Voters approve data center restrictions across US communities

Voters approved dozens of restrictions on data centers in Tuesday’s midterm elections, while newly elected governors in major development markets promised to pause construction. The results could slow the expansion of facilities used to power artificial intelligence, analysts said.

As of Wednesday afternoon, voters had approved 38 measures restricting data centers in communities across several states, according to a Redbud Consulting analysis cited by CBS News. The Guardian reported that data centers were on ballots in at least 40 jurisdictions across 10 states and that voters approved nearly every proposed moratorium. A North Dakota community was the notable exception, voting against restrictions.

The Guardian reported that at least 14 Ohio municipalities passed bans or restrictions, including Sunbury, where Amazon has proposed a $2 million data center project. Eight Maine municipalities approved temporary moratoriums. Voters in Emporio, Kansas, approved a ban on high-impact data centers after a 1,000-acre, gigawatt-scale facility was proposed there, the newspaper reported.

The elections also put governors who campaigned for tighter controls in office. Democrat Gina Hinojosa defeated Republican incumbent Greg Abbott in Texas after proposing a temporary construction ban. Texas accounts for an estimated 25% to 30% of data center capacity expected to come online by 2030, according to technology analyst Dan Ives.

“Texas is the foundation of the AI buildout in the U.S.,” Ives told CBS News. Gordon Johnson, head of investment adviser GLJ Research, estimated that Hinojosa’s victory could stall the addition of 13 gigawatts of data-center power in the state. Abbott had already suspended data center approvals, CBS News reported. “All the new governor has to do is keep it in place,” Johnson said of that moratorium.

In Georgia, the third-largest data center market, newly elected Gov. Keisha Lance Bottoms told CBS Mornings on Wednesday that she would immediately “sign an executive order for that pause,” then determine what other administrative steps were needed. She also said she would review tax incentives that have encouraged development. The Guardian reported that Ohio’s newly elected governor, Amy Acton, has pledged a moratorium on large data centers.

Opposition to new facilities has grown across party lines. A CBS News poll this summer found that Americans opposed building a data center in their area by more than 2 to 1. The Guardian reported that Florida Gov. Ron DeSantis signed a bill in May imposing strict regulations on large-scale data centers.

Investors reacted Wednesday as semiconductor, hardware and other stocks tied to data center construction fell sharply amid concerns about permitting delays, according to Vital Knowledge analyst Adam Crisafulli. Franklin Templeton strategist Stephen Dover predicted a “slowdown in data centers being built,” while Ives said the answer to whether the elections would slow planned construction was “a clear YES.”

Higher costs may follow if developers face new requirements to invest in electrical grids or lose tax incentives, Principal Asset Management strategist Seema Shah wrote. But a slower buildout need not derail wider economic growth, analysts at Oxford Economics said: More restrictions would extend project timelines, and slower construction over the medium to long term “wouldn’t necessarily be a bad outcome for the macroeconomy.”