The legislature of Maine made a big mistake on April 14 by passing legislation to institute a statewide moratorium on large-scale data centers.
Under the legislation, the moratorium would last until November 2027. Gov. Janet Mills (D-ME) has until Friday to veto the legislation or sign it into law.
Voters in Maine are concerned about the effect of data centers on residential electricity prices. The state faces some of the highest electricity rates in the country, but green policies are far more responsible than data centers for Maine’s high electricity prices. Democratic politicians have blocked the construction of natural gas pipelines into Maine and the other New England states. Now, Maine politicians are using data centers to obfuscate the real reason for high electricity prices.
Unfortunately for the country, at least 12 other states are considering moratoriums on data center construction.
Moratoriums are bad for state and local economies, and they harm national security. The United States is in an existential battle with China across many economic and political domains, including data centers, which are essential for the rapid development of the artificial intelligence revolution. AI has already jump-started domestic productivity growth, and AI supremacy is essential to American national security.
Today, data centers are not a luxury. They are core infrastructure, as essential to the modern economy as railroads were in the 19th century or highways in the 20th century. Blocking their development risks undermining economic growth, weakening national competitiveness, and distorting energy policy.
The most immediate problem with banning data centers is economic. These facilities bring substantial capital investment, often measured in the billions of dollars per project. Companies such as Amazon Web Services, Microsoft, and Meta are investing billions of dollars in building out computing infrastructure to meet surging demand for AI and digital services. When a state blocks these projects, it is effectively turning away investment, tax revenue, and high-paying jobs. Geographies that embrace data centers attract capital investment and entrepreneurial activity.
The rise of AI and cloud computing allows businesses across sectors to operate more efficiently, reduce costs, and innovate. Limiting access to computing infrastructure raises the cost of these technologies and slows their adoption. In practice, this means lower productivity growth, weaker business formation, and slower wage gains. States that ban data centers risk falling behind those that embrace them, creating a widening economic divide.
Energy concerns are often cited as the primary justification for restricting data centers. It is true that these facilities consume large amounts of electricity. But banning them is the wrong solution to what is fundamentally a supply problem. Electricity demand is rising not only because of data centers, but also due to the electrification of transportation, manufacturing, and heating. The rational response is to increase power generation capacity, not to suppress demand. Importantly, companies such as Amazon, Alphabet, Meta, and Microsoft are willing to build data centers with dedicated electricity supplies.
Data centers can improve the economics of the power grid. Large, sophisticated operators often enter into long-term power purchase agreements, providing utilities with stable demand and revenue streams that justify new investment in generation.
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At their core, bans on data centers reflect a broader misunderstanding of economic development. Growth requires infrastructure, and infrastructure requires investment and energy. Attempting to halt one of the fastest-growing forms of infrastructure in the modern economy will not stop demand for digital services. It will simply push investment to other states or countries.
States that choose restriction over expansion are not protecting their citizens. They are choosing stagnation over growth.
James Rogan is a former U.S. foreign service officer who later worked in law and finance for more than 30 years. Today, he writes a daily note on markets, economics, politics, and social issues.