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(Bloomberg Opinion) — The emerging political battle over data centers has a feature unfamiliar to present-day policymaking: The opponents are not divided along partisan lines. Instead, the conflict is between local communities and Big Tech developers, with elected officials caught in the middle. <\/p>\n<\/div>\n
Politicians \u2014\u00a0from both parties \u2014 who have greenlit these projects without enough guardrails have found their careers finished. Officials who\u00a0once courted data centers for their economic potential are facing pushback from residents and businesses who\u2019ve been blindsided by the strain on the power grid and water supply, the impact of noise pollution and the potential damage to property values. <\/p>\n<\/div>\n
Virginia pioneered a sales-and-use tax exemption for data center equipment in 2008. Since then, dozens of states have offered similar financial incentives to lure the tech industry\u2019s power centers, primarily because they create construction jobs and provide a windfall of tax revenue. <\/p>\n<\/div>\n
But these mammoth facilities consume monstrous amounts of energy and water \u2014\u00a0something that threatens to drive up electricity prices to political-liability levels. Now Virginia serves as a cautionary tale of what not to do. <\/p>\n<\/div>\n
Its 600 data centers use as much electricity as two million households,\u00a0or more than half the households in the state. It is also a lax land-use state with no regulations requiring local governments to show they have adequate services before they permit new data center construction. Local officials are left to develop their own ordinances and codes. <\/p>\n<\/div>\n
The tech industry has approached its expansion by reflexively cloaking its data centers and cryptocurrency mines with secretive non-disclosure agreements that often keep both the public and even some public officials in the dark about the potential demand for energy, water, and round-the-clock noise. Yet local officials, often so willing to sell land at elevated prices for massive warehouse campuses and tax revenue, sign the pacts \u2014\u00a0and take the lucrative campaign cash that usually comes with them. <\/p>\n<\/div>\n
Chris Mills, president of the Piedmont Environmental Council, has been dealing with land use and infrastructure decision-making in Virginia for 30 years. With the data center explosion, he said, \u201cthe tech industry is trying to break all the rules.\u201d <\/p>\n<\/div>\n
\u201cHomeowners associations and planned communities are finding out that their open space is going to have a transmission line going through it, or a data center next door, and they\u2019re apoplectic \u2014 because that was not that was not in the plan, and it was not something that was anyone knew was coming,\u201d he said. \u201cWith the threat of eminent domain and other things being what it is, they’re feeling very disempowered.\u201d <\/p>\n<\/div>\n
The stakes are only getting larger. Amazon, Google, Microsoft and Meta are among the companies launching plans for new \u201chyperscalers\u201d \u2014\u00a0facilities that house 5,000 or more servers and cover enough land to fill several football fields. <\/p>\n<\/div>\n
And a backlash is brewing. This month, a judge halted construction of a $24.7 billion project in Prince William County after residents of the adjacent subdivision sued, saying they had not been given proper notice of the impact. (The leaders of the project, QTS Realty Trust Inc. and Compass Datacenters, vowed to appeal.) <\/p>\n<\/div>\n
The chair of the board of supervisors in Prince William County, a Democrat, was voted out of office for pushing through a plan to build 37 data centers across more than 1,700 acres of rural land. And in the town of Warrenton, Virginia, angry voters have defeated every town council member who supported Amazon\u2019s proposal to build a $37 million, 220,000-square-foot data center. <\/p>\n<\/div>\n
These fights are not unique to Virginia. \u201cWhat was once quiet infrastructure is now a national flashpoint,\u201d concludes a recent report from Data Center Watch, a project of the AI intelligence firm 10a Labs. It found that $64 billion in data center projects were blocked or delayed in 24 states over the last two years due to local opposition. <\/p>\n<\/div>\n
However, no amount of political friction will change the trajectory. Data centers are here to stay \u2014\u00a0and with the AI boom, America will need more of them. What should change is the way the tech industry treats local communities. <\/p>\n<\/div>\n
\u201cThese data centers are critically important infrastructure, and the operators are extremely sensitive about any potential threats to them,\u201d said John Dinsdale, research director at\u00a0Synergy Research Group. But he concedes, \u201cthe level of secrecy is over the top and not particularly helpful.\u201d <\/p>\n<\/div>\n
There are four things states should do if they want a fair process for data center development, Mills told me: Require companies to be transparent about their plans; conduct a reasonable assessment of impacts that includes not just the local community but surrounding communities; regulate how the impacts will be handled; and mitigate the impact on land and water resources. <\/p>\n<\/div>\n
A report last week from the industry-focused Data Center Frontier reached similar conclusions. \u201cDevelopers are encouraged to map opposition early, publish environmental data transparently, and negotiate tangible local benefits to mitigate resistance and streamline approvals,\u201d it said. <\/p>\n<\/div>\n
Dinsdale\u00a0warns, however, that when one community rejects a project, developers will simply move on to find another suitable site. \u201cIt\u2019s a bit like playing Whac-a-Mole,\u2019\u2019 he said. \u201cMoney talks and there is a lot of money involved in these projects.\u201d <\/p>\n<\/div>\n
That\u2019s become increasingly apparent in states where intensive lobbying from the tech industry has blocked bipartisan bills requiring more transparency and impact assessments. In Georgia last year, the Republican-controlled Legislature voted to suspend the state\u2019s sales tax breaks for new data centers for two years so that it could study whether companies were shouldering enough of the economic cost of building their energy infrastructure. Republican Governor Brian Kemp vetoed the measure, saying it would disrupt existing projects.\u00a0 <\/p>\n<\/div>\n
In Virginia, the Democratic-controlled General Assembly passed a bill this year to require site assessments that detail noise, water, and other impacts before new data centers are approved. Republican Governor Glenn Youngkin vetoed it. \u201cWhile well-intentioned, the legislation imposes a one-size-fits-all approach on communities that are best positioned to make their own decisions,\u201d he wrote. <\/p>\n<\/div>\n
Sadly, Youngkin is only partially right. Local communities do know what\u2019s in their best interests, but that\u2019s only if they\u2019re allowed to know what\u2019s coming. <\/p>\n<\/div>\n
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This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. <\/p>\n<\/div>\n