The rapid expansion of artificial intelligence is driving a major surge in data center construction across the United States, raising urgent questions about energy use, water consumption, public subsidies, environmental harms, and the rights of communities living near these facilities.
As AI companies race to build the infrastructure needed to power advanced digital systems, thousands of data centers are already operating across the country. Investment in this sector is growing at extraordinary speed, with hundreds of billions of dollars being directed toward new facilities. This growth is reshaping local economies, utility systems, land use decisions, and environmental planning processes.
While data centers are often presented as essential infrastructure for the future of AI, their local impacts can be significant. Communities near these facilities may face rising electricity bills, pressure on water supplies, increased e-waste, air pollution, noise, light pollution, and limited public transparency. These concerns are especially serious for low-income neighborhoods, rural communities, and communities of color that already face disproportionate environmental and economic burdens.
One of the biggest concerns is electricity demand. AI-focused data centers require enormous amounts of power, and some large facilities can consume as much electricity as entire towns or cities. When this demand places pressure on the grid, the costs can be passed on to ordinary ratepayers. Communities may see higher utility bills without having a meaningful voice in the planning decisions that created those costs.
Water use is another major issue. Large data centers can require substantial amounts of water for cooling, which can create additional stress in regions already facing drought, water scarcity, or competing local needs. At the same time, diesel backup generators used by data centers can contribute to air pollution and public health risks. These facilities may also produce e-waste as hardware is replaced to keep pace with fast-moving AI technology.
The fiscal impact of data center development is also a growing concern. State and local governments often offer major tax subsidies to attract data center projects, but these deals are not always transparent. In many cases, the public may not know which companies receive benefits, how much support they receive, or whether the community gains enough in return. This lack of disclosure becomes especially troubling when data centers create relatively few permanent jobs after construction is complete.
Community Benefit Agreements offer one possible solution to these challenges. A Community Benefit Agreement, or CBA, is a legally binding agreement negotiated between developers and community stakeholders before a project moves forward. When properly designed, it can secure enforceable commitments on environmental protection, local hiring, public reporting, financial contributions, and long-term accountability.
Unlike voluntary promises, a strong CBA creates clear obligations. It can require developers to meet specific targets, provide secured funding, disclose environmental and financial data, and accept penalties if they fail to comply. This makes CBAs an important tool for communities seeking more control over how AI infrastructure is developed in their neighborhoods.
CBAs are especially useful because they can be adapted to local needs. A community facing water scarcity may prioritize strict water caps and public reporting. A community concerned about electricity affordability may focus on protections against cost-shifting to ratepayers. Areas facing pollution risks may demand real-time air monitoring, stronger emissions controls, and community health funds.
One important example is the agreement connected to the Lancaster AI Hub, where local officials negotiated a legally binding CBA before construction was finalized. The agreement secured community contributions, water use limits, clean energy requirements, noise protections, local hiring commitments, first-responder training, and public records transparency. This case shows that communities and municipalities can secure meaningful protections when negotiations happen before key approvals are locked in.
The timing of CBA negotiations matters greatly. Communities have the most leverage before permits, zoning approvals, and public subsidies are granted. Once a developer has already secured the approvals needed to proceed, it becomes much harder for residents and local organizations to demand stronger protections. For this reason, CBAs should be treated as a condition of project approval, not as an afterthought.
Strong CBAs should also include meaningful transparency requirements. Communities need access to information about water use, energy demand, pollution levels, backup generator use, tax incentives, and government subsidies. Without public disclosure, residents cannot fully understand the risks or hold developers accountable for their commitments.
Community oversight is another essential part of an effective agreement. A CBA should create a community advisory board with real authority, not just a symbolic role. This board should include residents, environmental justice representatives, community-based organizations, and other local stakeholders. It should have the power to review data, commission independent audits, monitor compliance, and trigger enforcement when violations occur.
Financial commitments must also be clear and enforceable. Developers should contribute to community funds that support locally determined priorities such as broadband access, digital literacy programs, workforce training, healthcare, parks, environmental improvements, and small business development. These funds should not replace tax revenue that the community is already owed, but should provide additional benefits that reflect the scale of the project’s local impact.
Workforce provisions should be realistic and specific. Because data centers often create limited permanent employment after construction, local hiring requirements should focus strongly on construction jobs, apprenticeships, training programs, and long-term workforce development. Agreements should set numeric targets instead of relying on vague language about good faith efforts.
CBAs can also help ensure that AI infrastructure development supports broader community wealth-building. Beyond direct payments, agreements may include revenue-sharing models, community land trusts, affordable housing funds, local equity mechanisms, or dedicated support for small businesses. These approaches can help communities gain lasting economic value rather than receiving only short-term compensation.
For policymakers, CBAs should not be treated as optional gestures. State and local governments can create legal and regulatory frameworks that make robust CBAs a condition for high-impact data center approvals or subsidies. Planning departments, zoning boards, and city councils can require compliance with these agreements and use permitting authority to enforce penalties, delay approvals, or revoke support when terms are violated.
However, CBAs are not a substitute for strong environmental laws, utility regulation, public subsidy disclosure, or responsible permitting. They work best when combined with broader policy reforms. In some cases, if a developer refuses transparency or offers weak commitments, community opposition or a moratorium may be more appropriate than accepting an inadequate agreement.
The growth of AI infrastructure creates both risks and opportunities. Data centers may support technological progress, but they also depend on local land, water, electricity, roads, emergency services, and environmental capacity. Communities hosting these facilities deserve more than promises. They deserve enforceable protections, fair investment, and a meaningful role in shaping development decisions.
Community Benefit Agreements can help balance the relationship between AI companies, local governments, and residents. They can turn data center projects from one-sided development deals into negotiated partnerships built around transparency, accountability, and shared value.
As AI continues to reshape the economy, the way its infrastructure is built will matter deeply. Communities should not be left to absorb the costs of data center expansion without receiving clear benefits in return. With strong CBAs, local residents can demand better protections, secure long-term investment, and ensure that AI-fueled development serves the people and places that make it possible.
