April 24 (UPI) — Maine Gov. Janet Mills on Friday vetoed a bill that would have paused artificial intelligence data center construction in the state for 18 months.

Mills said she decided to veto it because it would have potentially harmed a permitted and in progress data center expected to create hundreds of jobs, both for construction and once the center opens.

The project, a $550 million data center in Jay, Maine, is a multi-year effort to redevelop the former Androscoggin Mill, which was damaged in a 2020 boiler explosion and then closed in 2023, took with it hundreds of jobs and 22% of the town’s tax revenue.

The bill would have been the first in the country restricting or slowing the spread of large-scale data centers required for power-hungry AI systems, which have driven up the cost of both electricity and water for residents living near them, NBC News and Politico reported.

“A moratorium is appropriate given the impacts of massive data centers in other states on the environment and electricity rates,” Mills said in a press release.

“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,” she said.

There are more than 5,000 data centers in the United States — more than any country in the world — and that number has grown significantly in the last four years as artificial intelligence has become a focus the tech industry.

While many state and local leaders have started to respond to concerns among residents about the huge amounts of electricity needed to power AI data centers and the huge amounts of water needed to keep them cool, as have some members of Congress.

As states have contemplated increased regulation and scrutiny from tech and AI companies, President Donald Trump at the same time has worked to keep the cuffs of tech companies because they “must be free to innovate without cumbersome regulation,” he said in December.

“Excessive state regulation thwarts this imperative,” Trump said in an executive order meant to prevent states from creating new regulations.

Mills said she worked with Maine’s legislature to carve out an exemption for the data center in Jay but was unsuccessful, so she vetoed the law.

The development in Jay, she said, is under contract and permitted, and is expected to create 800 construction jobs, more than 100 high-paying permanent jobs and “substantial tax revenue” for the Town of Jay.

In a letter informing the legislature that she planned to veto the bill, Mills said she plans to issue an executive order to establish a council to study the impacts — real and potential — of data centers in Maine.

“I believe it necessary and important to examine and plan for the potential impacts of large-scale data centers in Maine, as the use of artificial intelligence becomes more widespread,” Mills said.

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