Artificial Intelligence (“AI”) has seemingly, overnight, integrated into our daily lives. From requesting a simple recipe, to a Fortune 500 Company automating tasks and providing customer service, we have come to rely on AI for its efficiency, convenience, and productivity.
With such reliance on, and growing demand for bigger and better AI technologies, comes a stark question many are now grappling with – where are the data centers that fuel AI going to be built, what are their potential impacts, and how can those impacts be mitigated? Municipalities are at the forefront of these pressing issues. This article endeavors to take a deep dive into the same.
Data Centers, a Necessary Component of AI
Data centers are the infrastructure that power AI systems by providing computing (processing data and generating outputs), storage (maintaining training data and models), and networking (moving data across servers) necessary to process vast amounts of data. These facilities accommodate thousands of specialized servers and processors that train AI models and generate responses to user requests. AI search engines like ChatGPT rely on data centers to perform the calculations required to understand prompts, retrieve information, and produce coherent responses in real time. Demand for data centers has grown rapidly as businesses, governments, and consumers increasingly adopt AI-powered tools.
Impacts
As demand for data centers continues to grow, so too does public concern regarding the potential impact these facilities may have on local communities and resources. Below are common examples:
- Electricity Demand: Data centers require substantial and continuous electrical power to operate computing equipment. The electricity required to generate a simple Chat GPT response is ten times higher than a google response; and it is “estimated that using generative AI…in each Google search would lead to annual electricity consumption of 29.2 TWh, the equivalent annual output of four to five nuclear reactors.”[1]
- Water Usage: Data centers use significant quantities of water to cool their machines and prevent processing chips from malfunctioning. A medium-sized data center can consume approximately 110 million gallons of water per year, equivalent to the annual use of about 1,000 households, while larger facilities can use up to five million gallons per day, roughly equivalent to a town of 10,000 to 50,000 residents.[2]
- Acreage: Data centers demand large parcels to accommodate server buildings, substations, backup generators, and cooling infrastructure, typically industrial sites ranging from approximately 20 to more than 100 acres.
- Noise: Data centers produce persistent industrial noise due to the continuous operation of cooling equipment, including chillers, cooling towers, air-handling units, condenser fans, and from routine backup generator testing.[3] Without adequate mitigation, data centers can disturb nearby residences who face elevated risks of annoyance and sleep disturbance.
- Clearing of trees: Removing trees to develop a data center may destroy wildlife habitat and, if not mitigated, can increase stormwater runoff and adversely affect stormwater quality.
- Pollution: Burning fossil fuels to produce the electricity that data centers need to run emits several air pollutants. Emissions from diesel backup generators include nitrogen oxide and particulate matter. Data centers connected to an electric grid increase emissions from fossil-fuel power plants, including fine particulate matter, nitric oxide, and sulfur dioxide.[4]
Land Use Control
At the frontline of weighing the need to accommodate data centers against their potential impacts are municipalities, which generally administer zoning laws and regulations that control where and how improvements can be built and operated.[5]
First, the potential benefits of data centers should not be ignored; they generate substantial and stable property tax revenue, garner private investment, require limited municipal services, and create construction jobs during development and permanent high-paying technical jobs throughout the data center’s life. On a national scale, advancements in AI can bolster the global competitiveness of American businesses and enhance U.S. military capabilities. Municipalities have had to weigh these benefits against citizen concerns, as described above.
Developers, municipalities, and interested parties alike should be attuned to how data centers can and have been regulated. Municipalities that do not enact data center-specific regulatory standards risk forfeiting control over their development. For example, the 40,000-acre “Stratos” data center project in Box Elder County, Utah (approximately the size of Manhattan) is moving forward with minimal oversight from the local government, who failed to establish zoning regulations governing the project area before it was proposed.[6] To avoid this result and plan for data centers which differ from commonly known industrial uses, municipalities have certain land use controls at their disposal.
The first is through zoning moratoria, which temporarily suspend private property development of a particular use in order to give municipalities time to develop regulatory standards.[7] Zoning moratoria are, however, a short term fix to a long term planning requirement; they generally must be limited in both duration and scope, addressing a specific defect in the existing zoning regulations that justifies a temporary suspension of property rights. Towns have already used this strategy; in May 2026, the Town of Morris, Connecticut, enacted a one-year moratorium prohibiting data center development.
The second is through zoning regulations which provide detailed regulatory standards addressing what a data center is defined as, where they can be located, how they must be developed, and how they can be operated. For example, the Town of Groton in Connecticut has proactively developed zoning regulations addressing data centers.[8] The regulations prohibit a data center from exceeding a certain size, being located within a certain distance of other data centers, restrict cooling infrastructure, restrict fuel sources, contain noise mitigation standards, fire suppression controls, utility company agreement safeguards, and buffer requirements to protect nearby residential districts. Other municipalities have opted to ban them altogether; Mansfield, Massachusetts recently banned development of all data centers that require more than 10 megawatts of electricity to operate.[9]
Overall, careful planning and regulatory schemes can and will ensure that data centers are developed in a manner that is compatible with the areas surrounding them. In navigating the complex development process, which can include layers of oversight from municipal, state, and federal government agencies, Hinckley Allen and its attorneys possess the expertise necessary to efficiently navigate regulatory hurdles.
[1] J. Anderson et al., “Power of AI: Wild Predictions of Power Demand from AI Put Industry on Edge,” S&P Global, October 16, 2023, available at: https://www.spglobal.com.
[2] Environmental and Energy Study Institute. (2025, June 24). Data centers and water consumption. https://www.eesi.org/articles/view/data-centers-and-water-consumption.
[3] Gour, N., Ortiz, L., & Maibach, E. (2026). Health implications of the rapid rise of data centers in Virginia: An exploratory assessment. Frontiers in Climate, 8, 1648912. https://doi.org/10.3389/fclim.2026.1648912
[4] George, Babu. Health Consequences of Large Data Centers: Air Pollution, Noise, Water Use, and Environmental Justice. No. cnwyb_v1. Center for Open Science, 2026.
[5] See for example, in New England: Connecticut, (Conn. Gen. Stat. § § 8-1, et seq.); Rhode Island, (R.I. Gen. Laws Chapter 45-24); Massachusetts, (Mass. Gen. Laws ch. 40A, § 1, et seq.); New Hampshire, (N.H. Rev. Stat. § 674:16) Vermont, (Vt. Stat. tit. 24, § 4301); Maine, (Me. Rev. Stat. tit. 30-A, § 4352).
[6] The Salt Lake Tribune, “After data center project controversy, Box Elder County commissioners trail in Republican primary” – published June 23, 2026.
[7] In New England, see Connecticut, (Arnold Bernhard & Co. v. Plan. & Zoning Common of Town of Westport, 194 Conn. 152, 164 (1984)); Rhode Island, (Green Dev., LLC v. Town of Exeter, 297 A.3d 931 (R.I. 2023)); Massachusetts, (Collura v. Town of Arlington, 367 Mass. 881 (1975); New Hampshire, (N.H. Rev. Stat. § 674:23); Vermont, (Vt. Stat. tit. 24, § 4415); Maine, (Me. Rev. Stat. tit. 30-A, § 4356).
[8] See Groton Zoning Regulations § 5.1-6.F
[9] See Article 23, https://ecode360.com/MA3212/laws/LF2689753.pdf
This alert is for informational purposes only and does not constitute legal advice. The outcome of the pending litigation remains to be determined and is not guaranteed.
This information is provided for educational purposes only. It should not be construed or relied on as legal advice. It is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication or other legal counsel.
