Local Data Center Fights are Reshaping the Midterms-Here's How

Dow Jones09-08 13:00

Data center opposition is on the rise, with a patchwork of local moratoriums and rezoning fights popping up across the United States. As the midterm elections approach, that backlash could push the issue from local actions into federal policy.

Moratorium activity is increasingly concentrated in competitive House and Senate battlegrounds, most notably in Michigan and Ohio, according to a recent report from Raymond James Research. That is "raising the likelihood that local opposition influences campaign messaging and federal policy," researchers wrote.

President Donald Trump has reiterated his support for data center development even as support for the projects has waned among Republican voters.

More than 6 in 10 Republicans are either strongly or somewhat opposed to the construction of local data centers, a Gallup poll found. Opposition is even stronger among independents and Democrats-3 in 4 Democrats are against them.

Roughly 62% of the moratorium actions Raymond James tracked are in House districts won by Donald Trump in 2024, while 38% fall in districts won by Kamala Harris.

That sentiment has already reshaped political messaging from both parties. Since the start of the year, Republicans have shifted from celebrating data centers to emphasizing their drawbacks, according to a Washington Post analysis of politicians' social media posts. Democrats, who were already relatively negative, have focused even more heavily on data centers' downsides.

In Michigan, Democratic Senate nominee Abdul El-Sayed has proposed what he calls the "terms of engagement" for data centers-a sweeping proposal that would require data center developers to supply their own power and follow strict environmental and economic requirements. El-Sayed's campaign website says he intends to pass the proposal as federal law in the U.S. Senate.

It's a similar story in neighboring Ohio. Democratic Senate nominee Sherrod Brown ran an ad calling the incumbent Sen. Jon Husted the "face of data centers."

Brown's campaign website lists data centers as one his top issues-he will "require data centers to pay the full cost of their utilities so your bills don't go up."

In a private memo to top AI companies, the National Republican Senatorial Committee warned that backlash against U.S. data centers is threatening Husted's chances of winning.

The memo, first reported by Axios, describes data centers as "the anchor hanging around Husted's neck."

Husted said the memo was "a great wake-up call for the data centers that they have to do a better job" attracting public support in Ohio, the Canton Repository reported.

In July, Husted introduced the Ratepayer Protection Act to ensure American families and small businesses aren't left paying for the energy infrastructure needed to support new data centers. The bill was referred to the Committee on Energy and Natural Resources after its introduction, but has yet to receive a vote.

Big Tech companies and industry groups are spending millions of dollars on advertising across television, Facebook, and YouTube to try to generate support for data centers.

The Data Center Coalition, a prominent data center trade group which counts companies like Alphabet's Google, Microsoft, and Amazon among its members, has launched dozens of ads through its advertising arm, called America Connects.

America Connects spent nearly $1.2 million in 2024, the most recent year with available data, on videos, mailers, and other ads promoting the benefits of data centers, according to an Internal Revenue Service filing.

State-level offshoots of that national campaign have launched in at least eight different states, most since the start of the year. Together, they have spent roughly $580,000 on Facebook and Instagram advertisements.

Local residents have reacted with sharp criticism to these groups online, calling the advertisements "data center propaganda" and "total b*******."

Despite growing opposition, Trump has doubled down on his support of data centers.

"The only reason that communities throughout the U.S.A. should not want Data Centers is if they want to end up being backwards and poor," the president wrote in a social media post on Aug. 31. "If they want to be successful and rich, with far lower taxes and jobs all over the place, let Data Reign."

Whether other Republicans maintain their support of data centers depends on Husted's success in Ohio, the NRSC warns in its memo.

"If he loses and data centers get the blame, politicians across the country will take notice-and they will not go near the next one," the memo says. "This has become a sleeper issue for the entire election cycle."

What does this all mean for the future of the AI buildout? Not much, according to some experts.

Analysts at Evercore ISI wrote in a recent report that the congressional midterms are "mostly noise."

Data center backlash is a growing risk, but action is expected to remain on the state and local level for now, they wrote. The "issue has surfaced in races like Michigan and the Ohio Senate contests, but don't expect a 2027 legislative outcome at the federal level."

Others aren't so assured.

Raymond James sees a "conditional buildout" as most likely, with AI infrastructure expanding under a more expensive, regulated framework. Its bear case sees affordability driving stronger Democratic gains and tighter state and federal policies, including more moratoriums, permitting restrictions and mandates on costs or power.

For now, neither scenario is a foregone conclusion. The political backlash to data centers is real, but its impact on the broader AI buildout will depend largely on the extent to which it remains a local fight or becomes a national one.

 

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