April 24 (Reuters) - The Democratic governor of Maine, Janet Mills, on Friday vetoed a bill that would have made it the first U.S. state to impose a moratorium on large new data centers, even as local opposition to the electricity-hungry facilities grows.
If it had been signed into law, the bill would have frozen approvals until October 2027 for data centers requiring more than 20 megawatts of power, while a state-appointed council analyzed their impact on the local grid, electricity bills, air and water.
In a letter to the Maine legislature, Mills said she supports a temporary moratorium on data center projects - and would have signed the bill if it had included an exemption for a data center project underway in the town of Jay.
"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.
The Androscoggin paper mill shut down in 2023 after a boiler explosion, leading to hundreds of job losses.
Work to develop a $550 million data center on that site 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.
The decision on Friday reflects the difficult trade-off facing political leaders who must weigh data centers' impact on the environment and household energy bills against the millions of dollars in investment and tax revenue they can bring.
Mills also said that she plans to issue an executive order establishing a council to examine the impact of data centers in Maine and has signed a bill to prohibit data center projects from Maine's business development tax incentive programs.
American tech giants have pledged to spend more than $600 billion on artificial intelligence data centers this year as part of a spending spree that has boosted the U.S. economy and is considered the biggest since the telecom boom of the late 1990s.
But mounting opposition to that buildout has led at least 11 U.S. 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.
To ease worries about rising electricity bills, Washington last month got big technology companies to sign a voluntary pledge at the White House that they would bear the cost of new electricity generation to power their data centers.
Two Democratic lawmakers - Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez - have also introduced legislation to halt all construction on data centers until Congress passes AI safety legislation.
(Reporting by Aditya Soni in Bengaluru, Chris Thomas and Mrinmay Dey in Mexico City; Editing by Pooja Desai)
