US States Block AI Data Centers Amid Grid Concerns

A nationwide backlash against the rapid expansion of AI data centers has led to the blocking or delay of billions of dollars in infrastructure projects. Research from Data Center Watch indicates that local opposition disrupted 45 projects worth $68 billion in the second quarter of 2026, following a first quarter where 75 projects worth $130 billion were halted. Protests center on the depletion of water supplies, loss of farmland, and surging electricity bills for residents.

Donald Trump has dismissed this opposition as a "sick conspiracy," arguing that regulations hinder U.S. competition with China and that the industry is the "oil of the next 20, 25 years." However, several state leaders have moved to restrict development. California Governor Gavin Newsom signed seven bills shifting infrastructure costs to operators, while New York Governor Kathy Hochul ordered a one-year ban. In Texas, Governor Greg Abbott paused approvals for new centers drawing from the state power grid pending an audit by ERCOT.

Legislative efforts in Washington remain stalled. While the House passed the Ratepayer Protection Act to ensure tech companies pay for grid upgrades, the Senate has blocked the bill. House Speaker Mike Johnson expressed skepticism about immediate regulation, citing a lack of necessary information among lawmakers. Despite these hurdles, industry executives like CoreWeave CEO Michael Intrator maintain that global demand for compute will simply shift projects to different jurisdictions rather than stop them.