Opposition to AI data centers in the midterms foreshadows tougher regulations ahead
Data center regulation itself was not on most midterm ballots, but hard-line stances against the server warehouses were woven into the platforms of Democrats who upended longtime Republican control of the governorships in Texas, Ohio and Georgia, all data center hot spots.
Harrisburg, Pennsylvania (AP) — The recent midterms saw a surge in Democrats promising stricter regulations on AI data centers, suggesting more stringent rules could be on the horizon, despite President Donald Trump's ongoing support for the industry. While data center regulation wasn't a major issue on the ballot, many candidates took a hard stance against them, incorporating it into their campaign platforms.
In Texas, a Democrat's pledge to oppose data center development was a key factor in his election, as ranchers raised concerns about the impact on their dwindling water supplies. AdImpact data shows campaigns spent over $380 million on ads mentioning data centers, with Democrats outspending Republicans by nearly three-to-one. Democrats' sweeping wins resulted in control of Congress and several state governments, many of which are data center hotspots.
A majority of victorious candidates expressed support for stronger regulation or a moratorium on data centers. Wisconsin's newly elected governor, David Crowley, initially opposed a moratorium but later stated his support for one, along with other measures like disclosing water and energy consumption. OpenAI, an AI giant, published a framework advocating for clear rules to ensure responsible investment and broad sharing of AI infrastructure benefits.
The Data Center Coalition echoed the sentiment, cautioning that stricter regulations could have consequences like reduced tax revenue for host communities. The election of data center skeptics adds challenges to the AI-driven stock market, with the Nasdaq dropping 11% below its all-time high amid concerns over potential construction slowdowns due to rising borrowing costs.
Morgan Stanley warned that decisive Democratic results may lead to stricter data center restrictions, potentially fragmenting the country into areas open to new centers and those without. Texas' election of Democrat Gina Hinojosa as governor and Ohio's selection of Democrat Amy Acton are particularly significant, as both have pledged to block data center projects unless they meet certain standards. Voter referendums in multiple states overwhelmingly approved restrictions on data centers.
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