‘we Don’t Need 50 More Data Centers.’ Arizona Ag Declares War On Ai.

Arizona leaders want the state to be a high-tech hub for making semiconductors, clean energy components and artificial intelligence software.

But the desert state’s water shortage is pushing some officials to propose tempering its soaring growth in data centers — a move that could test Arizona’s aspirations of becoming a technological superpower.

The state’s attorney general, Democrat Kris Mayes, insisted to the POLITICO Energy podcast that there’s no contradiction in pursuing a tech boom while also preventing Arizona’s water from falling victim to it.

“You can be a tech hub and not build data centers,” Mayes said. “Anybody who lives in Arizona — and this is why this issue polls the way it polls — knows that we don't have the water for it.”

That backlash may fuel the first Democratic takeover of the state House in six decades, positioning the legislature to pass laws taming data center expansion — or potentially even a moratorium like the one Mayes has promoted.

It’s also revealing disagreements among Democrats. Gov. Katie Hobbs has rejected the idea of temporarily banning data centers, saying instead that she wants to find the “right balance.”

Mayes’ stance reflects the public’s souring opinion toward the facilities. A POLITICO poll in July found that 41% of respondents would oppose a data center being built within three miles of their home, up from 28% in January.

It wasn’t long ago that Arizona invited AI investment with tax breaks. Then the backlash came, prompting new laws to halt those incentives. While Mayes has called for a moratorium on new builds, Hobbs and Phoenix Mayor Kate Gallego — both Democrats — have opposed measures going that far.

Mayes, who is running for reelection next week, said Arizona can continue to pursue a tech-driven economy without courting data centers. She pointed to a $265 billion facility built by Taiwan Semiconductor Manufacturing in Phoenix — whose products may well be destined for data centers — as the type of project that she said can create more jobs than AI computing hubs.

“We don't need fifty more data centers in the state of Arizona, and according to my staff's research, that's what's on the books right now,” she said.

Polls suggest Mayes is leading her Republican opponent, Senate President Warren Petersen, ahead of the Nov. 3 election.

Water consumption is front and center in Arizona’s debate over data centers. Mayes has also challenged utilities’ plans to raise electricity rates, saying tech companies should cover the costs of their power consumption. Then there’s the community impacts, with residents showing up to town halls in tears because data centers popped up seemingly overnight.

“I would call on the industry to have some common sense and some humanity, quite frankly,” Mayes said.

The pushback comes as states across the country struggle to balance adding new power supplies to meet surging demand — much of it driven by data centers and large manufacturing facilities — while limiting consumer costs.

Mayes, a former chair of the Arizona Corporation Commission, said utility regulators should err on the side of consumers. As attorney general, she opposed efforts by Tucson Electric Power and Arizona Public Service to raise electricity rates by up to 13% and 14%, respectively, to recover capital spending. Those expenses, she said, largely came from supplying data centers with power, adding that customers should not have to shoulder the costs of utilities that are “doing fine” financially.

“There should be not one single power plant transmission line, substation, or distribution line that is subsidized by consumers, and those should be paid for by the out-of-state billionaires that are bringing the data centers into Arizona,” she said.

But Mayes acknowledged the limits of her power to block data centers. She’s pursued nuisance lawsuits against projects that disrupt quality of life through noise pollution or operations that raise temperatures in already sweltering neighborhoods.

Blanket policies would be better, Mayes said. She has used her office to crack down on illegal groundwater pumping to prevent depleting aquifers, which can take decades to refill because of persistent drought. But those are one-off battles — just like her cases against data centers.

Mayes said she is optimistic Democrats would pass legislation to constrain data center development and protect groundwater if the party can flip the Arizona House of Representatives for the first time since 1964.

“If that were to happen, you're definitely gonna see efforts to curtail data centers,” she said. “I can't underscore for you how passionately people in Arizona feel about this and how aware Arizonans are about our water situation.”

That water situation is coming to a head.

Arizona gets much of its water from the Colorado River, which has dwindled due to population growth, climate change and drought. Arizona and its downstream neighbors Nevada and California have been unable to strike a deal with upstream states — Utah, Colorado, Wyoming and New Mexico — for sharing those flows. If left unaddressed, a water shortage would require Arizona to take the steepest cut under a 1922 compact.

Mayes said Arizona is gearing up for a lawsuit with the upstream states because of the impasse. The state on Wednesday joined a lawsuit filed by Nevada over the Trump administration’s plan for managing the river.

“It would be better if we could all come to an agreement. That would be the preferred outcome here,” she said. “But yeah, we're headed toward a standoff basically in front of the Supreme Court.”