Data Center Boom Turns Into a Growing Legal Battlefield
Goldlaner.com – As artificial intelligence drives an unprecedented push to build data centers, the projects are becoming harder to approve and increasingly expensive to defend. The expansion has brought a surge of investment, construction activity and demand for electricity, but it has also created fierce resistance in communities that worry about noise, water use, power demand and changing property values.
For lawyers, the conflict has opened a rapidly growing specialty. Land-use attorneys, environmental litigators, energy lawyers and class-action firms are all finding new work as data center developers face more organized opposition from residents, advocacy groups and local governments.
Jason Morris, a land-use attorney in the Phoenix area, has seen the shift firsthand. For years, his work involved helping housing, office and industrial developers navigate zoning requirements and neighborhood opposition. Data center clients appeared only occasionally, and their projects were generally viewed as easy approvals because the facilities resembled office buildings and generated limited vehicle traffic.
That calculation has changed. The Phoenix region developed into a major data center market supporting the AI buildout, and the local debate has become far more contentious. Morris now devotes roughly 70% of his practice to data center matters, compared with about 10% previously.
“These cases are my single most difficult. Every legal tool is being used,” he said.
From welcome development to contested infrastructure
Data centers once fit comfortably into many cities’ economic-development strategies. They can represent substantial capital investment while producing relatively little day-to-day traffic. Yet the newest hyperscale facilities, built to support AI computing, are substantially larger than earlier generations of data centers and require vast quantities of electricity and water.
That scale has forced local officials to consider more complicated tradeoffs. Communities may weigh potential tax revenue and construction activity against concerns involving utility systems, environmental effects and the daily impact on nearby residents. The disputes now routinely show up in local meetings, social media discussions and political advertising.
More than 300 jurisdictions across 44 states have adopted data-center moratoriums. Those restrictions have helped make permitting, land-use disputes and regulatory challenges central parts of the development process.
Morris represents developers, operators and technology companies in conflicts involving noise, water consumption and permits. His work includes defending projects in court as well as working with regulators during the approval process. The obstacles can arise long before a facility opens, particularly when a proposal requires local officials to address power, water, zoning or environmental concerns.
Law firms build specialized practices
The legal complexity surrounding digital infrastructure has prompted prominent firms to market dedicated services to data center clients. Latham & Watkins, Perkins Coie and WilmerHale are among the firms highlighting their capabilities in this area. Companies are also competing for partners with experience in the sector.
“When you start to see law firms large and small putting data centers on their websites, it tells you everything you need to know about the potential for business,” Morris said.
Many larger firms have created digital-infrastructure or data-center teams that combine lawyers from real estate, energy and regulatory practices. A Bloomberg Law survey released in June found that about one-third of large law firms had a practice group or team focused on data centers.
Energy expertise has become especially valuable because the facilities’ power requirements can be enormous. Tyler O’Connor, an energy litigator at Crowell & Moring in Washington, DC, advises developers on infrastructure and energy-compliance issues. He said the rapid data center buildout has become a defining influence on energy-related legal work.
During the Biden administration, clean-energy development was a major focus across the energy sector. O’Connor said data centers have more recently overtaken that work as the dominant force reshaping the field.
“Even when we’re not working for those clients, almost all of the work we do now is informed by the emergence of data centers,” he said.
Neighbors turn to nuisance claims
The expansion has also drawn the attention of plaintiffs’ attorneys. Lawyers who handle mass torts and other large-scale claims are offering assistance to people living near data centers and are bringing class-action cases against operators.
Laura Sheets, a Detroit attorney, recently filed one of the first nuisance lawsuits in the country targeting a data center operator in Michigan. She said residents began reaching out as more facilities appeared in their communities.
“When these facilities started popping up everywhere, we were contacted by people who were upset,” said Sheets.
Sheets has filed four nuisance complaints involving data centers in four states and is preparing additional cases. The lawsuits contend that ongoing sound from cooling equipment and power generators materially disrupts neighboring residents’ use and enjoyment of their property. That disruption is a key legal test in private-nuisance claims.
The complaints also argue that nearby data centers reduce property values. Such cases follow a familiar approach used in litigation involving large industrial operations, though the technology at issue is different. Michael Pollack, a Cardozo School of Law professor whose work focuses on land-use law, said courts are likely to rely on established environmental and land-use principles when evaluating data center disputes.
A fight with broader economic consequences
The legal conflict reaches beyond individual sites. Data center construction has become an important force in the broader economy, attracting trillions of dollars in investment and supporting a major wave of development tied to AI. Delays, moratoriums and lawsuits could affect where facilities are built and how quickly companies can expand computing capacity.
At the same time, the disputes show that data centers are no longer treated as invisible pieces of the digital economy. Their physical footprint is increasingly central to public debate. Residents are pressing for limits and accountability, while developers are seeking predictable rules for projects that often require years of planning and extensive infrastructure coordination.
Some of the legal demand could eventually fade if court challenges substantially slow development and the industry pursues federal legislation that would limit the ability of municipalities to block new construction. For now, however, each proposed facility can create another high-stakes contest involving local control, infrastructure needs and the future of AI-driven growth.
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