By Kennedy Maize
A major U.S. energy policy disconnect is developing over locating data centers to serve the promising but still infant artificial intelligence business. The federal government, driven by the Trump White House and many conventional electric utility generation and transmission companies, are boosting the nascent AI tech industry and its electricity gobbling data centers.
24/7 Wall Street commented: “The world’s biggest tech companies are racing to build AI capacity because whoever controls the computing power may control the next decade of software, advertising, cloud services, and automation. But as investors chase chip stocks and AI winners, a new problem is emerging: communities increasingly do not want these giant facilities in their backyards.”
The online business site noted, “Community opposition to massive AI data center projects is emerging as a critical bottleneck to the infrastructure buildout, with residents in Utah, Virginia, Arizona, Georgia, and Texas raising concerns about water consumption, power demands, and environmental impact that could delay multibillion-dollar projects and reshape where AI facilities get built.”
A March Gallup Poll found, “Seven in 10 Americans oppose constructing data centers for artificial intelligence in their local area, including nearly half, 48%, who are strongly opposed. Barely a quarter favor these projects, with 7% strongly in favor.”
AI and data center advocacy is getting a significant push in Washington. In his first days in office, on Jan. 23, 2025, Trump issued a “Presidential action” titled “Removing Barriers to American Leadership in Artificial Intelligence.” The order asserts, “It is the policy of the United States to sustain and enhance America’s global AI dominance in order to promote human flourishing, economic competitiveness, and national security.”
The White House has followed up with more than a dozen “actions,” “statements,” “briefings,” “releases,” and “orders” touching on the administration’s enthusiasm for all things AI, including a July 2025 “AI Action Plan.”
The most significant is the March 11, 2025 Executive Order 14365 — “Ensuring a National Policy Framework for Artificial Intelligence” — where Trump outlines how his administration will big-foot states on data center siting and rate setting disputes. The order proclaims the need for “a minimally burdensome national standard — not 50 discordant State ones. The resulting framework must forbid State laws that conflict with the policy set forth in this order.”
A detailed examination of the actions the administration might take are, at best, unconvincing or, more likely, typical Trumpian bovine excrement. It calls for the Justice Department to create an “AI Litigation Task Force” to challenge state laws it dislikes. DOJ complied in January.
The first target is a bizarre and obscure 2024 Colorado law that goes into effect at the end of June and pertains to protecting Coloradans from “risks of algorithmic discrimination, which targets undefined “discriminatory impact or treatment based on protected characteristics.” Colorado Gov. Jarod Polis and Attorney General Phil Weiser both opposed the act but were unable to prevent its passage.
Trump’s on-again, off-again tech bro Elon Musk sued Colorado in federal court in April, based on alleged violations of the First Amendment, Commerce, and Equal Protection clauses of the Constitution on behalf of his xAI firm. Musk has also challenged California AI regs with the same broad causes of action. The suit is pending before the 9th Circuit Court of Appeals after a district court dumped it.
In D.C., the Department of Energy and the Federal Energy Regulatory Commission have been moving to implement the administration’s AI policy by accommodating data center power demands, although FERC has shown some hesitance in big-footing state regulators on siting issues.
FERC may address the thorny issue of the state versus federal authorities on data centers at its June public meeting. Chairman Laura Swett, a Trump appointee, told reporters after the commission’s April meeting, “I want to know exactly where the lines are of FERC jurisdiction versus state jurisdiction. That is a very important issue that is a huge component of our action here.”
The backlash is a political and business challenge to the developers, as states weigh in on the consumer consequences of large, power-hungry data centers. A recent blog posting by the Sheppard law firm — “Out of Sync – Data Center Developers Face Opposition at the Local Level Despite Federal Support” — notes, “State lawmakers are increasingly addressing the concerns of some constituents by proposing legislation limiting data center development through measures such as moratoriums, resource restrictions and tax benefit prohibitions.”
What to do? The Sheppard blog suggests developers should “formulate plans for resources that include on-site energy generation and storage and reclamation of water resources to mitigate potential negative impacts on neighbors. Finally, developers and long-term data center owners should devise strategies that promote and highlight community benefit arrangements like those seen in the offshore wind space to ensure local interests share in the value of having a data center in their area.”
There is another, perhaps more radical, approach for AI moguls and their appetite for large amounts of electricity to run their data centers, which solves those problems internally and completely: eschew the grid entirely.
