Maine Governor Vetoes Data Center Moratorium, Citing $550M AI Project

Maine Governor Janet Mills has vetoed legislation that would be the first in the U.S. to impose a temporary moratorium at the state level on large-scale data center projects amid rising concerns over power demand and grid impacts tied to AI infrastructure.

In a letter to lawmakers, Mills said she supports the intent behind L.D. 307 — including a pause on new data center approvals and the creation of a state-level coordination council — but rejected the bill because it failed to carve out an exemption for a $550 million project planned at the former Androscoggin Mill site in Jay.

“A moratorium is appropriate given the impacts of massive data centers in other states on the environment and on electricity rates,” Mills wrote. “But the final version of this bill fails to allow for a specific project in the Town of Jay that enjoys strong local support.”

The proposed legislation would have halted state and municipal permitting for data centers with loads of 20 megawatts or more through November 2027, reflecting a broader push among policymakers to study how surging demand from artificial intelligence workloads could strain power grids and raise costs for ratepayers.

Mills’ veto instead clears the path — at least for now — for the Jay redevelopment project, which is expected to create more than 800 construction jobs and at least 100 permanent positions. The site, a former paper mill that shut down in 2023 following the departure of Pixelle Specialty Solutions, once accounted for roughly 22% of the town’s tax base.

The governor framed the project as a rare opportunity to repurpose existing industrial infrastructure — including power, water and buildings — into a new form of energy-intensive compute, potentially mitigating some of the environmental and grid concerns raised by critics of greenfield data center developments.

At the same time, Mills signaled that scrutiny of the sector is far from over. She said she plans to issue an executive order establishing a council to study the impacts of data centers across Maine, including electricity demand, environmental effects, and siting considerations, as AI adoption accelerates.

The decision mirrors a broader national debate, where states and grid operators are grappling with a wave of large-load interconnection requests tied to hyperscale data centers. In regions like PJM and ERCOT, regulators have begun revisiting rules around how such facilities connect to the grid and who bears the cost of infrastructure upgrades, amid concerns that rapid load growth could outpace transmission capacity.