Vermont Governor Phil Scott vetoed H.727, the Vermont Sustainable Data Centers Act, on May 28, 2026, returning the bill unsigned to the General Assembly. The House attempted to override the veto the following day, May 29, but fell short at 83 yeas and 52 nays, with 90 votes needed. The override vote largely broke along party lines: all recorded nay votes came from Republicans, while Democrats and independents supported the override. In the weeks before the veto, the bill had passed the Senate 26 to 3 and cleared the House floor on a voice vote with no recorded opposition.
The bill would have created a new regulatory framework specifically for large data centers, defined as facilities using 20 megawatts (MW) or more of power. Under H.727, those facilities would have been required to sign utility contracts approved by the Public Utility Commission (PUC) designed to insulate other ratepayers from any infrastructure costs incurred to serve the data center. They would have been subject to Act 250 land use review, mandatory site suitability analyses, closed-loop cooling requirements to minimize water use, per- and polyfluoroalkyl substances (PFAS) discharge monitoring, and annual energy transformation payments equal to 60% of their electricity usage multiplied by Vermont's alternative compliance payment rate, as set out in the enrolled bill text.
Scott's Veto: Existing Law Is Sufficient, and the Broader Precedent Is Too Risky
Governor Scott's veto letter cited two main objections.
- Vermont already has the regulatory tools to address data center impacts through Act 250, PUC oversight, environmental permitting, and municipal zoning, and that layering a new dedicated framework on top of those tools was redundant and unnecessary.
- H.727's requirements, while nominally aimed at data centers, would create a precedent affecting other energy-intensive industries Vermont is actively trying to attract, including advanced manufacturing, semiconductor production, and clean energy technology.
"We cannot afford policies that risk driving current or future jobs and investment to other states," Scott wrote, adding that if the legislature wanted to revisit the issue, it should start from the less restrictive House version of the bill rather than the final enrolled text.
Supporters of the bill pushed back directly on the adequacy-of-existing-law argument. The Vermont Natural Resources Council pointed out that a single 20 MW facility, the minimum threshold under H.727, requires as much electricity as roughly 35,000 EVs, and that as of January 2026, Vermont had fewer than 21,000 EVs registered statewide. A single mid-sized data center could materially affect the state's peak demand, transmission planning, and electricity costs for existing ratepayers without any dedicated regulatory framework requiring it to bear those costs. The debate mirrors broader national concerns over whether utilities, residential customers, or hyperscale operators should bear the cost of transmission upgrades and generation additions needed to support AI-driven load growth.
Maine Lawmakers Sent a Moratorium to Their Governor. It Also Failed.
Vermont's outcome lands in the context of a broader New England debate that has been moving fast. Maine lawmakers approved legislation establishing an 18-month moratorium on any data center requiring more than 20 MW and sent it to Governor Janet Mills, who vetoed it on April 24, citing a carve-out dispute over a proposed $550 million project in the town of Jay. The Maine House attempted to override on April 29 but fell short at 72-65, well below the two-thirds threshold needed. With both efforts failing, Vermont and Maine continue relying primarily on existing permitting and utility oversight frameworks that were not designed with large AI data center loads in mind.
For facilities, energy, and procurement professionals tracking where data center regulatory frameworks are heading, the Vermont outcome is worth watching precisely because the bill failed despite extraordinary legislative support. The arguments Scott made, that economic competitiveness concerns outweigh ratepayer protection and that existing tools are adequate, are the same arguments playing out in statehouses across the country. Vermont's override failure shows how quickly legislative consensus can collapse when executive pressure arrives. The underlying tension between grid capacity, ratepayer cost exposure, and data center siting is not resolved. It is just deferred.
