US Cities and States Impose Moratoriums on AI Data Centers
Local and state governments across the US are banning or pausing data center construction over concerns regarding water scarcity, grid stability, and environmental impacts.
A wave of local and state governments across the United States has implemented bans or moratoriums on hyperscale data centers to combat the environmental and economic strain of the AI boom. Approximately 500 communities have taken action, citing concerns over noise pollution, water depletion, and electricity costs. In Pennsylvania, the state House passed HB2496 to establish a six-month moratorium, while Governor Josh Shapiro issued an executive order restricting development and requiring local approval. Similarly, over 30 local governments in North Carolina, including Charlotte, imposed temporary pauses between February and July 2026.
In Texas, where nearly 2,000 projects await grid connection, Governor Greg Abbott reversed his previous support for the industry, urging developers to provide their own power generation to prevent grid instability. In California, Monterey Park became the first U.S. city to permanently ban data centers via ballot measure, while the state legislature sent seven regulatory bills to Governor Gavin Newsom. In the Midwest, governors in Nebraska and Illinois have rescinded tax incentives for these facilities.
Federal policy diverges from local trends. President Donald Trump signed executive orders to accelerate permitting and repurpose federal lands in Kentucky and Nevada for data center use, warning that opposing neighborhoods will become backward and poor. Meanwhile, OpenAI identified a China-origin group posing as Americans to generate online criticism of U.S. data centers, suggesting a foreign effort to slow American AI infrastructure development.
