Jennifer Huddleston and Christopher Gardner
A new anti-data-center push seems to be uniting the left and the right, with critics ranging from Sen. Bernie Sanders and Rep. Frank Pallone to Sen. Josh Hawley and Rep. Nancy Mace calling for some form of federal limitation on data center construction. As with any expansion, there are legitimate policy conversations to have about resource use and other underlying issues. However, a moratorium on the construction of a particular kind of facility based on arbitrary ceilings when demand is growing is a misguided policy sledgehammer that could not only derail critical innovation but also fail to resolve the underlying policy issues.
Data centers aren’t new, but the rising backlash and policy proposals to ban construction come at a critical time for innovation. The need for data centers should not be seen as an either/or but rather as an opportunity to consider better solutions to policy questions around resource use and other related issues facing the communities where they are built. If we aren’t careful, bad policies like data center construction moratoriums and outdated energy policy could backfire — not only on progress in artificial intelligence, but also on a range of current and future technologies, including cloud computing and quantum computing.
The Rise of Data Center Construction Moratorium Policy and Its Problems
The most concrete federal effort to block data center construction is the AI Data Center Moratorium Act. Proposed by Senator Bernie Sanders on March 25, 2026, this Act would halt construction of new or existing data centers until a comprehensive federal AI regulatory framework is enacted. In the months since, the Overton window has shifted, with both the public and policymakers seemingly expressing a desire to pause construction of critical infrastructure for current and emerging technology demands.
The federal government is not alone. As of the end of June 2026, 116 municipalities have imposed local moratoriums. At the state level, California, Minnesota, Montana, and Kansas have all passed legislation that either incentivizes or disincentivizes data center construction in their states. These are in addition to the countless AI bills proposed in state legislatures across the country.
Unsurprisingly, states and localities have been and will continue to both restrict and enable datacenter construction for the foreseeable future.
Responding to Critics’ Common Concerns
Senator Sanders justified his bill by arguing two main points common among data center critics. His first claim is that AI is advancing too quickly and that Congress is moving too slowly. Because of this, Congress needs a data center moratorium to give it time to catch up with the technology. His second claim is that data centers pose environmental and economic risks to their locality by raising utility rates and consumption.
The data on data centers, however, do not bear out these claims. Data centers are needed to meet increasing demands beyond just AI, including the volume of connected devices and data Americans use regularly. Our capacity needs have expanded with AI, but demand had been growing even before AI’s exponential leaps. Data centers are critical to AI and the progress it enables across a variety of areas. AI products power not only the direct-to-consumer chatbots many have come to rely on to improve access to information but also an array of products that can improve health, enhance cybersecurity, or support responses to natural disasters. All of this is to say AI’s benefits are far from merely ephemeral.
When it comes to concerns about energy usage or utility rates, there are better solutions than the moratorium sledgehammer, and the data indicate such claims are vastly overblown. Multiple studies have found that while energy rates have increased, it’s far from clear that data centers are to blame. In fact, one study even found a connection between lower retail energy rates and data centers.
The reality is that energy policy keeps the grid and our energy supply outdated, which can increase costs. A better solution is to pursue energy policy reform, as our colleague Travis Fisher has written, to enable greater energy abundance and innovation.
Similarly, water usage in some regions of the country is a legitimate debate. But it is a problem that is far broader than just data centers. In aggregate, golf courses use significantly more water than data centers but rarely face the same kind of backlash.
Why The Backlash Could Backfire
The reality is that technological advancement is overwhelmingly a force for good. Some communities don’t want a new data center, while others may embrace the millions in tax revenue and hundreds of high-paying jobs that come with it. Individual communities are best positioned to know the specific trade-offs they face with any large investment, as they have been for decades.
Data centers date back about 70 years to when IBM was building them to support the cutting-edge technology of the day: mainframe computers. The type of data centers we think of today can trace back over 25 years. Cities and regions like Loudon County, Virginia, have worked with communities and companies to find a balance that enables infrastructure investments that provide economic opportunities and development while responding to community-specific concerns. More recently, however, these debates have spiraled from the typical debates over new construction or development to something much more heated.
The backlash against datacenters and AI has, at times, mushroomed into irrationality and violence. On April 10, 2026, a Molotov cocktail was thrown at Sam Altman’s home. Two days later, the same home was struck by gunfire from a vehicle. In 2025, a 25-year-old was arrested and charged with an act of terrorism for his plan to burn down xAI’s Memphis Colossus datacenter. These are paired with shootings at the homes of local councilmembers, physical confrontations at town meetings, and death threats against county commissioners.
This is particularly concerning, given the often-overlooked benefits of data centers. One study estimated that data center construction could create 4.7 million construction and skilled trade jobs in the United States. Many skilled trade jobs last beyond the initial construction, given the increased need for HVAC technicians and electricians, among other jobs, to support the center’s operation.
For users, there is a growing demand for less latency and more storage. The downside is that without the necessary infrastructure to support the demands of modern startups, it grows more difficult to start the next great company in a garage. This could also mean that those needing this level of access to develop cutting-edge AI applications must migrate to regions that provide the necessary data center infrastructure to support it.
This is in part why a federal moratorium would be particularly concerning. Companies and talent need to know they will not face unnecessary roadblocks from the government, particularly for capital-intensive investments. Given the global nature of AI competition, preventing such a critical buildout could hinder the US’s global competitiveness.
Conclusion
The debate over data centers has now jumped from a local issue to a national one. While the debate over AI policy should largely be a federal issue given its interstate nature, the issue of data centers is much more local and intrastate.
This should be concerning not only for its impact on infrastructure but also because a federal data center moratorium would represent an extraordinary reach by the federal government into hyper-local decisions about the development of individual plots of land across the country. Giving the federal government power over such a hyper-local issue might not be limited to data center construction and could spill over into an array of issues.
The goal should be to have a market that allows capital investment to increase supply and meet growing demands. Whether it’s moratoriums that stop needed development or artificial inducements that could result in overbuilding or cronyism, state and federal government intrusion makes finding the actual correct balance more difficult for the local communities most directly impacted.
Banning data centers comes at a critical moment for AI. But they will impact much more, including not only the storage and speed we’ve come to expect in the cloud era, but also the advancements needed for the next generation of technology, such as quantum computing. The underlying concerns driving data center bans can be addressed with far better policy approaches that allow innovation while actually solving long-standing issues. Moratoriums on data center construction both fail to solve the concerns about resource usage and delay critical and potentially life-saving progress.
