Mayes Calls For Freeze On Data Centers

Attorney General Kris Mayes called for a statewide pause on new data center projects across Arizona on Monday — a move eliciting criticism from some in Arizona’s economic-development community.

The announcement, which follows the U.S. Department of Interior’s recent nearly 30% cut to the state’s Colorado River supply, highlights the rising tensions between Arizona officials, business leaders and the public over the impacts of Arizona’s latest tech industry trend.

“Arizona may be one of the most exposed states in the country to the negative impacts of excessive data center development,” Mayes said in an official statement. “The Colorado river is in serious distress, and Wall Street firms are seeking to ship La Paz County’s groundwater to Phoenix to fuel the Valley’s growth – against the wishes of the county’s residents and leaders. We owe it to our communities, homeowners, and future generations of Arizonans to better manage our water and power needs before any new data center approvals are issued.”

Just a year ago, a statewide moratorium in Arizona would have seemed outlandish.

In 2026, Atal Networks described Arizona as the “second-largest U.S. market for planned data center development,”citing a slew of incentives for businesses to build the energy-intensive structures such as tax incentives, low risk for natural disasters and fiber-optic infrastructure. In January, Jen Springman and William Beard of the Goldwater Institute, an Arizona-based conservative free-market think tank, described the state as a “hotbed” for large-scale infrastructure with a potential for 553% in increased energy capacity to meet the data center need, to roughly 5,340 megawatts.

Economic experts believed Arizona was prime real estate for industry growth, but the prospect of such large-scale infrastructure investment shook environmentalists and public officials concerned about the impact on residential energy bills, water supplies and uncontrolled development.

In March, Mayes’ office filed testimony opposing a 14% rate increase proposed by APS. In announcing Monday’s proposed pause, Mayes argued that the infrastructure needed to serve existing and planned data centers has driven rate increases.

She wasn’t alone. Protestors gathered en masse at the Arizona Corporation Commission in May to protest that same increase — a push largely dominated by concerns over data center costs.

But both the politicization of the issue and the involvement of the attorney general have caused confusion among economic officials.

“The attorney general is irrelevant to this story, basically. She’s just playing politics on a hot topic right now. They’re not equipped to make any comments about data centers and the economy,” said Jim Rounds, President of Rounds Consulting Group, an expert and frequent consultant in Arizona policy, in an interview with Arizona Globe.

Rounds says he has yet to see a concrete plan that strikes a balance on data center construction — inaction he largely attributes to politics.

“The people opining and making these decisions don’t understand how data centers will actually work within the economy,” Rounds said. “They don’t understand how it touches almost everything we do from when we wake up until we go to bed — whether you’re an individual or a business — and they don’t understand that it might be a good idea to put together a plan related to data centers.”

And public understanding of how data centers operate may play a larger role in public discourse than it first appears, with recent polling showing a 31 point increase in Arizonans approval of data centers once officials tell them that the facilities recycle the water they use—a common complaint listed directly in Mayes’ Monday announcement.

“It’s the idea that we’re making big decisions and we’re putting in no time thinking about it, and I know for a fact that they haven’t put in any time thinking about it,” Rounds said. “… All they have to do is analyze it. This wouldn’t be in my top 10 in terms of complexity for things this year. They just have to get it together.”

Whether or not the state can come to a concrete plan for data centers is even more relevant given the latest $18.3 billion state budget, a plan that fully implements President Donald Trump’s tax cuts, reducing state revenue while simultaneously placing a moratorium on data center tax credits, aiming to increase tax collections. Hobbs anticipated $57 million in savings from the tax moratorium.

“We have to figure out this balance, and right now I’m seeing very few people even trying to get the right folks together to find that balance. It is very frustrating, because we’re going to stand out as the state, once again, that is arguing about something that is so simple to analyze,” Rounds said.