In a small city in southern New Jersey, the AI boom hit a brick wall. On May 19, Millville’s Board of Commissioners voted to prohibit data centers in every zoning district, killing what would have been the largest such facility in the state: a 260,000-square-meter complex drawing 1.4 gigawatts of power.
The ordinance, which amends the city’s land-use code, defines data centers to cover cloud services, video streaming, blockchain and crypto mining, artificial intelligence and virtual reality — and bans them everywhere. Millville is the sixth municipality in New Jersey to adopt such a ban since February, according to local officials, and part of a wave of more than a dozen similar actions across the country.
Pemberton Township, in Burlington County, became the first New Jersey town to ban data centers outright in February. Since then, municipalities across Cumberland, Sussex, Gloucester, Salem, Burlington and Warren counties have moved to restrict or prohibit the facilities. Phillipsburg voted to ban them as a “proactive measure.” Harrison Township introduced an ordinance targeting AI data centers. Mannington Township confirmed them as prohibited uses in all zoning districts. Logan Township introduced its own measure.
The stated reasons vary, but the pattern is consistent: noise from cooling fans, water consumption, heat, and above all the strain on the electric grid. Data centers in the PJM region, which covers New Jersey and a dozen other states, accounted for more than 70% of the projected increase in electricity demand in recent capacity auctions. Utilities have warned that the facilities could require new transmission lines and power plants, and that the costs could land on household bills. In towns like Sayreville, residents have protested that their utility rates would rise to subsidize big tech companies’ computing needs.
New research has sharpened the concerns. A CNN analysis of University of Cambridge work found that AI data centers create heat islands that can raise surrounding land surface temperatures by as much as 16.4 degrees Fahrenheit and affect areas up to 6.2 miles away. Environmental groups, including the Sierra Club’s New Jersey chapter, have begun campaigning town by town for ordinances that require noise buffers of at least 1,000 feet and, in some recommendations, heat-island buffers several miles wide.
The Millville project that prompted the ban was a proposal to build a 1.4-gigawatt campus on roughly 260,000 square meters of land — a facility large enough to power hundreds of thousands of homes. The developer argued the project would bring jobs, tax revenue and investment to a city that has struggled economically. The commission heard those arguments and voted to prohibit the use anyway.
The developer declined to comment on next steps. Options include challenging the ordinance in court, where New Jersey courts have generally upheld municipal zoning authority, or taking the project elsewhere. The town’s decision was cheered by residents and environmental groups and criticized by business organizations that see the bans as a tax on the state’s economic future.
The bans are a growing problem for the companies building the infrastructure that AI depends on. Data-center developers, many backed by the largest cloud providers and AI labs, need sites with cheap power, water and fiber. They are finding that the communities most eager for investment are also the ones most suspicious of the facilities’ side effects.
New Jersey is a revealing case because it sits at the center of the AI buildout. The state has become a magnet for data-center development, drawn by proximity to New York’s financial industry, abundant fiber and available power. The same features that attract developers have put towns on alert. Zoning loopholes that let developers classify data centers as warehouses — a dodge that has let projects slip through redevelopment districts — are being closed, one ordinance at a time.
The backlash is reshaping where data centers get built. Developers are turning to rural counties, brownfield sites and states with permissive rules, and some are offering community-benefit packages — payments in lieu of taxes, local hiring commitments, even heat-recapture schemes for district heating. In New Jersey, several towns have said they would consider projects that meet stricter standards, suggesting the market may settle on negotiated deals rather than blanket bans.
The deeper question is whether local resistance becomes a real constraint on AI development. Industry executives argue that the compute buildout is too large to be stopped by zoning, and that power-constrained regions will simply lose projects to others. But the cumulative effect of a dozen bans, utility bottlenecks and transmission delays is already visible in development timelines, analysts said. The “not in my backyard” problem that has long plagued power plants, pipelines and transmission lines has arrived for data centers.
Millville’s vote was about one project in one city. But the ordinance is part of a pattern that spans states and sectors, and the AI industry is only beginning to grapple with it. The companies that need hundreds of new data centers are learning that the hardest approvals are not technical but political — and that in towns across America, the answer is increasingly no.
