The U.S. States Leading the Backlash Against Data Centers

Sovereign States Draw a Line on Digital Infrastructure

A quiet rebellion is brewing across the United States, not against traditional industries, but against the insatiable appetite of digital infrastructure. As the demand for data processing and storage accelerates, driven by advancements in artificial intelligence and cloud computing, a growing number of states are confronting the significant energy and resource implications of unchecked data center expansion. Consumers, increasingly burdened by escalating utility bills and anxious about the stability of the nation's power supply, are turning to their elected officials for solutions. This groundswell of public sentiment is translating into legislative action, with some states moving to pause or even outright ban the development of new data centers.

The projections paint a stark picture of future energy consumption. By 2030, data centers are anticipated to become one of the largest drains on U.S. electrical grids. A recent United Nations report highlighted the escalating global impact, forecasting that by the same year, these facilities could double their consumption of both power and water. In 2025 alone, data centers globally consumed an estimated 448 terawatt-hours of electricity, with artificial intelligence workloads accounting for a substantial one-fifth of that total. The environmental toll is equally concerning, with these operations consuming 4.5 trillion liters of water and emitting 189 million tons of carbon dioxide.

Within the United States, the scale of the issue is particularly acute. The power demand from major data centers surged by approximately 11.3 GW in 2025, reaching a total of 61.8 GW. Projections indicate this demand will climb to 75.8 GW for IT equipment, cooling, lighting, and ancillary services by 2028, and then surge to an astonishing 134.4 GW by 2030, according to research from 451 Research. These figures represent only a portion of the potential growth, as they do not factor in development by non-tech corporate giants.

Mounting Opposition and Legislative Hurdles

The downsides of data center development are becoming increasingly apparent to local communities. Concerns range from noise pollution and substantial energy costs to perceived wastefulness. While over 4,300 data centers currently operate across the U.S. according to the Data Centre Map database, the push for accelerated deployment is meeting significant resistance. Consumers, in particular, are voicing strong opposition. A recent Gallup poll revealed that a striking 70 percent of Americans disapprove of data center construction in their locales, with more than half expressing strong opposition.

Despite the widespread deployment of tax incentives across at least 38 states aimed at attracting data center investment, a counter-movement is gaining traction. The National Conference of State Legislatures reports that at least 14 states are actively considering legislation to temporarily halt new data center construction. However, differing viewpoints on the economic benefits versus the environmental costs have stalled the progress of many of these proposed bills. The states grappling with these decisions include Georgia, Maine, Maryland, Michigan, Minnesota, New Hampshire, New York, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont, Virginia, and Wisconsin.

In Maine, a proposed ban on new data center development was ultimately vetoed by Governor Janet Mills in April. Nevertheless, similar legislative efforts are still under consideration in Georgia, Michigan, New York, Pennsylvania, South Carolina, and Vermont. North Carolina is also exploring the implementation of more stringent regulations for these facilities.

Local Victories and State-Level Moratoriums

Beyond the state level, some municipalities are taking decisive action. Monterey Park, California, has made history by becoming the first U.S. city to enact a permanent ban on data center development, following intense pressure from its residents. While other cities have implemented temporary or indefinite moratoriums, Monterey Park's ban was achieved through a ballot initiative, demonstrating powerful local consensus. Preliminary election results in early June indicated nearly 90 percent of residents voted in favor of the ban, citing concerns over soaring utility costs, depletion of water resources, and environmental pollution.

“This shows unequivocally that residents in Monterey Park do not want data centres in their community… We hope that other communities will use the model set by residents here in Monterey Park as inspiration to stop data centres from encroaching in their backyard.”

This sentiment is echoed in Wisconsin, where voters in Port Washington approved a measure mandating voter approval for any tax incentives offered to data center developers. Residents of Janesville, Wisconsin, are also set to vote in November on a similar proposal requiring city approval from voters for new data centers valued above $450 million.

New York is on the cusp of potentially becoming the first U.S. state to implement a moratorium on large data centers. In June, the state legislature greenlit a one-year ban, pending Governor Kathy Hochul's signature. State Senator Kristen Gonzalez, a co-author of the bill targeting hyperscale data centers exceeding 20 MW, emphasized the legislative intent. “Big tech has been used to writing their own rules or not having rules that they have to play by, when it comes to new technology,” Gonzalez stated. “This is one of the first times that we’re really drawing a line in the sand and saying that as a state legislature, we have the responsibility to make sure that New Yorkers are in the driver’s seat.”

The proposed moratorium specifically targets major tech companies developing massive data centers, with at least 28 large facilities, representing a collective energy demand of 9.7 GW, currently under review. Senator Gonzalez further articulated her stance: “We should not have to sacrifice our water, our energy, our green space and local communities for big tech and specifically for generative AI, which is oftentimes used for things like AI slop.” As consumer pressure mounts over energy security and utility expenses, other states are expected to follow suit. While some regions continue to court the substantial investments data centers bring, a growing number are prioritizing a careful evaluation of the long-term energy and environmental consequences.

Market Ripple Effects

The escalating pushback against data center development in the U.S. presents a complex dynamic with implications stretching across several asset classes. Investors and traders should monitor this trend closely, as it signals a potential shift in how critical digital infrastructure is integrated into local economies and energy landscapes. The immediate impact is felt by the technology sector, particularly companies heavily involved in building and operating these facilities, as well as those reliant on AI processing power.

This regulatory scrutiny could directly affect the share prices of major cloud providers and hardware manufacturers. Beyond tech stocks, the energy sector, especially utilities and renewable energy providers, will be significantly impacted. States imposing moratoriums or stricter regulations may see a slowdown in demand growth for electricity, potentially impacting utility earnings forecasts. Conversely, this could accelerate investment in energy efficiency technologies and grid modernization projects. The construction industry, including materials suppliers and engineering firms, will also feel the ripple effects of any slowdown in data center build-outs.

Traders should watch for policy developments in key states like New York, Georgia, and California, as these could set precedents for national trends. The evolving regulatory environment introduces a degree of uncertainty, potentially increasing the cost of capital for future data center projects. Furthermore, this trend could spur innovation in decentralized computing and more energy-efficient AI models, creating opportunities for companies at the forefront of these solutions. The conflict between the demand for digital services and the strain on physical resources highlights a critical challenge for sustainable technological growth.