Big Tech wants to build more AI data centres across America. Why local communities are pushing back against the costs of the AI revolution

The growth of America’s AI sector is facing a problem that no innovation in chips or faster computers can overcome – the approval of locals. In various cities in the US, people are raising issues related to the location of large-scale data centres, the amount of electricity and water required by these facilities, and the value of the economic contribution compared to their resource consumption. In many cases, local authorities react to such problems with a temporary suspension of new facilities and efforts to develop regulations for the rapidly developing industry, reported Forbes.

A recent case is Raleigh, North Carolina, where the council approved a moratorium on approvals for large data centres on October 6 by a 7-to-1 vote. This temporary measure is meant to allow officials time to evaluate impacts on adjacent properties and local resources, but not to ban the business outright.

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This isn’t an isolated issue. The National Conference of State Legislatures found that 16 state legislatures were contemplating a data centre moratorium or ban in September.

According to a report by Forbes about the emerging battle between AI and local governance, the issue is not just the degree to which the residents agree with AI. Towns and cities are expected to take tough decisions regarding the distribution of power, water, land, and investments in AI projects without having the right knowledge.

For an industry that is trying hard to establish the infrastructure for AI and cloud computing, it is turning out to be a practical challenge.

Why cities are pressing pause on the AI building boom

An extensive data centre cannot be considered a typical commercial project. In addition to the building and land, a large-scale data centre may demand considerable amounts of electricity, cooling solutions, backup power, fibre optic connections, as well as infrastructure upgrades.

However, each of these components can relate to a different governmental or utility organisation. Still, the combined impact can come from the same community, forcing local policymakers to analyse a project with costs and benefits distributed across various systems.

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According to the Forbes article, Ilissa Miller, CEO of iMiller Public Relations, claims that local communities require an enhanced approach to analysing these projects. Moreover, Ilissa Miller chairs the Digital Infrastructure Framework Committee of the OIX Association, which works on guidelines that will help local communities understand the technology of the data centres and evaluate each particular project.

It is important to distinguish between moratoriums and outright bans on projects.

Moratoriums can give sufficient time to the authorities to figure out what information they have to gather from the developers as well as how they should assess the infrastructure and construction site requirements.

Otherwise, they risk basing their decisions on comparisons between different projects without understanding whether a developer's promises to have minimum water needs and constant energy supplies mean anything without specifics about the cooling system, the need for electricity and local resource availability.

What is needed is not stopping the process of construction per se but establishing the rules to allow authorities to differentiate between those projects which are manageable for the community and those which can cause it some expenses.

Court battles are adding another hurdle for data centre developers

However, local opposition is not confined to community meetings and planning disputes anymore. Lawsuits on environmental issues have become another source of uncertainty for corporations constructing AI infrastructure.

According to Forbes, a potential Google data centre project in Pine Island, Minnesota, was met with a lawsuit from the Minnesota Centre for Environmental Advocacy. The court imposed a temporary restraining order against the construction and pre-construction work until the validity of the city’s environmental assessment is questioned.

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In Mississippi, the NAACP filed a lawsuit against xAI for using gas turbines to operate its Colossus data centres in the Memphis region, claiming a violation of federal laws regarding clean air. Even though the issues differ from each other, they provide examples of the influence of environmental permitting on the development process.

Delays can result in increased costs and even doubt over the viability of developing a site. Even with land availability and electrical power, a site may be very hard to develop if the approvals are subject to persistent litigation.

Moreover, according to Forbes, there is a more widespread issue. This issue includes fragmentation within the regulatory environment where various rules in different states and municipalities make planning more complicated, though more regulation would only delay the process.

Communities want a say in what the AI boom leaves behind

It is not just an issue of regulation. It is also an issue of whether the residents feel that there is sufficient information provided to them to make a decision and whether their community will see sustainable benefit.

As mentioned in Forbes, some technology firms are now abandoning non-disclosure clauses when negotiating with government bodies. Matt Garman, Amazon Web Services chief executive, stated that the firm was no longer engaging in non-disclosure clauses with government bodies for its projects.

In addition, Amazon has promised several-year investment in priorities like education, job training and water and energy conservation in the communities where it runs data centres.

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Transparency will assist the residents in understanding the proposal, but it won’t solve the question of electricity requirements, water usage, noise or other costs of local infrastructure.

Forbes cites instances of data centres leveraging their waste heat for use by adjacent buildings and reusing old industrial sites. Such an approach means that developers could plan for local benefit, as opposed to assuming that employment and tax revenues would always outweigh the demands of such facilities.

This is why a moratorium could mean more than mere political rhetoric.

According to the data centre FAQs on the city of Raleigh website, the six-month moratorium will give the city enough time to come up with regulations, and the city intends to work towards creating permanent regulations before the expiry of the moratorium on April 6, 2027.

The success of the moratorium will hinge on the ability of the officials to formulate standards in regard to power, water, environment, and public engagement. Just as Forbes posits, not all data centres are suited to every location.

However, the rejection of development altogether could mean rejecting suitable projects in terms of industrial sites or local benefits.

America's Artificial Intelligence revolution will need increased computing infrastructure. The challenge now lies in whether cities can plan ahead of public opposition, infrastructure challenges, and court disputes.