Commentary: Gov. Scott’s misguided data-center veto
Vermont Governor Phil Scott vetoed H.727, a bill aimed at implementing strict regulatory parameters for large-scale data centers to mitigate their financial and environmental impacts. Despite strong legislative support, the House failed to override the veto, allowing the bill to die. The proposed legislation would have required data centers to undergo comprehensive Act 250 environmental reviews and ensure ratepayers were protected from increased electricity costs.
State Representative Kathleen James, D-Manchester, chair of the House Energy and Digital Infrastructure Committee, criticized Governor Phil Scott's May 28 veto of H.727. The bill, which aimed to protect Vermonters from the "negative financial and environmental impacts of future large-scale AI data centers," failed to become law after a House vote to override the veto on May 29 fell short of the two-thirds threshold. The vote was 83-52, with all Democrats, Independents, and Progressives supporting the override, and Republicans opposing, reversing their previous support for the bill after the governor's veto.
H.727 would have mandated strict regulatory parameters for data centers 20MW or larger, requiring them to undergo the full Act 250 permitting process. This would have included analysis of impacts on air and water quality, water supplies, noise, and consistency with municipal plans. Additionally, the bill required large-scale data centers to sign a 10-year utility contract, reviewed by the Public Utility Commission, to ensure electric ratepayers would not face higher bills and would potentially benefit, with provisions for on-site renewable power and annual payments to help Vermonters reduce fossil fuel use.
Rep. James argued that the bill was a proactive measure to address concerns about data centers driving up electricity costs, draining water supplies, and contributing to air and noise pollution, citing examples of issues seen across the country. The bill had received overwhelming, near-unanimous support from both the House and Senate before the governor's veto. Governor Scott's veto letter expressed concern about the "broader message" H.727 might send, but Rep. James countered that the veto sends a message that regulatory protection for large-scale data centers can wait. The right-wing organization Americans for Prosperity applauded the veto, stating that "Data centers are not a threat."