AI data center developers begin suing local jurisdictions behind bans and moratoriums — claims range from officials exceeding authority to violations of due process and equal protection laws

A few AI data center developers have started suing local governments after the latter either denied their application or passed laws that banned or put a moratorium on such developments. According to Bloomberg Law, some of the lawsuits alleged that officials exceeded their authority in banning data centers, while others say that their right to due process and equal protection has been violated by these moratoriums.

“If people just start to say ‘no, we’re never approving data centers anymore,’ especially in locations where they are needed and available, that’s going to be a problem,” John Crossley of K&L Gates LLP told the outlet. One example of this lawsuit is in Hill County, Texas, which was the first county in the Lone Star State to pass a one-year data center ban. The developer sued the local government, alleging that it did not have the authority to pass a ban. This resulted in the rescinding of the law a week after the case was filed, after which the case was dismissed. Texas Gov. Greg Abbott recently passed a moratorium on data center approvals, but it’s unclear if this project is affected or if other affected developers will sue the state government.

We see another case like this where a cryptocurrency mining operation sued Hawkins, Tennessee for banning data centers. It said that its right to due process and equal protection is being violated by the move, even as the county said that developments like this “sap valuable natural resources while spewing both environmental and noise pollution.” Hawkins County lawyers wrote, “In short, data centers take a lot more than they give in a place like Hawkins County.”

While many AI data center developers argue that they bring in significant benefits to the communities they enter, like tax revenue, construction jobs, and more, it’s widely reported that these projects have placed an unnecessary burden on the residents who live nearby. While Virginia has now required data centers to pay for all dedicated upstream electrical infrastructure that they need, it has only arrived after electricity prices in the PJM Interconnection region already have risen precipitously by as much as 76%.

Multiple Meta data centers have also caused water issues in various regions — from low pressure and muddied water supply to contaminating a city’s water system. Elon Musk’s Colossus data centers are also facing allegations of air pollution, although it has since promised to remove its 69 unpermitted power generators after an on-site 1.2GW power plant has replaced them. One data center in Michigan is also facing a lawsuit for emitting a loud, distressing noise 24/7, with residents saying that “It sounds like someone set up a vacuum, like in your living room.

Even an Amazon data center, which finally received its approval after years of processing and has begun construction recently, is in the middle of a controversy as residents alleged that they only knew about the project after the workers started pouring in the site. One Pennsylvania town offered a solution that protected both its people while allowing a data center project to proceed — it gave 43 specific demands that covered everything from noise, light, and air pollution concerns to water and power use, land use, taxes, and even the decommissioning of the data center. Unfortunately, the developer called these demands “too difficult,” which the council slammed as “approval by tantrum.”

These aren’t isolated reports and have been happening all over the country. This is probably the reason why even the Trump Administration, which has an aggressive AI policy, has made AI hyperscalers, state governors, utility providers, and data center operators agree to the “ratepayer protection pledge” and promise that they will “pay their own way” when it comes to their required infrastructure.

The negative news surrounding data center developments has definitely made it harder for projects like these to get off the ground without opposition. Data centers need to win the approval of their neighbors if they want to get their projects running quickly, but this has gotten exponentially difficult, especially with all the negative publicity that all the other sites have generated.