Dylan Buck (He/Him), Class of 2027, Fordham Environmental Law Review Staffer

The explosive growth of Artificial Intelligence (AI) and the massive data centers required to support it are driving a historic increase in electricity consumption in the U.S., following a long period of flat growth. While companies promise a digital revolution, the price of that revolution is already being reflected in utility bills and local environmental conflicts across the nation. While conventional data centers have served as the backbone of our digital lives for years, the newer facilities created strictly for AI are far more resource-heavy, with a single “hyperscale” facility often consuming as much power as a mid-sized city. In 2023, U.S. data centers already consumed approximately 176 terawatt-hours of electricity—about 4.4% of the nation’s total generation—but that was just the baseline for a massive surge.

Modeling by the Lawrence Berkeley National Laboratory now projects that total energy consumption for these facilities will surge to between 325 and 580 TWh by 2028. This projected range represents a staggering doubling or tripling of energy use in just five years, potentially accounting for up to 6.7%  to 12% of all U.S. electricity consumption. This demand is not just straining the national power grid; it is exposing critical gaps in environmental and economic policy that unfairly benefit tech corporations while burdening ordinary citizens.

The Great Utility Cost Shift

The first major burden placed on communities is financial, as at least 30 states lure “hyperscale” data centers with cushy tax incentive packages offered to wealthy tech giants like Amazon, Microsoft, and Google. To be considered “hyperscale,” a facility must be a massive warehouse-sized campus housing at least 5,000 servers and requiring a power draw exceeding 100 megawatts—enough electricity to support roughly 80,000 U.S. households. Unlike regular enterprise data centers that might occupy a single room to serve a local business’s internal IT needs, these facilities support the massive processing workloads required for global cloud platforms and AI. While state legislation may eliminate sales-and-use taxes for these corporations for up to 50 years, these tax breaks don’t eliminate the need for new infrastructure, such as new power plants, transmission lines, and upgrades required to serve such immense loads. Instead, these infrastructure costs are typically shared by all electric customers in the service area, regardless of whether they use the facility, shifting the financial weight from the tech industry to ordinary residents. This cost-shifting is a primary reason utility bills in some regions have already risen at twice the rate of inflation over the past year.

As ratepayer advocacy groups like the Citizens Action Coalition argue, this model leaves ordinary residents unprotected from the “rapacious resource needs, massive tax subsidies and extraordinary utility cost burden” associated with these facilities. Essentially, ratepayer funds support infrastructure that primarily serves the wealthiest corporations.

Resource-Ravenous and Locally Polluting

Beyond the grid, data centers are proving to be “resource-ravenous” when it comes to water and land. A single large data center can consume up to 5 million gallons of water daily– equivalent to the water usage of a town of up to 50,000 people. This high water usage is especially problematic because two-thirds of data centers built since 2022 are located in water-stressed regions. When water is drawn for cooling and evaporates in the process, it is not returned to the local basin, which can create critical water quality issues downstream. This process is dangerous because it lowers the volume of the local watershed while leaving behind higher concentrations of salts and other contaminants in the remaining supply. Because “everyone is upstream from someone else,” these withdrawals can degrade the safety and reliability of drinking water for every community further down the river. As one critic stated, wherever they are built, data centers act like a “giant soda straw sucking water out of that basin”.

The construction of these massive, windowless warehouses consumes land, and their energy demands carry profound climate implications. Many companies still rely heavily on fossil fuels because they have not “decarbonized” their grids yet. Furthermore, the facilities often rely on thousands of on-site diesel generators as backups, which are classified as emergency power but still contribute to local air pollution, including particulate matter and nitrogen oxides. These particles can exacerbate respiratory and heart conditions in nearby communities.

Local Citizen Pushback as Valid Policy

This combination of economic and environmental burdens has led to significant pushback both politically and from citizens. In Northern Virginia, citizens are advocating for regulations against the noisy and eyesore facilities. In Indiana, legislators are facing calls to study and implement a moratorium–or temporary prohibition–on “hyperscale” data centers until the state can adequately address their resource and cost burdens.

Such opposition suggests the need for an immediate overhaul of the governing policies. In addition to local approval, state approval should also be required for data center permits, as state authorities have better insight into regional impacts. Taxpayers need to challenge the assumption that infrastructure investments primarily serving corporate data needs should automatically be funded by residential customers.

Taxpayers must also insist on policies that enforce water replenishment and require data center operators to explain precisely how they will run the facility efficiently and where they will secure their water resources, rather than prioritizing their access to the detriment of local communities. As the technology sector continues its massive AI expansion, local governments must use integrated land and resource policies to force companies to recognize and mitigate the “true cost of a data center” so that it is not paid by communities. Only by enacting meaningful regulation and ending the practice of offering corporate tax incentives without full environmental accountability and sustainability can the law protect community members and ecosystems from the unintended consequences of the AI boom.