More than 500 jurisdictions across the United States have implemented bans or restrictions on the construction of new data centers, a trend that could jeopardize the U.S.'s leading position in the artificial intelligence race, particularly against China. In July alone, over 150 localities enacted such prohibitions.
This surge in opposition comes as tech giants and developers face increasing resistance from local communities concerned about the environmental impact and substantial energy consumption of these facilities. Protests have occurred in various locations, from Fredericksburg, Virginia, to Tyler, Texas, highlighting a growing public sentiment against the development of AI-focused data centers.
"There’s a pretty strong sense that local people want to oppose these and part of it is the tech bros are forcing AI on us," said Paul Triolo, a partner at consulting firm DGA-Albright Stonebridge Group. He noted that the negative public narrative surrounding AI needs to be addressed to find solutions beneficial to both sides.
The pushback is also evident at the state level. New York Governor Kathy Hochul has enacted a one-year moratorium on new data centers. In Texas, Governor Greg Abbott has implemented a pause for state agencies to audit projects, although no end date has been set for this hiatus.
Developers are encountering significant obstacles, with activists employing tactics such as online attacks and lawsuits. One developer in Southern California faced death threats and legal challenges while attempting to build what would have been California's largest data center, resulting in project delays.
This opposition is impacting projected capacity. Goldman Sachs Commodities Research estimates that only 50% to 60% of planned data center capacity will become operational on time over the next two years due to delays and cancellations. JPMorgan reports that approximately 60% of data center capacity slated for 2027 has not yet begun construction, despite substantial investments in AI infrastructure.
Experts warn that these hurdles could hinder U.S. efforts to maintain its lead in AI development over China. The White House is reportedly drafting a ban on U.S. imports of new Chinese data center components.
Former President Donald Trump has attempted to mitigate domestic opposition, championing a voluntary pledge signed by governors and electricity companies aimed at shielding consumers from potential increases in utility bills due to data center energy demands. "AI is probably the biggest thing anybody’s ever seen, and whoever wins that race is probably going to win, period," Trump stated at an Environmental Protection Agency event during the pledge signing.
Consulting firms specializing in advising tech clients on navigating regulatory and community concerns have seen a significant increase in business. Triolo's firm recently launched a practice dedicated to assisting clients with the challenges of AI buildout.
While widespread bans could impede U.S. competitiveness, Triolo believes the bans seen so far are unlikely to dislodge the U.S. from its leading position, especially as states like Texas are adopting more data center-friendly policies. In Texas, energy companies in the Permian Basin are exploring agreements with data centers for land leases, water, and construction materials, leveraging the state's abundant land, affordable energy, and business-friendly environment. Chevron, for instance, has an agreement with Microsoft for a large AI data center in West Texas.
However, even Texas is experiencing rising opposition. Gina Hinojosa, the Democratic nominee for Texas governor, has voiced concerns about data centers being owned by the wealthiest individuals while communities bear the costs, describing the situation as the "Wild West of data centers."
Despite local opposition, the expansion of data centers is projected to be substantial. The U.S. had 5,427 data centers at the end of last year, and AI companies have announced plans for approximately 4,000 new facilities, with 802 currently under construction, according to data center research firm Aterio.