Vermont Blocks AI Data Center Bill
Governor returns measure unsigned, warning it could undermine economic competitiveness.
June 1, 2026 – Vermont's governor vetoed a bill Thursday that would have imposed new regulations on AI data centers, citing unacceptable risks to the state's economic competitiveness.
Gov. Phil Scott, R-Vermont, returned H. 727, titled an act relating to sustainable data center deployment, unsigned, saying the state already has adequate oversight tools in place.
“We cannot afford policies that risk driving current or future jobs and investment to other states, when we already have regulations and policies in place to address our concerns about data centers,” Scott said explaining his veto to the General Assembly.
Scott pointed to Vermont's Act 250 process, Public Utility Commission oversight, environmental permitting requirements, energy siting rules, and municipal zoning as existing mechanisms he said render the bill unnecessary.
The veto came even though no data center is currently proposed or planned for Vermont. Lawmakers who backed the measure said its goal was to ensure any future facilities are properly sited, that electric ratepayers are protected from excessive costs, and that adequate environmental safeguards are in place.
Scott also warned the bill's reach extended beyond data centers and into industries the state actively relies on for employment, including advanced manufacturing, semiconductor manufacturing, and clean energy technology.
The governor left open the possibility of future legislation, but urged lawmakers to return with a narrower bill more closely resembling the House-passed version, with further changes to prevent unintended economic consequences.
The veto comes as states across the country clash over how to manage the AI data center boom, which has hardened into a defining political issue of 2026, with communities pushing back over energy costs, water use, and local infrastructure strain.
