Democratic Maine governor vetoes first US state freeze on new datacenters

The decision reflects the difficult trade-off facing political leaders, who must weigh the impact of datacenters on the environment and household energy bills against the millions of dollars in investment and tax revenue they can bring.

If signed into law, the bill would have frozen approvals until October 2027 for datacenters requiring more than 20 megawatts of power while a state-appointed council analyzed their impact on the local grid, electricity bills, air and water.

Janet Mills, in a letter to the Maine legislature, said she supports a temporary moratorium on datacenter projects – and would have signed the bill if it had included an exemption for a datacenter project under way in the town of Jay that is key to jobs and tax revenue.

“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.

The Androscoggin paper mill in the town shut down in 2023 after a boiler explosion, leading to hundreds of job losses. Work to develop a $550m datacenter, which reuses existing infrastructure that would not have had a major impact on the electric grid or energy bills, is expected to create more than 800 construction jobs and at least 100 high-paying permanent jobs, and would contribute property tax revenue to the town of Jay, Mills said.

Mills also said that she plans to issue an executive order establishing a council to examine the impact of datacenters in Maine and has signed a bill to prohibit datacenter projects from Maine’s business development tax incentive programs.

US tech giants have pledged to spend more than $600bn on artificial intelligence datacenters this year as part of a spending spree that has boosted the US economy and is considered the biggest since the telecom boom of the late 1990s.

But mounting opposition to that build-out has led more than a dozen US 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. Virginia, one of the world’s largest datacenter hubs, is among the US states considering similar legislation.

To ease worries about rising electricity bills, big technology companies signed a voluntary pledge at the White House that they would bear the cost of new electricity generation to power their datacenters.

Two Democratic federal lawmakers – senator Bernie Sanders and representative Alexandria Ocasio-Cortez – have also introduced legislation to halt all construction on datacenters until Congress passes AI safety legislation.

Maine lawmakers passed the bill against datacenters last week, sponsored by Melanie Sachs, a Democratic state representative. The state was seen as a test case of whether such measures could be adopted in other places.

Limiting datacenter 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.