Data centers become a political flashpoint after midterms, putting AI industry on notice

HOBART, Ind. - The message from voters was hard for the data center industry to ignore: communities want a say in what gets built in their backyards — and they're increasingly demanding answers before those projects move forward.

Data center debate 

The backstory:

President Donald Trump has been one of the biggest supporters of the data center boom, arguing these facilities will bring jobs, investment and economic prosperity to communities across the country. 

On August 31, in a post on Truth Social, Trump said in part, "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. If they want to be successful and rich, with far lower taxes and jobs all over the place, let data reign."

"You have to convince your community how great these things," said Trump. "You can't fight it. You have to go with it. And you're going to make a tremendous amount of money. You're going to reduce taxes."

But that message hasn't necessarily resonated with residents who are worried about the potential consequences of these massive developments.

And those concerns became a political talking point during the midterm elections.

The Associated Press reports Democrats who campaigned on tighter restrictions on data centers made significant gains in several key gubernatorial races, including Texas, Ohio, Georgia, Nevada and Iowa.

In fact, 32 of the 34 winning gubernatorial candidates in races where AP called a winner supported stronger regulations or restrictions on data centers. Twelve supported outright bans or moratoriums.

At the local level, the opposition was even more pronounced.

An analysis by Redbud Consulting found voters approved restrictions in 44 of 45 completed local data center referendum elections across the country.

And the opposition wasn't confined to one political party or one part of the country.

The AP Voter Poll found roughly three-quarters of Americans opposed building a new data center in their community.

For Wannie Park, founder and CEO of Pado AI, an energy orchestration software company that works with data centers, this backlash has been building for some time.

"I think the dynamics of growth sometimes, which is what we're kind of going through, is oftentimes full brute force without thoughtfulness and good planning," said Park. "And I think with that, what you have is sort of what we have now, which is the backlash, right? Moratoriums and just people saying like, 'hey, let's take a breath here and figure out what's the right way to deploy this stuff.'"

Park says the issue has become increasingly bipartisan, as residents question whether the economic benefits promised by developers are actually materializing.

"People are saying, well, like, 'hey, I'm not getting what I thought I was getting' or ‘the economic development is not there’ or 'you're using up and polluting all our water' or ‘my rates are going up.’ Like all those types of things started to trickle in," said Park.

Hobart meetings on data centers 

In northwest Indiana, Fox Chicago has reported increasingly heated public meetings in Hobart over proposed data center developments, with some residents even being removed after voicing their opposition.

And the concerns being raised locally mirror what is happening across the country.

On Fox News, Compass Data Centers CEO Chris Crosby acknowledged that not every developer has done a good job addressing those concerns.

"I think it's fair. Their questions are real. Not everybody who develops and owns data centers does a good job of it. And, you know, there is a bar that needs to be raised," said Crosby.

He says developers need to be more transparent, pay their own way when it comes to electricity and provide tangible benefits to the communities where they operate.

Park agrees the industry needs a different approach.

And he takes issue with the idea that opposing data center development means someone doesn't understand the importance of artificial intelligence.

"I think that's just the wrong position, right?"

Park argues the industry has been operating inefficiently, with opportunities to get more out of existing facilities rather than simply building more.

He says older data centers could be repurposed, potentially reducing the need for some of the massive new construction projects being proposed.

And he pushes back against the argument that slowing development automatically means America will fall behind China in the AI race.

"I don't think it's that dire. Sometimes the industry kind of speaks to it like it's a binary. We have to build, build, or we're going to fall behind China or whatever. We're not going to lead. It's not that dire," said Park. 

What's next:

Instead, Park says the next phase should focus on making better use of existing infrastructure and proving that these projects produce meaningful benefits.

He also believes the political backlash is already affecting the industry's bottom line, with stricter regulations and uncertainty making investors and lenders more cautious about financing new developments.