Everyone hates data centers. Lawyers love them

Data Center Boom Turns Local Disputes Into a Major Legal Market

Healfromzero.com – For years, data center construction was often viewed as an easy win for local governments: large, office-like buildings that promised investment without the traffic associated with warehouses, retail centers or major industrial plants. That calculation is changing quickly as the facilities supporting artificial intelligence become bigger, more power-hungry and more visible to nearby residents.

The resulting backlash is creating a rapidly expanding source of work for lawyers on both sides of development fights. Attorneys now advise developers, technology companies, investors, community groups and homeowners as disputes spread across zoning boards, permitting agencies and courts.

Jason Morris, a land-use attorney who spent years helping housing, office and industrial projects navigate opposition and regulations around Phoenix, has watched the shift firsthand. Data center matters once represented roughly 10% of his practice. They now account for about 70% of his time.

Phoenix and its surrounding region became an important data center market during the expansion of artificial intelligence infrastructure. Early projects generally received a favorable welcome from cities. But the scale of newer hyperscale facilities has altered the discussion. These projects can require enormous quantities of electricity and water, putting their local effects at the center of approval debates.

“These cases are my single most difficult. Every legal tool is being used,” he said.

From routine approvals to highly contested projects

Data center disputes now appear in neighborhood social-media groups, city council sessions and political advertising connected to midterm elections. The issue carries national economic importance because construction is helping sustain economic activity and drawing trillions of dollars in investment. At the same time, many communities are questioning whether the benefits justify the infrastructure demands placed on their areas.

More than 300 jurisdictions across 44 states have adopted moratoriums targeting data centers. Those pauses reflect concerns that range from land use and resource consumption to noise and the pace of construction. For local officials, the challenge is no longer simply whether a building fits on a parcel of land. It is whether the community can accommodate the facility’s broader demands.

Morris represents developers, operators and technology companies facing claims related to water use and noise. His work also includes helping clients seek regulatory approval for construction and expansion. The legal questions can involve environmental rules, zoning requirements, permitting processes and municipal authority.

For developers, delays can carry major financial consequences. Data center projects are capital-intensive, and the companies behind them often need facilities completed on precise timelines. For opponents, legal challenges can provide a way to force fuller public review, seek restrictions or halt development entirely.

Big firms build specialized teams

The opportunity has not gone unnoticed in the legal industry. Firms including Latham & Watkins, Perkins Coie and WilmerHale are marketing specialized services for data center clients. Companies pursuing these projects are also offering significant compensation to partners who have experience in the field.

“When you start to see law firms large and small putting data centers on their websites, it tells you everything you need to know about the potential for business,” Morris said.

Larger firms have established digital infrastructure and data center groups that bring together lawyers focused on real estate, energy and regulation. A Bloomberg Law survey released in June found that about one-third of large law firms had a dedicated data center team or practice group.

Energy lawyers have become especially valuable because electricity is central to every new facility. Tyler O’Connor, an energy litigator at Crowell & Moring in Washington, DC, works with data center developers on infrastructure and energy-compliance issues. He said the rise of these facilities has reshaped legal work throughout the energy sector.

Clean-energy development had been a principal focus of the energy industry during the Biden administration. More recently, the data center expansion has taken greater prominence, O’Connor said. The change affects even matters that do not directly involve a data center client, because the sector’s growing electricity demand influences broader infrastructure planning and compliance work.

“Even when we’re not working for those clients, almost all of the work we do now is informed by the emergence of data centers,” he said.

Residents pursue nuisance claims

The legal growth is not limited to the companies building the facilities. Plaintiffs’ attorneys are working with residents and advocacy organizations that want to challenge projects or limit their effects. Mass-tort lawyers have promoted assistance online for people living near data centers, while some operators are facing class-action litigation.

Laura Sheets, a Detroit attorney, recently brought one of the first nuisance cases in the country against a data center operator in Michigan. She said residents began reaching out as facilities appeared in more places.

“When these facilities started popping up everywhere, we were contacted by people who were upset,” said Laura Sheets.

Sheets has filed four nuisance complaints involving data centers in four states and is preparing additional cases. The complaints argue that ongoing sound from cooling equipment and power generators substantially interferes with neighbors’ ability to use and enjoy their properties. That interference is a key legal test in private-nuisance claims. The lawsuits also contend that nearby property values are being reduced.

Such cases use a familiar approach for disputes involving large industrial operations. Michael Pollack, a professor at Cardozo School of Law whose work focuses on land-use law, said courts will rely on the same legal frameworks that govern environmental and development conflicts involving other major facilities.

That means data centers may be technologically new in their scale and purpose, but the underlying legal arguments are well established. Communities can raise questions about siting, environmental effects and neighborhood impacts, while operators can argue that their projects comply with applicable rules and serve substantial economic needs.

A fight that could reshape federal and local authority

The intensity of today’s legal work may not last forever. If litigation and local moratoriums meaningfully slow construction, the industry could seek federal legislation that prevents municipalities from blocking new projects. Such a move would shift a significant portion of decision-making power away from cities and counties.

For now, data center development remains a local conflict with national consequences. Artificial intelligence has increased the urgency of building digital infrastructure, but communities are demanding clearer answers about energy, water, noise and the value they receive in return. As those questions continue to move through public hearings and courtrooms, lawyers have become central figures in the future of the data center boom.