the late 1990s.
But growing opposition to such expansion has led more than a dozen U.S. states to consider legislation to halt or limit the development of these facilities, even as the Trump administration pressures states not to participate in AI regulation.
To ease concerns about rising electricity bills, Washington last month signed a deal with big tech companies voluntary commitment At the White House, they will bear the cost of new generation to power data centers.
Two Democratic lawmakers — Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez — have also introduced legislation to halt all data center construction until Congress passes AI safety legislation.
Maine lawmakers last week passed a bill targeting data centers sponsored by Democratic state Rep. Melanie Sachs. The state is seen as a test case for whether such measures can be taken elsewhere.
However, limiting data center development would add to economic pressure in a rural state that is already grappling with factory closures that have eroded one of its key industries.
Sacks said Mills’ decision to veto the bill was “completely wrong.”
“While the veto may protect Jay’s proposed data center project, it would have significant potential consequences for all ratepayers, our grid, our environment and our shared energy future,” Sacks said.
Virginia, one of the largest data center hubs in the world, is one of the U.S. states considering similar legislation.
(Reporting by Aditya Soni in Bengaluru, Chris Thomas and Mrinmay Dey in Mexico City; Editing by Pooja Desai)
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