Utah Data Center Fight Draws Spy Claims as States Weigh Bans

Utah political consultants Gabi Finlayson and Jackie Morgan were driving through a canyon last week when their phones lit up with messages warning them about a Fox News segment. Kevin O’Leary, the investor from Shark Tank, had claimed their firm, Elevate Strategies, along with the nonprofit Alliance for a Better Utah, operated as cells linked to the Chinese Communist Party. O’Leary said his team traced the connection through IP addresses while promoting a 40,000-acre data center project that the groups have opposed.

Finlayson and Morgan described the accusation as baseless and timed to discredit local resistance. Elizabeth Hutchings of Alliance for a Better Utah told Fox News she would likely earn far more if she were actually on a foreign payroll. The project in question, backed by O’Leary’s Stratos venture, would require enormous amounts of land and power in a state already weighing the trade-offs of rapid tech expansion.

The episode sits inside a wider pattern. At least 11 states have considered restrictions on large data centers this year, and Maine’s governor recently vetoed what would have been the first statewide ban. Senators Bernie Sanders and Alexandria Ocasio-Cortez have introduced federal legislation to pause new construction nationwide. Sponsors cite rising electricity demand, water use, and strain on local grids. More than 300 related bills have appeared in state legislatures, and local opposition has already delayed or blocked projects worth over $160 billion since 2024.

Data centers are not unregulated. They fall under federal environmental statutes and face state-level rules on energy efficiency and grid cost allocation. Several states have created special rate classes for large users. In March, seven major tech companies signed a pledge under the Trump administration not to pass higher electricity costs onto households, committing instead to fund new generation or efficiency measures.

Still, the scale of projected demand creates real friction. Training and running advanced AI models requires clusters of servers that consume power at levels comparable to small cities. Communities asked to host these facilities often face questions about long-term reliability of the grid, property values, and whether promised jobs will materialize beyond construction. Blanket moratoriums, however, risk slowing the infrastructure that underpins both commercial AI and government computing needs.

O’Leary’s public charge against the Utah opponents illustrates how quickly local land-use disputes can be reframed as national-security threats. The tactic echoes earlier efforts to delegitimize environmental or ratepayer concerns by associating them with foreign adversaries. Finlayson noted that she and her colleagues simply do not expect to be labeled as operating against U.S. interests for participating in routine permitting debates.

Policy responses so far have focused more on cost allocation than outright prohibition. States are experimenting with requirements that hyperscale users pay for transmission upgrades and with incentives for co-locating renewable generation. These approaches attempt to capture the benefits of expanded computing capacity while limiting spillover costs to existing ratepayers.

The Utah episode shows how personal attacks can crowd out those narrower, technical arguments. As demand for data centers continues to rise, the more durable questions concern which regulatory tools best balance local impacts against broader technological and economic goals.