Data center projects face new hurdles in states that elected Democratic gubernatorial candidates who have vowed to rein in the industry.
The midterm elections displayed the public’s growing opposition to data centers. Voters not only supported ballot measures to restrict data centers but also elected Democrats who have campaigned on slowing down and regulating the industry.
Texas
Texans on Tuesday elected Democrat Gina Hinojosa, who has vowed to impose a statewide moratorium on data centers until state legislators pass new guardrails.
Hinojosa’s legislative priorities include requiring data centers to hire union workers, protect water resources, and give communities the power to approve data center projects.
She has also called for companies to stop using nondisclosure agreements that limit public access to their projects. Hinojosa also said that households should not bear energy costs tied to data centers, and that the government should not offer tax breaks for projects. In Texas, Democrats flipped the House, while Republicans maintained their majority in the Senate.
“It’s about passing laws to protect Texans,” Hinojosa told Politico. “We can have economic development, and we can have protections for Texans. These things are not mutually exclusive.”
Texas has one of the fastest-growing data center markets. As of September, the state has at least 596 operating and planned data centers, according to the Texas Tribune.
Michael Webber, a professor at the University of Texas at Austin, told the Washington Examiner that the governor doesn’t have direct control over development, but she can influence it indirectly through appointments for agencies such as the state’s Public Utility Commission and Texas Water Development Board.
He noted that Hinojosa has campaigned on placing guardrails on these data centers, not to fully stop development in the state.
“There’s so much money at stake,” Webber said. “I’d be amazed if we just said ‘no’ [to data centers]. I have a feeling things will proceed in Texas, but there might be some work in place about how the data centers should operate.”
The Trump administration and Republicans have argued that data center development is needed to compete against China in the AI race.
But the GOP, too, has been swayed by rising fears about data centers adding to local energy costs, water consumption, and noise pollution.
In September, Texas Republican Gov. Greg Abbott paused data centers from connecting to the grid and ordered a statewide audit of projects to collect information on power usage, water consumption, and tax incentives.
Ohio
Data center politics also played a key role in the elections in Ohio. The state accounted for the majority of the country’s data center ballot measures, with 21 proposals. The pro-data-center side lost all of them.
Voters in Ohio elected Democrat Amy Acton as their new governor, who has called for a moratorium on data centers.
She has said that data center projects must meet conditions to move forward. Those include requiring operators to end nondisclosure agreements, provide their own energy, use union labor, protect air and water quality, and utilize brownfield sites for development.
“I’m very pro business,” Acton said in late October on WBNS 10TV. “We are open for business in Ohio, but we’re not for sale and we’re not for exploitation, and that’s the big difference.”
Data centers also played a major role in the Senate race between former Democratic Sen. Sherrod Brown and Sen. Jon Husted (R-OH), which Brown won.
The National Republican Senatorial Committee warned tech companies over the summer that data centers were becoming increasingly unpopular, citing the Ohio Senate race in particular.
Ohio has more than 200 data centers.
Georgia
A pause in development could be coming to Georgia as well. Democratic Gov.-elect Keisha Lance Bottoms yesterday said she plans to sign an executive order to pause data center developments.
“A lot of data centers are being built in Georgia because of the incentives that have been attached to those data centers,” she told CBS. “So, of course we’re going to have to take a look at what those agreements entail and determine what our remedies are to enact that pause.
“I don’t think we’re going to get a lot of pushback across the state,” Bottoms said. “Many local governments have already taken that first step.”
Tech companies have begun reacting to the midterm election results. Meta President Dina Powell McCormick told the Wall Street Journal at an event on Wednesday that building data centers will become harder.
Still, McCormick noted that some elected governors who ran on data centers might be open to negotiating with them.
“We did have a governor that won last night who did make data centers a big part of the platform, say ‘As soon as we get past the inauguration, let’s meet because we don’t want to lose this investment in our town. We don’t want these jobs to go elsewhere,’” she said.
She also said she expected more reviews on new projects.
“What I mean by that is to start new data center build-outs today in the United States will be very challenging,” she said, adding that the company will have an easier time expanding its existing data centers.
McCormick also said that hyperscalers will start to look abroad to build data centers.
DATA CENTERS ON TRACK TO GO 1-40 ON BALLOT MEASURES IN SIGN OF BACKLASH
OpenAI also announced a new framework on Thursday as part of a response to public backlash over its development.
It released the National Community Compact and a Compute Campus Policy Blueprint, assuring the AI company will pay for the electricity it uses, protect local resources, prioritize a closed-loop water system, and advertise job opportunities and work with unions to provide training for employment on the campuses.
Dan Diorio, executive vice president of State Policy & Government Affairs at the Data Center Coalition, told the Washington Examiner in a statement that data centers can play a key role in creating jobs, increasing local tax revenue, and investing in local communities.
“We will continue to engage with residents and local leaders to understand community priorities and ensure that the growth of digital infrastructure delivers clear benefits that communities across the nation are seeking,” he said.
Continue reading...
[ H/T Washington Examiner ]
