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Data Centres: Boom and Backlash
6MAY

Twinsburg and Ypsilanti use utility hookup denial

4 min read
13:52UTC

Twinsburg, Ohio passed a one-year data-centre ban unanimously; Ypsilanti's utility authority blocked water and sewage hookups for twelve months; Vermont's S.205 would freeze AI data centres until July 2030.

IndustryDeveloping
Key takeaway

Service denial is faster, narrower, and harder to challenge than zoning; if it survives test, it spreads.

Twinsburg, Ohio passed a unanimous one-year data-centre construction ban this week. Ypsilanti, Michigan's utility authority instructed water and sewage staff to refuse new connections for industrial data-centre projects for 12 months, a separate legal mechanism from a zoning moratorium and one without an established challenge pathway, because the authority is not granting or refusing a planning permit; it is simply declining to extend a service. Good Jobs First counts at least 12 US states with active moratorium bills filed in the 2026 session, and dozens of municipalities now moving local construction pauses on the same template language . Vermont's S.205 would freeze AI data centres until July 2030, the longest moratorium proposed in any US state.

The template repetition matters. Good Jobs First's tracker shows shared bill text appearing across at least a dozen state filings, which suggests coordinated drafting by a community-rights network rather than uncorrelated local opposition. Capstone DC's late-2025 client notes had flagged this jurisdictional fragmentation risk and forecast state-bill failure rates above 75 per cent, on the working assumption that governors would consistently kill the statewide versions. Mills's Maine veto held that pattern, and the muni-tier filings document the consequence rather than a substitute.

Ypsilanti's utility-authority pathway carries the heaviest weight of the three. A planning moratorium can be challenged at the state Land Use Court or its equivalent; a service-denial decision sits inside utility law and faces only the much narrower test of whether the authority acted within its enabling statute. If Ypsilanti's denial survives the first legal challenge, the model spreads to every municipal water board, sewer commission, and electric co-op in the country that is sitting on a pending data-centre interconnection request. That is several thousand decision-makers, none of whom face an executive-veto pen.

Deep Analysis

In plain English

Two small US cities took a more direct approach to slowing data centre growth than passing moratorium laws: they used their control over local water and sewage services. Twinsburg in Ohio banned new construction outright for a year. Ypsilanti in Michigan told its water authority not to connect any new large industrial buildings for 12 months. Because these cities run their own water systems, they can refuse connections without needing to go through the same planning process that developers usually contest in court. This is harder to overturn than a normal planning refusal. Vermont separately proposed a freeze that would last until mid-2030, the longest proposed in any US state so far.

Deep Analysis
Root Causes

Both cities invoked service-denial powers specifically because data centre water consumption, at 1.5-2.5 million litres per day on a typical hyperscale site, exceeds what their municipal water systems can absorb without major infrastructure investment.

A 100 MW hyperscale campus using evaporative cooling draws roughly 1.5-2.5 million litres per day, which is comparable to the daily water consumption of 15,000-25,000 residential households. Twinsburg (population approximately 19,000) and Ypsilanti (approximately 20,000) are small cities whose water systems were not designed to absorb that scale of industrial load without infrastructure upgrades.

The structural mechanism is a mismatch between the data centre industry's site-selection logic and the utility infrastructure of small and mid-size cities. CBRE and JLL data centre advisory reports from 2024-2025 show that developers expanded site searches beyond tier-1 markets precisely because those markets had congested grid queues; they found greenfield land in smaller cities whose utilities had no framework for evaluating water and power demands at hyperscale volumes.

Vermont's S.205 extending to July 2030 reflects a different structural logic: it is the first moratorium bill to explicitly tie its duration to a state-commissioned grid and water-impact study that must be completed before any new large approvals can proceed. That structure is more legally durable than a time-fixed freeze because it creates a conditional rather than a categorical prohibition.

What could happen next?
  • Precedent

    If Twinsburg's service-denial approach survives any legal challenge in the next 12 months, it will likely spread to the 50-plus other small US cities currently weighing data centre proposals where a municipal utility exists.

  • Risk

    Vermont's S.205 structure, moratorium conditional on completion of a grid and water study, is the most legally durable template yet proposed; if it passes, it creates a replicable model for states that have seen moratorium bills fail at the gubernatorial level.

First Reported In

Update #2 · Maine veto, Seattle freeze, $725bn capex

Good Jobs First· 6 May 2026
Read original
Different Perspectives
Global hyperscale operators
Global hyperscale operators
Operators are still filing gigawatt-scale campuses and Meta is proceeding with its $10bn Lebanon, Indiana site despite the county-level bans nearby, betting Q2 capex outruns the patchwork of restrictions. Industry framing casts New York's freeze, Oregon's surcharge and Indiana's bans as taxes and levies that push build-out toward faster-permitting jurisdictions such as India and the Gulf.
EirGrid
EirGrid
EirGrid set a 900 MW instantaneous demand-loss ceiling because a single voltage dip can trip many data centres onto backup power at once, risking imbalance above 1,150 MW. It wrote the limit into a standing procedure rather than waiting for an emergency to force one.
US host communities and ratepayers
US host communities and ratepayers
Prince William residents backed the 8-0 denial of Dulles South over the Occoquan watershed, drinking water for eight million people, while Oregon's approved tariff cuts residential bills 1.3% by charging large loads 29% more. Their position: consent and cost-attribution belong in law, not left to a developer's or a utility's discretion.
Hassan Allam Digital Infrastructure
Hassan Allam Digital Infrastructure
Hassan Allam Digital Infrastructure, an Egyptian conglomerate rather than a foreign hyperscaler, reportedly secured a domestic hyperscale licence with a $400m first phase, per single-source reporting still to be verified. It reads as home-grown sovereign compute ambition, building national capacity rather than importing a US or Gulf operator's campus.
Damac Digital
Damac Digital
Damac Digital keeps building toward roughly 6,000 megawatts of hyperscale capacity across 13 countries while Virginia taxes power and New York weighs a freeze. Every dollar or month of delay a US state adds is capacity a Gulf developer can site somewhere with faster permitting and no equivalent levy.
Acequia communities, Santa Fe County
Acequia communities, Santa Fe County
Santa Fe County commissioners voted unanimously on 2 July to freeze any data centre over one megawatt, citing the acequia irrigation commons that has shared scarce water since Spanish colonial rule. They expect the low threshold to draw the same Fifth Amendment challenge RCM Hill brought against Hill County, Texas.