Gov. Janet Mills on Friday vetoed a bill that would have made Maine the first state in the country to enact a temporary ban on new data center development.

The bill, LD 307, would have prevented the state, local governments and quasi-governmental agencies from issuing permits or other approvals for new data centers until November 2027, while a new Data Center Coordination Council studied the projects’ potential impacts in Maine.

Mills’ veto comes after lawmakers shot down an amendment that would have allowed for a data center proposed at the former Androscoggin Mill in Jay. The governor had pushed for that amendment, arguing that the project could bring significant economic benefits to the town. The developer behind the Jay site said the moratorium brought about by the bill would effectively kill his plan.

Without a moratorium, a handful of projects that emerged in the past year appear ready to move forward. That includes the Jay site and another data center proposed for Sanford.

In her announcement, Mills specifically called out the Jay project as a key reason for her decision. She added that she would have signed the bill if lawmakers had approved an exemption.

“A moratorium is appropriate given the impacts of massive data centers in other states on the environment and on electricity rates,” Mills wrote to the Legislature. “But the final version of this bill fails to allow for a specific project in the Town of Jay that enjoys strong local support from its host community and region.”

Rep. Melanie Sachs, D-Freeport, who sponsored the bill, said Mills was “resisting the will of a majority of Maine people” with her veto.

“While a veto might protect the proposed data center project in Jay, it poses significant potential consequences for all ratepayers, our electric grid, our environment, and our shared energy future,” Sachs said in an emailed statement. “This decision is simply wrong.”

The bill could still become law if approved by a two-thirds majority of both the House and the Senate. But when the bill was passed this month, it fell short of that threshold in both chambers: the House voted 79-62 to enact, and the Senate 21-13.

Lawmakers are poised to take up vetoes next week.

JAY MOVING FORWARD

Tony McDonald, the owner of the Jay project, was thankful to hear the news when informed of Mills’ veto by a reporter Friday afternoon.

“It means we can move ahead,” he said. “It means we’re alive.”

With the veto, his team can begin demolition to usher in the new project starting the second week of July, he said.

“Gov. Mills was one of the few people in Augusta that took the time to actually listen to the facts and understand the facts, whereas a lot of the politicians were just hysterical about concerns over the effect of data centers that simply were not factual and not applicable,” McDonald said.

Randy Gibbs, lead developer behind the Sanford project did not return requests for comment Friday afternoon.

Mills’ decision comes after Franklin County leaders urged her to veto the measure in a pair of letters last week. They said the project would carry significant economic benefits for Jay, which has struggled since the closure of the Androscoggin Mill — the site McDonald is planning to convert.

Tom Saviello, a Franklin County commissioner and the mill’s former environmental manager, said it “took great courage” for the governor to veto the bill.

“She didn’t forget her roots in Franklin County, and she didn’t forget the people in Jay,” he said on a call. “It’s a terrible analogy, but it’s true: (the mill) gets to rise from the ashes again. This puts Franklin County back on the map.”

CRITICS CONDEMN VETO

Seth Berry, executive director of Our Power, sharply criticized Mills’ move in a written statement Friday. The group, which pushes for energy independence in Maine, led an online petition effort that generated more than 6,800 letters to elected officials, he said.

“In Our Power’s five years, we’ve never before seen an issue with such strong and bipartisan support as the data center moratorium,” Berry said.

Maureen Drouin, executive director of Maine Conservation Voters, said Mills had sided with large data center developers over the will of her own constituents.

“Maine had a chance to push pause and establish the right regulatory framework to protect its people, their wallets, and the environment from polluting, resource-hungry data centers,” Drouin said in an emailed statement. “This veto flies in the face of that responsibility and the bipartisan will of the Maine Legislature.”

THE NATIONAL PICTURE

Had Mills signed LD 307, it would have marked the first statewide restriction on data center development in the nation — though municipalities across the country, including Bangor, have pursued similar bans at the local level.

In the days after its passage in the Legislature, the bill garnered international media attention.

Though data centers — facilities that house computers to store data and run online applications and services, including artificial intelligence — have existed for decades, they have taken on new significance in light of the AI boom.

Last month, weeks after Maine lawmakers began mulling a moratorium, U.S. Sen. Bernie Sanders of Vermont and Rep. Alexandria Ocasio-Cortez of New York introduced a bill that would pause data center development nationally. The bill is unlikely to advance in either chamber, The Associated Press reported.

The U.S. Department of Energy has forecasted that data centers could consume more than one-ninth of the country’s total electricity usage by 2028.

But projects across the country have faced local pushback. Some, like proposals in Lewiston and Wiscasset, have been shot down or otherwise fizzled out.

And others have run into another roadblock: shortages of the electrical equipment needed to power them. This month, Bloomberg reported that nearly half of American data center projects slated for this year could be delayed or canceled.

Despite the veto, Mills said she plans to issue an executive order to create a commission studying the impact of data centers in Maine. Such a commission was also part of the bill.

“Given the serious conversations about data centers here and around the country, I believe this work should commence without delay,” she wrote.

Mills also announced that she signed into law LD 713, which will bar data center projects from being eligible for the state’s business equipment tax exemption or the Dirigo business incentive program. Those programs reduce the amount of property and state taxes businesses need to pay.