The rush to build data center infrastructure for artificial intelligence is colliding with a growing data center backlash in the United States. Between 2023 and 2025, more than $64 billion in U.S. data center projects stalled. Of this total, $18 billion was permanently blocked, while $46 billion faced major delays driven by organized local opposition. What was once an invisible infrastructure sector has become a political flashpoint. In states such as Virginia and Georgia, voters have unseated sitting officials who supported large-scale data center expansion. At the same time, residents from Arizona to Indiana are forming increasingly coordinated campaigns to stop projects in their communities.
This backlash cuts across traditional political lines. Around 55 percent of opposing officials identify as Republicans, while 45 percent are Democrats. These figures challenge the assumption that data center development enjoys broad bipartisan support as an unquestioned economic good.
Why Communities Are Pushing Back
The opposition reflects more than simple Not-In-My-Backyard sentiment. Communities point to concrete concerns. These include rising electricity bills, heavy water use in drought-prone regions, and persistent mechanical noise that affects daily life. Many residents also highlight an imbalance in costs and benefits. While data centers promise jobs and tax revenue, they create limited employment relative to their capital investment. At the same time, the cost of grid upgrades and utility expansion increasingly falls on existing ratepayers rather than on the companies driving demand.
Environmental pressure is also mounting. More than 230 environmental organizations are now calling for a national moratorium on new data center construction. Their demand centers on the absence of comprehensive federal regulations addressing energy use, water consumption, and climate impacts.
Despite this resistance, the forces driving data center expansion remain powerful. Artificial intelligence workloads require massive computational capacity that only hyperscale facilities can provide. Major technology companies, including Amazon, Microsoft, Google, Meta, and OpenAI, are committing hundreds of billions of dollars to U.S. data center infrastructure over the next five years. Federal policy is reinforcing this trend. Executive orders and proposed FERC rulemaking increasingly focus on accelerating grid interconnection for large loads rather than limiting them. State governments continue to offer strong incentives as well. Today, 42 states provide sales tax exemptions to data center operators, representing more than $6 billion in lost revenue in recent years.
This growing tension is reshaping the data center development landscape. In 2025, successful projects increasingly treat community engagement as a core permitting strategy rather than a public relations exercise. Early stakeholder dialogue, transparency, and clear local benefit commitments now separate viable projects from those that stall or fail. The evidence suggests this is not a temporary disruption. Instead, it marks a structural realignment in how large-scale data center infrastructure is planned, permitted, and operated in the United States.
The Scale and Geography of Opposition
The Growing Size of Organized Resistance
The scale of data center opposition is unprecedented in modern U.S. development. Data Center Watch, an independent tracking organization, identified 142 activist groups across 24 states by mid-2025. These groups actively work to block or delay new data center projects. Some operate as informal grassroots networks using social media and local petitions. Others function as professionally staffed coalitions. Virginia’s Data Center Reform Coalition stands out among them. The group coordinates efforts across 41 registered environmental, conservation, and homeowner associations.
The financial impact of stalled projects highlights the stakes. Data Center Watch estimates that $18 billion in projects have been permanently blocked after withdrawals or local denials. Another $46 billion faces delays averaging 18 to 36 months beyond original schedules. In Q2 2025 alone, opposition stalled or delayed 20 projects worth $98 billion. This figure represents a 125 percent increase over the combined disruption of the previous two years. The trend shows that resistance continues to intensify as awareness spreads and organizational capacity grows.
Regional Hotspots of Data Center Opposition
Opposition concentrates in regions with high data center density and rapid expansion. This pattern creates a feedback loop of conflict. Virginia sits at the center of this movement. The state hosts roughly 13 percent of the world’s data centers and routes about 70 percent of global internet traffic through Loudoun County and nearby areas. Activists have formed 42 documented groups across the state. As a result, Virginia has become a testing ground for opposition tactics, legal strategies, and organizing models that groups in other states now study and replicate.
Resistance has also emerged across Indiana, Georgia, Arizona, Oregon, Texas, and California. These states either host major data center clusters or expect large future investments. Indiana has faced opposition to more than a dozen projects since 2024. Citizens Action Coalition reports a sharp rise in constituent concerns about tax incentives and utility impacts. In Georgia, rapid expansion driven by tax breaks and lower energy costs has triggered local backlash. As of late 2025, activists report that eight municipalities have enacted moratoriums on new data center development.
What Communities Oppose: The Substantive Grievances
Opposition to data centers is not monolithic in motivation, though several themes recur across jurisdictions with striking consistency. Understanding these grievances reveals the structural rather than merely NIMBY-driven character of resistance.
Energy Demands and Electricity Rate Impacts
The most immediate concern cited by residents is the impact of data center expansion on residential electricity costs. A 100-megawatt data center consumes roughly as much power as 75,000 homes combined, yet creates only 30 to 50 permanent jobs. When utilities must build new generation capacity or transmission infrastructure to accommodate data center loads, the capital costs get incorporated into rate-base calculations that all customers ultimately pay.​
The impact is quantifiable in certain markets. Bloomberg’s analysis of wholesale electricity markets near data center clusters found prices as much as 267 percent higher than the national average, and these wholesale costs directly flow through to residential bills. In Virginia, PJM (Pennsylvania-Jersey-Maryland Interconnection), the regional grid operator serving Northern Virginia, has forecast that data center demands alone will drive peak load increases of approximately 40 gigawatts between 2024 and 2039, a growth trajectory that infrastructure cannot easily accommodate.​
This concern resonates particularly in regions with deregulated or partially competitive electricity markets, where price signals are transparent to consumers. In Indiana, where citizens have become highly engaged on data center tax incentives and utility impacts, constituents object to bearing the infrastructure costs of facilities that generate minuscule local employment while enriching distant corporations. A Democratic Georgia state legislator, Peter Hubbard, noted that among his constituents, affordability ranked as the number-one concern, with data center impacts as a close second, specifically the perception of massive corporations “sucking up water, electricity, and land, without paying taxes.”​
Water Consumption in Water-Stressed Regions
The water footprint of data centers represents the second major grievance. U.S. data centers consumed approximately 17 billion gallons of water directly in 2023, with indirect consumption through electricity generation reaching nearly 800 billion liters annually. A typical 100-megawatt facility requires about 2 million liters of water per day for cooling, equivalent to the daily consumption of approximately 6,500 households.​
The problem concentrates in regions least able to sustain the demand. Hyperscale data centers often locate in areas chosen for electrical grid capacity and fiber connectivity rather than water availability, creating a misalignment between infrastructure needs and resource endowments. Northern Virginia, despite hosting the world’s highest density of data centers, is not a water-stressed region, moderating the environmental concern. However, proposed or existing data center clusters in Arizona, parts of Texas, Chile, and Brazil exist in arid or drought-prone areas where water scarcity is a genuine constraint on economic activity.
Google’s proposed second data center in Santiago, Chile faced community resistance over projected water consumption in a region experiencing chronic water stress, leading the Chilean courts to revoke the facility’s license in 2024. The company subsequently committed to developing a waterless refrigeration facility, but reporting indicates the Chilean government quietly allowed data center developers to bypass environmental assessments, revealing regulatory capture dynamics that undermine public oversight. In São Paulo, Brazil, where half of all Brazilian data centers operate or are under construction, the city faces regular water crises stemming from agricultural irrigation, household consumption, and industrial use, adding data center loads compounds a pre-existing resource constraint.​
The water issue also implicates energy policy trade-offs. Data centers pursuing zero-carbon goals often site near renewable energy (solar in the Southwest, hydropower in the Pacific Northwest). Yet the regions with abundant solar potential are frequently the least water-abundant, forcing a choice between carbon minimization and water conservation that current technology and policy fail to reconcile elegantly.​
Noise Pollution and Quality of Life
A recurring complaint from residents living near data centers involves persistent mechanical noise from cooling infrastructure. Data center cooling systems—whether massive chillers, evaporative coolers, or roof-mounted fans—operate continuously at decibel levels that residents describe as intrusive and sleep-disrupting. Unlike industrial facilities with regulated operating hours, data centers run 24/7/365, meaning noise occurs continuously including nights and weekends.​
Elena Schlossberg, a Virginia activist with a decade of experience opposing data centers near her property, describes living near diesel-powered data center backup generators as unbearable: “If you live near a data center that’s being powered by these gas turbines, you simply cannot imagine living there. You can hear the noise in your home.” In Fairfax County, Virginia, noise concerns led to regulations requiring data centers to be positioned at least 200 feet from abutting property lines, undergo pre- and post-construction noise studies, and maintain minimum distances from transit infrastructure.​
Prince William County, home to contested mega-facilities like the $24.7 billion “PW Digital Gateway” project, has amended noise regulations specifically in response to resident complaints about constant mechanical buzzing from existing Amazon Web Services data centers. The fact that major counties are rewriting zoning and noise ordinances indicates that noise impacts have moved from anecdotal complaints to formally recognized infrastructure problems warranting regulatory intervention.​
Tax Incentives and Economic Justice Framing
A politically distinct but emotionally resonant grievance concerns the tax abatement structures that states deploy to attract data center investment. Nearly all states with sales taxes extend exemptions to data center equipment and operations—in some cases covering energy consumption for up to 50 years. Collectively, states have foregone approximately $6 billion in tax revenue over the past five years through these exemptions.​
Conservative opponents object on fiscal grounds: why should taxpayers subsidize infrastructure investments by the world’s most profitable corporations? The justification—that tax incentives drive location decisions and create jobs and tax base growth—fails scrutiny in data center cases. A Microsoft facility in Illinois received over $38 million in sales tax exemptions but created only 20 permanent jobs, yielding a subsidy-to-job ratio that would be considered unacceptable for other industries. Indiana offers some of the nation’s most generous exemptions, requiring only a $10 million investment to achieve a complete sales tax exemption on power infrastructure and computer equipment for up to 50 years, yet the state’s data center employment contributions remain modest relative to capital inflows.​
In Virginia, which maintains detailed records, a 2024 state audit found that between fiscal years 2014 and 2023, data center sales tax exemptions returned 48 cents per dollar to the state through indirect economic activity (jobs, income tax, non-exempt purchases). While this return exceeds other exempted sectors, which average 17 cents per dollar, it represents a 52 percent subsidy burden that falls disproportionately on residential ratepayers who lack equivalent tax preferences. Progressive opponents frame data center incentives as regressive transfers from ordinary residents to shareholders of trillion-dollar companies.
The Global Context: Latin America as Parallel Experiment
While American opposition attracts sustained media attention, data center expansion in Latin America follows a different path. Regulatory frameworks are looser, and organized resistance remains limited. This contrast reveals how policy choices shape development outcomes.
Brazil and Chile are emerging as second-tier data center hubs. Both governments actively court investment through tax incentives and regulatory relaxation. In 2025, Brazil’s finance minister, Fernando Haddad, traveled to Silicon Valley to promote data center investment. He proposed tax exemptions and promised faster permitting. The Brazilian government has refused to share details of its National Data Center Policy with civil society groups. This lack of disclosure signals limited transparency in decision-making.
Government-Led Expansion and Regulatory Rollbacks
Chile introduced a national Data Center Plan, known as PDATA, in 2024. The policy aims to reduce bureaucracy for developers. It also weakens environmental licensing requirements. Authorities relaxed environmental impact assessment standards for data centers. As a result, some facilities can bypass reviews that normally apply to heavy industry. When Google’s proposed second Santiago data center faced court challenges over water use, the government intervened. Officials modified assessment criteria instead of enforcing stricter standards. The episode exposed signs of regulatory capture.
Unlike the United States, where organized opposition has delayed or blocked $64 billion in projects, resistance in Latin America remains fragmented. Most groups lack scale and coordination. Investigative journalism networks have filled part of this gap. Agência Pública and the Latin American Center for Investigative Reporting have examined industry claims. Their reporting shows that promised job creation often lacks evidence. It also finds that local economic benefits remain unproven. Non-disclosure agreements further limit public scrutiny of environmental and resource impacts.
Mexico’s experience with Microsoft’s 2024 data center highlights potential risks. After the facility opened, residents reported more frequent power cuts and water outages. Some disruptions lasted days or even weeks. Causation remains disputed. Microsoft attributes the outages to pre-existing grid instability. Even so, the incident sharpened community concerns. Many residents fear that data centers strain weak infrastructure. In such cases, households and small businesses bear the reliability risks, not large technology firms.
Resource Demands and Infrastructure Constraints
Electricity Demand Is Rising Faster Than the Grid
Electricity demand from data centers is accelerating at an unprecedented scale. U.S. data centers consumed about 415 terawatt-hours of electricity in 2024. That figure equals roughly 1.5 percent of global electricity consumption. Demand is growing at around 12 percent annually. By 2030, data centers could account for 12 to 13 percent of total U.S. electricity use, according to McKinsey estimates.
Two forces drive this growth. First, traditional cloud and colocation data centers continue to expand after a decade of steady growth. Second, generative artificial intelligence has triggered a surge in AI-specific compute infrastructure. AI training and inference require far more power than conventional cloud workloads. Some estimates suggest that AI-specific servers alone consume 53 to 76 terawatt-hours per year in the United States. That amount is enough to power more than seven million homes annually.
Virginia as a Stress Test for Grid Capacity
Virginia illustrates the severity of the infrastructure challenge. Since 2022, the state’s data center load has grown at roughly 30 percent per year. Current demand has reached about 4,140 megawatts. Projections suggest demand could exceed 12,000 megawatts by 2030. This represents a tripling of capacity in less than a decade.
Expanding generation and transmission fast enough remains difficult. A modeling study commissioned by the Virginia Joint Legislative Audit and Review Commission examined this challenge. The study found that meeting unconstrained data center demand while also achieving clean energy targets would require unprecedented investment. Even meeting half of projected demand would force solar capacity additions to double recent historical rates. Offshore wind would need to exceed all currently secured development sites. Natural gas plants would also need to come online at rates matching the busiest construction periods of the 2012–2018 era.
Interconnection Delays and Physical Limits
These constraints extend beyond financing. Grid interconnection for large loads typically takes four to seven years under favorable conditions. In many regions, interconnection queues stretch far longer. Federal efforts aim to shorten these timelines, as discussed below. However, policy changes alone cannot overcome physical limits. Generation and transmission infrastructure cannot be built faster than permitting, labor availability, and construction timelines allow.
Water Consumption as a Second Bottleneck
Electricity is not the only limiting resource. Water has emerged as a second major constraint. Hyperscale data centers could consume between 16 and 33 billion gallons of water annually by 2028. Cooling systems account for direct consumption. Power generation adds significant indirect demand. The International Energy Agency estimates that roughly 60 percent of data center water use occurs upstream in the electricity supply chain.
Cooling technologies drive wide variation in water intensity. Traditional evaporative cooling systems evaporate about 80 percent of the water they draw. The remainder enters wastewater systems. Residential cooling systems lose only about 10 percent to evaporation. This difference creates a structural imbalance. Data centers withdraw large volumes of water while returning little to aquifers or reservoirs. The effect is especially damaging in water-stressed regions.
Climate Goals Versus Local Water Security
Some regions face especially sharp trade-offs. The Southwestern United States offers abundant solar resources. These conditions attract renewable-powered data centers. At the same time, the region suffers from chronic water scarcity. Building solar-powered facilities in Arizona or parts of Texas lowers carbon emissions. However, it also intensifies local water stress. Corporate climate goals can therefore conflict directly with community water security.
The Policy Landscape: Federal and State Responses
Federal Efforts to Accelerate Interconnection
As community opposition grows, federal policy has moved in the opposite direction, prioritizing speed and scale. In July 2025, the Trump administration issued Executive Order 14318, directing the Federal Energy Regulatory Commission (FERC) to accelerate interconnection processes for large loads, including data centers. The stated objective is to compress interconnection timelines that currently stretch from four to seven years. The order also seeks to standardize procedures that vary widely across regions.
The administration followed this directive with a more aggressive proposal in October 2025. The Department of Energy urged FERC to assert federal jurisdiction over interconnection requests for loads exceeding 20 megawatts, an area historically regulated by states. A final rule is expected by April 30, 2026. If adopted, data center operators would be able to submit joint load and generation interconnection requests directly to FERC. Supporters argue that this approach could shorten study timelines and lower the capital costs of grid upgrades.
Pushback Against Federal Preemption
These proposals have triggered immediate resistance. State regulators, consumer advocates, and environmental groups have raised concerns about federal preemption of traditional state authority. Critics argue that shifting interconnection oversight to FERC could weaken state-level scrutiny of local impacts. Consumer advocates warn that federalized interconnection risks transferring grid upgrade costs from large data center operators to residential and small business ratepayers. Others fear that accelerated approvals could reduce transparency around rate impacts and environmental trade-offs.
State and Local Regulatory Innovation
While federal agencies push for acceleration, states and local governments are pursuing a different strategy. Rather than imposing outright moratoriums, many jurisdictions are experimenting with targeted regulatory tools designed to address community concerns.
Virginia has emerged as a focal point for this approach. Legislation introduced in 2025 would require mandatory site assessments for high-energy facilities exceeding 100 megawatts. These assessments would evaluate sound profiles and compliance with local noise ordinances before zoning approvals are granted.
Local governments have gone further. Fairfax County adopted stricter regulations in September 2024, including 200-foot setbacks, mandatory noise studies, and one-mile buffers from transit infrastructure. These requirements significantly reduce the number of feasible sites and raise development costs. Loudoun County, the nation’s most concentrated data center hub, eliminated by-right zoning in March 2025. All new projects now require individual board approval, increasing permitting uncertainty and extending timelines.
Other states are following similar paths. In December 2024, Phoenix approved comprehensive data center regulations that shift facilities toward industrial zones and impose new design standards. Officials explicitly cited resident concerns about land use and power demand. At the state level, transparency mandates are also gaining traction. New York is considering legislation that would require large electricity users to disclose energy consumption and environmental metrics aligned with frameworks such as the Greenhouse Gas Protocol. Supporters argue that these disclosures would allow regulators and the public to assess real impacts and enforce accountability.
The Economic and Technological Limits of Acceleration
At the same time, the economic logic underpinning aggressive data center incentives has come under increasing scrutiny. States often justify tax exemptions by pointing to job creation and economic growth, yet evidence suggests these benefits are uneven. Construction generates short-term employment, but operational facilities typically employ only a few dozen workers. Incentive structures vary widely, with some states offering exemptions so generous that fiscal returns may be negative. Crucially, the cost of grid upgrades needed to support data centers is rarely included in tax incentive analyses. Those costs appear instead on utility balance sheets and are ultimately passed on to ratepayers.
How grid costs are allocated has therefore become a central point of conflict. Studies indicate that data centers willing to adjust demand during peak periods could reduce infrastructure costs and even lower residential electricity rates. However, most operators resist such flexibility because it requires substantial investment in onsite generation and storage. Without these provisions, grid expansion costs are often shared with existing customers. Disputes over whether large technology companies truly absorb these costs reveal deeper challenges in utility accounting and regulatory transparency.
Technology offers some relief but no decisive solution. Advances in liquid cooling, microfluidic chip design, and semiconductor efficiency could reduce power and water intensity over time. Yet these innovations face long deployment timelines and scale-up barriers. Efficiency gains also risk being offset by growing AI workloads, as lower costs enable more computation rather than less consumption. Without policy mechanisms that convert efficiency into absolute reductions, technology alone cannot resolve grid and water constraints.
A Structural Shift, Not a Temporary Pause
Taken together, these dynamics point to a structural shift in infrastructure politics rather than a temporary disruption. Communities are responding to tangible constraints—electricity capacity, water availability, noise, and unequal cost allocation, not abstract opposition to technology. While developers and policymakers are adapting through engagement strategies, regulatory experimentation, and technological improvements, these efforts cannot eliminate underlying physical and political limits.
The likely outcome is not a halt to data center development, nor a return to unconstrained expansion. Instead, the future points toward a slower, more contested, and uneven buildout of AI infrastructure. Growth will be shaped as much by local resistance and resource constraints as by national ambitions for technological leadership.