A big fish worth frying

Many communities and individuals are concerned about data center development, but Jenna Ruddock, instructor at Washington College of Law, says there’s positive momentum in organizing to fight data centers.

“Individual moratoriums have bought time when time was at a premium,” Ruddock said. “Moratoriums interrupt non-disclosure agreements (NDAs). They have slowed the momentum of the industry. There’s a reason companies use tools like NDAs to shield project details from the public until the last minute, and one of the main reasons is to ensure all their ducks are in a row before they encounter any public opposition.”

NDAs are legal contracts that establish a confidential relationship between two or more parties and prevent individuals or businesses from sharing proprietary information. Some municipalities have established NDAs with potential data center developers, making it close to impossible for residents to obtain information about proposed projects.

According to Ruddock, passing a moratorium isn’t easy because tech companies and developers have likely already had discussions with local leaders months before the public learns about a project. However, this doesn’t mean citizens should stop fighting.

“Passing a moratorium isn’t the end of the road,” Ruddock said. “Most moratoriums are temporary and are passed for a set period, although they can be, and often are, extended. Even if a moratorium is passed, we’re already seeing legal challenges. As moratoriums have gained momentum, so have critiques about their strategic value and whether they’re just the ultimate NIMBY – not in my back yard.”

Communities across the U.S. are sharing what they’ve learned so the implementation of a lone moratorium isn’t a single blow that shifts the burden to another community. Instead, the action contributes to the rejection of a sense of inevitability that’s being imposed on communities by a very small group of people who stand to profit heavily from the community believing it.

Alli Finn, director of community partnership at the AI Now Institute, reviews the development of a policy aid developed to guide communities dealing with data center development.

“The North Star Data Center Policy Toolkit is geared toward stopping, slowing and restricting rampant data center development in the U.S. at the local, state and federal level,” Finn said. “The guide includes North Star interventions, the strongest possible tools, as well as scaffolded steps to get there when it isn’t feasible and when political conditions are challenging. The policy toolkit came out of a need from organizers and policymakers across the country to take advantage of critical moments of opportunity to identify and call for the strongest possible interventions. The toolkit maps all possible policy tools, from bans and zoning to water, air, energy, taxation, transparency and corporate power because not everything will be possible in every jurisdiction.”

While policy isn’t the only means of managing data center development, it can be a critical tool for organizing and changing the conditions of a data center buildout.

“There are many ways to stop a data center,” Finn said. “Zoning and land use vary drastically by state and locality. If you can’t fully ban a data center, all hope is not lost – there are other strategies available.”

The most direct way to prohibit data centers is through bans. Ordinances or ballot measures can be used to explicitly ban construction of new data centers or prohibit expansion of existing centers.

“Bans can be complete or partial,” Finn said. “You can prohibit data centers within certain zoning districts such as residential or agricultural. You can ban facilities over a certain square footage like in Groton, Connecticut, where they banned data centers larger than 12,500 square feet.”

In some cases, legal support is necessary, especially if a state preempts or prevents a locality from banning certain types of development including through exclusionary zoning.

Moratoriums are becoming more prevalent, and Finn described them as a “commonsense pause on a buildout to give a locality space and time to update or issue regulations.” For lasting impact, moratoriums should be followed by strong protection.

“These can turn into a ban, like in Groton,” Finn said. “Moratoriums are time-bound prohibitions on new data center approvals – they are not permanent, although they can be extended and lead to a ban on new data center approval.”

Finn recommends moratoriums last at least six months, but it’s likely a municipality will need additional time. Some moratoriums have now surpassed one year. Moratoriums can be passed by local governments (town, city, county), tribal nations, state governments, utilities and Congress. At least 12 states have filed data center moratorium bills. Utilities can also place moratoriums on data center connections, which happened in Ohio.

“Localities can build mechanisms into approval and zoning processes to reject data centers that don’t meet their local standards,” Finn said. “These require strong local goals set and passed by local government. Goals can be around water use, energy, heat, economic development and other options.”

Once goals are in place, Finn urges citizens to hold local developers accountable, make sure proposals are responding to standards and force them to prove how the project fits within the goals.

“We encourage independent review by experts with decision-making authority, not companies grading their own homework,” Finn said. “Localities can require companies to fund pre-approval studies but not to conduct those studies themselves. We are seeing fines of $1,000 per day, which doesn’t mean much to a wealthy corporation. Meaningful fines and the power to reject applications are necessary.” Finn noted that this approach requires enforcement power, which is lacking across the country.

One approach is conditional use permits, which require developers to apply to the zoning board for permission to use their property in special ways. Approval is conditional, meaning developers must meet certain requirements set by the local government to receive a go-ahead.

“Localities can amend zoning code or introduce new ordinances to create a separate conditional use permitting process for data centers,” Finn said. “This requires setting a distinct class for data centers so they are not included in existing zoning regulations or included in ‘by right’ zoning that often gives data centers automatic or easier approval.”

Conditional use permits should include binding conditions attached to the approval process such as water and energy use plans, transparency and environmental impact assessments. Finn said a key aspect of transparency is robust public notice and community hearing requirements that end the use of NDAs and the right for localities to reject applications that don’t include such transparency and enforcement.

If these options fail, localities can still limit where and how data centers are constructed. This can include setback requirements such as establishing minimum distance between a data center and a residential area, agricultural district or historic sites.

“All of these are tools to throw friction into the process and make your locality less attractive for data center developers, particularly hyperscalers,” Finn said.

The North Star Data Center Policy Toolkit is available at ainowinstitute.org/publications/data-center-policy-guide.

by Sally Colby