The AI Boom and Its Impact on Data Center Expansion in the U.S.

Artificial intelligence development in the United States is paralleled by a surge in the construction of data centers. There are over 3,000 existing data centers in the U.S., with another 1,500 in development, according to Pew Research Center. Despite President Donald Trump’s promotion of AI as crucial for economic and national security, research reveals that 70% of Americans are against the construction of AI data centers in their communities, citing concerns like increased utility bills, pollution, noise, and loss of green space. These centers host servers that process data for models like ChatGPT, consuming significant water and electricity.

Opposition to the infrastructure related to these data centers is rising, especially the transmission lines required to power them, which often need to traverse private land. Companies resort to eminent domain when landowners refuse to sell. Eminent domain allows the government to seize private property without consent for “public use,” with “just compensation” given to landowners, as per the Fifth Amendment of the U.S. Constitution.

While the federal government holds the power to initiate eminent domain actions, these are mostly conducted by state and local governments. They can delegate this power to private entities like power and water companies. Each state has its own regulations governing the exercise of eminent domain by utilities. For instance, in Texas, a project must “serve the public” and not be solely for the builder’s exclusive use to qualify.

The Supreme Court’s interpretation of “public use” is broad. In the 2005 Kelo v. City of New London decision, economic development was considered valid public use, allowing the city to seize private homes for development around a Pfizer facility that never materialized. Following this decision and public backlash, 45 states enacted eminent domain reform laws. In addition, state supreme courts like those in Michigan, Ohio, and Oklahoma restrict eminent domain for private economic development.

Legal disputes concerning property seizure for transmission lines based on public use yield mixed results. South Dakota and Vermont supreme courts have upheld such seizures, validating improved energy supply and grid reliability as public use. However, the Mississippi Supreme Court rejected a similar action when the transmission line didn’t benefit Mississippi residents.

As data centers drive increased energy demand and strain infrastructure, land seizures to enhance grid reliability will likely be justified as public use, mainly when they aim to secure reliability for in-state customers. Nevertheless, the debate over whether these lines benefit in-state users might provide landowners grounds to challenge these actions.