Maine Governor Janet Mills vetoed legislation on Friday that would have imposed a moratorium on new data centers in the state until November 2027, a measure aimed at addressing concerns linked to the rapid growth of the artificial intelligence sector. The bill, which would have made Maine the first state in the nation to enact such a pause, stalled after Mills declined to approve it, citing its failure to exempt a specific planned data center project in Jay, Maine.

Mills, a Democrat who is seeking a U.S. Senate seat, expressed support for the idea of a moratorium in principle due to the negative impacts seen in other states. However, she opposed the legislation because it offered no exceptions for the data center planned on the site of a closed paper mill in Jay. The facility had shut down in 2023, causing significant economic hardship to the town and its surrounding area. In explaining her veto, Mills emphasized her personal connection to Jay, noting the mill’s historical importance to the community and working families.

Prior to vetoing the bill, Mills requested that the Democratic-led Legislature create an exemption for the Jay project, but lawmakers rejected the proposal. Following her veto, the governor announced plans to issue an executive order to establish a council tasked with studying the impacts of data centers in Maine. This body would undertake a review similar to what the moratorium legislation had envisioned, aiming to evaluate potential effects on the environment, energy costs, and community wellbeing.

In a separate move, Mills signed legislation prohibiting data center projects from receiving incentives through Maine’s business development tax programs, signaling a more cautious approach toward the industry.

The moratorium effort in Maine emerged amid growing resistance in several states against the proliferation of data centers, which are critical to artificial intelligence operations but raise concerns over environmental impact and increased energy consumption. States such as New York, Minnesota, and Michigan have considered similar measures, reflecting mounting public unease about AI technologies.

Proponents of the bill argued that the pause would provide time for a comprehensive study led by a diverse group including environmental experts, utility officials, and tribal representatives. They stressed the need to develop regulations to mitigate adverse outcomes before allowing more data centers to come online. Opponents, including some Republican lawmakers, questioned the necessity of new restrictions, arguing that existing regulations were sufficient and emphasizing the economic benefits data centers could bring.

Katrina Smith, assistant minority leader in the Maine House, criticized the moratorium for potentially hindering job creation and economic growth. Meanwhile, local officials in Franklin County, where Jay is located, urged Mills to veto the bill, asserting that the proposed data center would utilize existing infrastructure at the former mill site and would not carry the same risks as larger projects elsewhere.

The contentious debate reflects broader national tensions between economic development and the desire to carefully manage the environmental and social costs associated with the expanding AI infrastructure industry.