Data centers have gained significant attention in the United States due to their rapid expansion, driven by the artificial intelligence boom. As a result, many residents and local officials in communities near data centers have expressed concerns about the strain on the local electricity grid and depletion of clean water sources.
These concerns also include frustration with nuisances such as heat and noise, as well as skepticism about the promised jobs and economic benefits to the community. Despite the benefits of data centers, which facilitate daily activities like texting, emailing, and using generative AI tools, the communities hosting them may bear a disproportionate share of the burden.
Data Center Development and Community Impact
A Showcase CLE program at the American Bar Association Business Law Section’s upcoming Fall Meeting in Chicago will address these issues. The program, titled “Data Centers: Issues of National Infrastructure, State Investment, and Local Sustainability,” will explore the working thesis that durable data center development should preserve meaningful self-determination for host communities.
Through conversations with panelists and members of the Section’s Community Economic Development Committee, the program aims to help conscientious business lawyers engaged in data center development manifest this principle in contracts, processes, and community engagement. This approach is particularly relevant today, as conversations around data centers continue to evolve.
For instance, northern Virginia, the world’s largest data center market, has seen significant growth due to its retail sales-and-use tax exemption. However, a recent Virginia appellate court ruling voided the rezoning approvals for a major data center project, citing defective public notice. This decision has raised questions about the future of data center development in the region.
Regulatory Environment and Future Uncertainties
Texas, another incentive-driven market, has responded to popular opposition by auditing certain projects and making information about power and water demand, as well as measures to reduce neighborhood impact, available to the public. Meanwhile, questions persist about how the Trump administration’s energy policy will coexist with data centers’ increasing demand for power.
Other uncertainties include the potential impact of technological advances or changes in data consumption patterns on the need for large data center facilities. The Showcase Program will bring together a leading professor, a data center developer executive, and lawyers with deep knowledge from various perspectives to discuss these issues and explore how to support host-community agency by considering various factors and concerns.
The panel will examine the legal and political considerations shaping data center development, including tax incentives and financing, and discuss how business lawyers can help catalyze host communities’ meaningful exercise of self-determination. The program aims to provide concrete takeaways for lawyers in different roles and generate lively conversations about the future of data center development.
Practical Applications and Takeaways
The program will offer a unique opportunity for lawyers, developers, and community advocates to come together and explore ways to balance the benefits and burdens of data center development.