Local opposition and permitting friction have abruptly stalled thousands of planned data center projects across multiple regions.

Americans’ growing opposition to the proliferation of data centers has prompted numerous politicians to restrict or halt their expansion entirely. Lawmakers in New York and Texas have effectively paused specific projects, while states like Pennsylvania have imposed stricter construction regulations. Nationwide support for data centers has declined sharply as critics increasingly link them to rising utility bills driven by extraordinary water and energy consumption in local communities.

In early August, Texas Republican Governor Greg Abbott announced a comprehensive moratorium on data center development as resident sentiment soured. Abbott framed the move as a protective measure for Texans. “My directive has halted up to 1,800 data center projects. I established guidelines & guardrails to protect Texas communities,” he wrote in a Wednesday social media post, adding that facilities must not divert water from local populations, strain the state’s energy grid, or otherwise disrupt neighborhoods. He specified that ✔️data centers must not take water needed by local communities, ✔️they must not take power needed by the Texas power grid, and ✔️they must lower the cost…

The moratorium elicited mixed reactions across sectors. Andrew Mahaleris, Abbott’s press secretary, told the Daily Caller News Foundation that the policy is effective. “The Governor established clear guidelines: Data centers must invest their own money, provide their own power, reuse their own water, ensure that the power grid is gaining power—not losing power because of their operations—and must not disturb neighborhoods,” Mahaleris said. “Data centers across the state have announced their full compliance with those standards, which provide guardrails that protect our communities.”

Conversely, industry leaders expressed concern. Brian Armstrong, co-founder and CEO of cryptocurrency exchange Coinbase, criticized the move on Thursday. “This is really unfortunate—I thought TX would be the last hold out against this ignorant thinking, and continue to be a place to build! Require them to bring their own power, and it’s a net positive all around,” Armstrong posted. Coinbase had reincorporated from Delaware to Texas in November 2025, with Armstrong previously praising the state’s pro-business culture and embrace of crypto. President Donald Trump also weighed in following reports of the moratorium. Speaking in a Punchbowl News interview published August 7, Trump called the decision a mistake. “I saw Texas the other day is sort of against data centers. I think it’s a mistake. I think they are tremendously important for the economics. This is, for Texas to say ‘no’ to data centers, is a mistake—in the sense that it could be bigger than oil. Data centers could be bigger than oil,” he said.

The economic and infrastructural implications of the pause are significant. According to the U.S. Energy Information Administration, Texas’s data center moratorium will likely cut the state’s electricity demand in half. This comes amid ongoing grid stability concerns; POLITICO’s E&E News reported that the Texas power grid suffered major outages during Winter Storm Uri in 2021, which killed more than 240 people. Reuters noted that many large data centers failed recent reliability tests, heightening outage risks. When facing electrical fluctuations, these facilities often disconnect from the grid to protect their hardware, a practice that frequently triggers dangerous surges of excess electricity. Abbott warned that the Texas energy grid was projected to require “five times the amount of power that we have available” due to data center expansion, telling The Center Square, “This simply is not going to work.” He further revealed that the Texas Public Utility Commission requested usage data from all operating and prospective facilities, receiving fewer than a 10 percent response rate.

Industry groups and major operators have responded by reaffirming their commitments. The Data Coalition, a trade association for data center companies, stated its members remain dedicated to “ensuring data centers are true partners in every Texas community where we operate, protecting residential ratepayers, strengthening grid reliability, and promoting responsible water stewardship,” according to The Center Square. Oracle, one of the state’s largest AI developers, echoed the same language regarding community partnership and infrastructure responsibility.

Beyond Texas, other states are enacting similar restrictions. New York became the first state to block construction on any data center project exceeding 50 megawatts, reportedly affecting at least 12 developments, according to TechCrunch. In Pennsylvania, Democratic Governor Josh Shapiro signed an executive order requiring AI companies to obtain state permits, pay for electricity costs, hire and train local workers, and protect the environment, according to a Tuesday press release. “My message to data center developers is clear: if you can’t agree to our strict requirements and get the community where you want to build to say ‘yes,’ you’re not going to have the Commonwealth’s support either,” Shapiro said. “These are some of the biggest companies in the world—they can afford to be good neighbors, follow the rules, and do this right.” He later emphasized via social media that the state would not allow developers to “bully my fellow Pennsylvanians” and insisted compliance with the nation’s strictest guardrails is mandatory for doing business in the state.

The regulatory pushback reflects a broader national trend. More than 530 American counties and municipalities have banned or restricted data center construction, according to a report by climate news outlet Heatmap. Multiple polls indicate bipartisan disapproval, with many politicians who once championed these facilities now reversing course after facing constituent backlash. An August Heatmap survey conducted by Embold Research found that approximately 75 percent of registered American voters strongly or somewhat oppose data center construction near their neighborhoods, while only 15 percent express approval. Robinson Meyer, founding executive editor of Heatmap, noted the speed of this shift: “It’s a faster and deeper shift in American public opinion than I would have once thought possible on any issue.”