How Governments in the U.S. and Europe Are Stalling the AI Buildout

In 2023, New York Governor Kathy Hochul stood in front of cameras and announced a temporary ban on new data centers that would draw power from the state’s grid. “Truly threatening to outpace our grid’s capacity, and they drive up costs for local ratepayers,” she said. “And I refuse to let those costs be passed on to New Yorkers who already paid too much for their utility bills.” New York was the first U.S. state to issue such a moratorium. It is far from the only government pushing back. Across the U.S. and Europe, a coalition of local lawmakers, residents, and national regulators is slowing the construction of the data centers that underpin the artificial intelligence boom — and the conflict is creating a new front in the debate over how fast AI should be allowed to grow.

The Local Divide: Supportive Governments, Skeptical Voters

The pushback is not uniform. A clear distinction has emerged between local governments and the voters they represent. Many municipal governments are eager to attract data centers because of the tax revenue they generate. Loudoun County, Virginia, for example, has publicly credited the data center boom with strengthening its finances and funding public infrastructure and schools. These governments often update zoning codes and pass laws specifically designed to make their communities attractive to developers.