For several years, data center construction was one of the brightest spots in the U.S. construction industry — a seemingly bottomless pipeline of large-scale projects driven by cloud computing and artificial intelligence investment that showed no signs of slowing. That narrative is now more complicated. More than 100 local governments across the United States have enacted moratoriums on data center construction in the past year, and a detailed industry analysis found that at least $64 billion in U.S. data center projects have been blocked or delayed by local, bipartisan opposition, per the Data Center Watch report.

The pattern has escalated to the point that the Associated General Contractors of America used its April 2026 construction employment analysis to sound a direct alarm: "The more communities do to restrict construction of data centers, the more likely future construction growth will be dampened or even decline," AGC CEO Jeffrey Shoaf said in the May 8, 2026 release.

The Scale of the Opposition Movement

The Data Center Watch report found at least 142 activist groups across 24 states actively organizing to block data center construction. The opposition is ideologically diverse — spanning rural communities in Republican-leaning counties and progressive urban neighborhoods — because the concerns driving it are primarily local rather than partisan. Common objections include:

• Higher electricity costs passed to ratepayers
• Water consumption for cooling systems
• Noise from cooling equipment operating 24 hours a day
• Reduced property values near industrial facilities
• Loss of green space or agricultural land

Polling cited by MultiState Associates found that while most people are not strongly opposed to data centers in general, a majority would oppose a project built within three miles of their home — explaining why local opposition has been so much more effective than statewide moratorium efforts. Of 11 states where statewide moratorium bills were introduced in 2026, none passed as of mid-May. But local action has been decisive in dozens of jurisdictions.

Local Government Action: From Moratoriums to Outright Bans

The range of local government responses has escalated from temporary construction pauses to permanent prohibitions. In February 2026, Pemberton Township, New Jersey became the first municipality in the state to ban data centers outright, adopting an ordinance prohibiting the construction and operation of facilities capable of using 20 megawatts or more of electricity, per Troutman Pepper's May 2026 analysis.

In Oldham County, Kentucky, a developer that had already submitted land use permit applications for a 100-megawatt data center facility abandoned the project after the county imposed an indefinite moratorium, per the same analysis. The moratorium's removal of an exemption for applications already in the queue made the project economically unviable to continue pursuing.

New Orleans and Chandler, Arizona have also passed temporary construction pauses, per MultiState Associates — examples from politically distinct communities illustrating the geographic breadth of the movement. A May 2026 MultiState legislative guide noted that while state-level moratoriums have faced significant resistance, local government action has become a "significant battleground" reshaping the data center development landscape.

The Construction Industry's Employment Stake

Why does data center opposition matter to the broader construction industry? Because data center construction has become one of the primary drivers of nonresidential construction employment. Nonresidential specialty trade contractors added 57,700 jobs over the 12 months ending April 2026, with the AGC specifically identifying data center demand as the primary engine, per the May 8 AGC analysis. Each large-scale data center campus typically employs hundreds to several thousand construction workers over a multi-year build cycle — electricians, mechanical contractors, ironworkers, concrete crews, and building envelope specialists.

Data center projects also tend to pay above-market wages because of the technical complexity of their systems — particularly the dense electrical distribution, precision cooling, and high-specification structural requirements of hyperscale facilities. Average hourly earnings in construction reached $38.73 in April 2026, running 20.2 percent above private sector averages, per the AGC, in part because of the premium paid for data center specialists.

Power, Water, and the Infrastructure Equation

The community concerns driving opposition are not without basis. A single large hyperscale data center can consume 50 to 200 megawatts of electricity continuously — enough to power tens of thousands of homes — requiring new transmission infrastructure, substation upgrades, and sometimes new power generation capacity. Water-cooled facilities consume millions of gallons annually for evaporative cooling. These infrastructure requirements create genuine costs for local utilities and municipal systems that frequently are not fully borne by developers.

Troutman Pepper's analysis notes that states are grappling with how to balance the economic development benefits — tax revenue, construction jobs, permanent operations employment — against infrastructure burdens and community quality-of-life impacts. Some states, like Indiana, have offered generous tax incentives to attract data centers; others are now reconsidering those incentive structures as construction costs soar and community opposition grows, per the MultiState 2026 guide.

The Industry's Path Forward

Several strategies are emerging among developers attempting to navigate community opposition. Earlier and more substantive community engagement — not just public hearings but sustained dialogue about power supply plans, water use, noise mitigation, and local hiring commitments — appears to be reducing friction in some markets. Site selection criteria increasingly include not just power availability and fiber connectivity but community receptivity and local regulatory stability.

The AGC and other industry groups are also beginning to engage more systematically at the local government level to educate policymakers about the employment and tax revenue implications of data center projects before moratoriums are enacted. The framing — that data centers are a primary engine of construction employment growth, not merely a technology amenity — is gaining traction in some jurisdictions but has not reversed the overall trend toward more restrictive local regulation.

For the construction industry, the message from the data is clear: the sector's recent growth story has been significantly powered by a single project type that is now facing organized, effective opposition in communities across the country. How developers, utilities, and local governments resolve that tension will shape the nonresidential construction pipeline for years to come.

Sources

Data Center Watch — $64 Billion of U.S. Data Center Projects Blocked or Delayed (April 2025)
Associated General Contractors of America — Construction Employment Rises By 9,000 In April (May 8, 2026)
Troutman Pepper — Policymakers Consider Temporary Pause on AI Data Center Construction (May 14, 2026)
MultiState Associates — Local Data Center Regulations Gain Ground as State Bills Falter (March 2026)
MultiState Associates — State Data Center Policy 101: 2026 Legislative Guide (May 2026)