Fast-Tracked but Not Frictionless: The Expanding Litigation Front Against the Data Center Boom

Data center expenditures could reach $7 trillion globally by 2030 in order to meet the growing demand for computing power,¹ and the Trump Administration has made data center buildout a national priority,² directing agencies to fast-track permitting and remove regulatory hurdles. On the other hand, the rapid and large-scale deployment of data centers has run into intense political, social, and legal backlash from states, local communities, and advocacy groups. Local moratoria on data centers are popping up in cities and counties nationwide. Most states now have at least one local jurisdiction that has hit the pause button, with one tracker reporting that more moratoria were adopted in June alone (80) than in all of last year combined (59).³ And fierce debates over data centers have been front and center in several recent primary races for congressional seats.⁴

This backlash has also generated a new wave of novel disputes and litigation,⁵ as communities raise concerns about the environmental impacts of data centers, transparency with respect to agreements between regulators and developers, and the social and economic implications of AI technology.

Below, we survey the environmental and land-use claims raised in data center disputes nationwide. Much of the current litigation remains pending; how these disputes are resolved will have significant implications not only for the future of data centers but also broader questions about whether “freeing” infrastructure development from the “shackles” of overly burdensome regulations and permitting requirements can backfire on developers without a clear plan for managing public engagement and a sound litigation strategy.⁶

Citizen Suits Under Federal Environmental Statutes

Litigation over data centers is raising novel issues under the Clean Air Act (“CAA”) and Clean Water Act (“CWA”) citizen suit provisions. Several environmental statutes authorize citizen suits, allowing private enforcement when the federal government does not act. Section 304 of the CAA, for example, allows “any person” to sue for a violation of an “emission standard or limitation.”⁷ A citizen plaintiff must first notify the federal government, and the suit is barred if the government steps in and “diligently prosecut[es]” the violation.⁸

In one such case, NAACP v. X.AI Corp., No. 3:26-cv-00074-DMB-JMV (N.D. Miss.), the NAACP brought a citizen suit against xAI and its subsidiary, MZX Tech LLC, alleging that the fleet of gas turbines powering xAI’s Colossus data center violates the CAA. The U.S. Department of Justice, representing the U.S. Government, has moved to intervene as of right as a plaintiff and to dismiss the suit. Specifically, the government argues that allowing the case to proceed over the Executive Branch’s objections would raise separation of powers concerns under Article II of the Constitution. Without engaging on the merits of NAACP’s claim, the government explains that it seeks dismissal based on national-security interests tied to x.AI-supported military operations.

If the government succeeds in dismissing the NAACP’s citizen suit in this case, it could set a precedent significantly narrowing the availability of environmental citizen suits as a tool for challenging data centers and other infrastructure projects where the government objects for reasons that may be unrelated to the merits of the suit.

Air Permitting and Emissions From On-Site Energy Generation

In the NAACP v. X.AI Corp. case, the plaintiffs’ substantive claim raises novel issues for CAA permitting and emissions standards for fossil fuel-fired generation assets. The plaintiffs in that case allege that xAI has constructed and is operating over 33 natural gas turbines without the requisite CAA permits and/or in violation of emissions standards.⁹ Under the CAA, new or modified stationary fossil fuel-fired turbines can qualify as major sources subject to New Source Review (“NSR”) — including Prevention of Significant Deterioration review and Best Available Control Technology — along with Title V operating permit requirements, performance standards, and hazardous pollutant standards generally administered under EPA-approved State Implementation Plans.¹⁰

The defendants contend that the gas turbines are temporary, trailer-mounted “mobile sources” exempt from CAA stationary-source permitting because they sit on flatbed trailers and are expected to remain on site for under twelve months. If that theory succeeds, it could remove CAA permitting requirements for a wide range of similarly designed energy facilities — making the case an important one to watch (for this issue and the citizen suit arguments) as it progresses in the District Court and through potential appeals.

Water Permitting, Use, and Contamination Issues

Data centers also use significant volumes of water for cooling purposes, with large data centers consuming roughly 2 million liters per day.¹¹ This level of use has raised concerns among local communities, particularly in water-scarce areas.

The types of water-related claims brought in litigation against data centers, however, have tended to focus on water pollution — i.e., from the construction of the data center or discharges of the cooling water. These disputes have relied on federal environmental statutory causes of action, common law nuisance, and state tort law.

For example, in a proposed class action in Oregon, plaintiffs alleged that high-nitrate wastewater from the data center's cooling processes contributed to nitrate contamination of groundwater and drinking water supplies. The evaporative cooling process that many data centers use can concentrate contaminants and dissolved solids already found in the water; the periodic flushing of cooling water to avoid scaling and corrosion releases that wastewater into the environment.¹² The plaintiffs in the Oregon action brought an imminent-and-substantial-endangerment claim under the Resource Conservation and Recovery Act,¹³ together with Oregon common-law claims for negligence, trespass, and private nuisance. The federal district court has preliminarily approved a proposed class settlement that provides for a settlement fund (reportedly valued at $20.5 million) for improving access to clean drinking water among class members.¹⁴

In another anticipated dispute in federal court in Georgia, in May 2026, landowners neighboring a data center campus, represented by an environmental group, issued a notice of intent to bring a citizen suit under the CWA. The notice alleges discharges of sediment-laden stormwater from clearing and grading of more than 350 acres at the data center campus in violation of CWA Sections 402 and 404. The notice further demands abatement of nuisance and trespass under Georgia law.

These disputes reveal that while water consumption by data centers may be the issue garnering the most public attention and political opposition, litigants and environmental groups are finding creative avenues under federal environmental statutes and state tort/nuisance law to challenge alleged water pollution.

Environmental Review Adequacy

Many states have their own NEPA-like statutes that require environmental review of state authorizations of major projects, and data center opponents are increasingly using these laws to attack the adequacy of the review that supported data center approval. These disputes involve, for example, claims that state agencies improperly exempted components of a data center project from environmental review,¹⁵ failed to include connected facilities (e.g., power generation) in the scope of the review,¹⁶ or failed to prepare an environmental impact statement where one was required.¹⁷ In one case that has received a merits ruling, the Minnesota Court of Appeals found that a city’s decision not to prepare an EIS was unsupported and remanded the proceeding.¹⁸

Common Law Nuisance Claims

Common law nuisance claims are among the more common causes of action against data center developers and operators. In such disputes, plaintiffs — typically neighboring residents — allege that a facility’s operations unreasonably interfere with the use and enjoyment of their property. In one putative class action (of over 10,000 members), plaintiffs allege that the gas turbines from a power plant adjacent to and serving a data center expose nearby residents to “loud, persistent, and low-frequency noise and vibrations,” bringing public and private nuisance claims along with state tort claims for negligence and emotional distress.¹⁹ These issues are not new to gas-fired power plants and can be mitigated through design features, setbacks, and other measures that reduce sound and vibrations. Even so, similar class actions pleading public and private nuisance, along with tort claims regarding the noise and vibrations associated with the continuous operation of data centers, continue to be brought around the country.²⁰

Local Zoning and Land-Use Issues

The most numerous challenges to data center development have arisen at the local level, where project opponents challenge the procedures used to enact rezonings, zoning amendments, or violations of comprehensive plans for localities. Plaintiffs have alleged, for example, defective or incomplete public notice, failure to make proposed ordinances and supporting materials available before a hearing, and failure to observe statutory intervals between publication and adoption.

In one case, the court invalidated three data-center rezonings because the county advertised proposed ordinances that were not yet available for public inspection and failed to provide adequate time for public feedback, emphasizing that these public notice and comment rules are procedural safeguards for meaningful public participation.²¹

Other examples of challenges to data centers contend that approvals were arbitrary or constituted illegal spot zoning, or that the authorized data-center use conflicted with the locality’s comprehensive plan and the stated purposes of the underlying zoning district.²²

These cases demonstrate that local opposition to data center development — which may stem from concerns about their environmental impacts or other potentially disruptive characteristics, as well as more general policy or social/economic opposition — can manifest most strongly in disputes before local zoning authorities. 

Data Center Moratoria and Developer-Side Challenges

Localities are increasingly enacting temporary moratoria on data-center approvals, prompting developers to challenge those moratoria in court, alleging procedural defects, exceedances of state statutory authority, and claims under the state and federal constitutions. In several cases, for example, developers have alleged that moratoria are ultra vires, exceeding statutory authority under state law, and procedurally invalid by failing to satisfy notice-and-hearing or “emergency legislation” requirements.²³ Developers are also pursuing regulatory takings claims, as well as alleging procedural and substantive due-process violations and equal-protection claims, premised on the assertion that underlying permits or authorizations are protected property interests. At least one developer has brought a First Amendment claim (among others) alleging retaliatory actions by municipal officials.²⁴

While these disputes have not reached merits decisions yet, some have resulted in rescissions of moratoria and settlements,²⁵ suggesting that these types of claims may provide a successful avenue for developers to push back against local moratoria.

Regulatory Reforms Aimed at Facilitating Data Center Development

Even as data center opponents pursue the litigation strategies surveyed above, the federal government has moved aggressively to advance a suite of regulatory reforms designed, in part, to remove or streamline environmental requirements for data center development and the supporting energy infrastructure. Executive Order 14318, Accelerating Federal Permitting of Data Center Infrastructure, directed agencies to establish new categorical exclusions for data centers under NEPA and called on EPA to develop or modify regulations under the CAA, CWA, CERCLA, and TSCA to streamline environmental permitting.

Agencies have already started implementing this strategy. EPA has advanced a series of CAA regulatory reforms, including loosening limits on beginning construction of a new major source prior to obtaining an NSR permit by allowing construction of non-emitting components;²⁶ proposing to eliminate public-notice requirements for minor NSR permits;²⁷ and issuing guidance concluding that “islanded,” off-grid generation serving data centers is not subject to the Acid Rain Program.²⁸ EPA has also finalized a rule that subjects smaller “temporary” fossil fuel-fired turbines to less stringent standards under the CAA’s New Source Performance Standards, as well as a conditional exclusion from stationary source requirements for turbines that meet the definition of a mobile source.²⁹ Outside of the CAA, the Army Corps of Engineers has updated its Nationwide Permits (which allow for streamlined CWA permitting) to explicitly include “data centers.”³⁰

These regulatory reforms may themselves become the target of litigation under the Administrative Procedure Act, creating additional risks for developers relying on them.

Implications for Data Center Development and Infrastructure Writ Large

The wide range of federal and state environmental claims, as well as nuisance, tort, and local zoning and land-use causes of action, reflects a rapidly evolving landscape of legal challenges facing data center development across the country. Although much of the litigation remains at early procedural stages, these disputes are already affecting the landscape of data center development as well as broader efforts to build out new energy infrastructure.

Project proponents and developers should be closely following these emerging trends as they develop their legal strategies moving forward:

• Novel legal theories: Plaintiffs, developers, and governmental entities are pursuing a wide range of legal theories, and how these are ultimately resolved will have implications not only for data centers, but for infrastructure development well beyond this sector. The argument that the federal government has ultimate authority to dismiss citizen suits under federal environmental laws, for example, would provide federal power to override citizen opposition to pursue broader federal policies favoring projects, regardless of the merits of the environmental claims. Moreover, how disputes over local moratoria unfold may embolden developers to pursue these claims in other localities.
• Opposition strategy: The range of causes of action being brought against data centers reveals that opponents are flexible and pursuing a variety of litigation strategies in service of their ultimate objectives to frustrate data center development. How these cases are resolved on the merits may push litigants toward certain causes of action; for example, if citizen suits under federal environmental statutes become effectively foreclosed, opponents may focus further on state and common law claims. As more and more project opponents resort to the courthouse, this will put a premium on developing robust community engagement strategies in an effort to avoid adversarial litigation in the first place.
• Chilling effect on new energy investments: The AI and data center boom has been the primary catalyst for investments in new energy infrastructure development around the country to power these facilities. While these disputes are still at the early stages, they are already affecting the risk calculus for new energy investments as developers weigh the potential delays or cancellation of projects. How these disputes are ultimately resolved, both with regard to preliminary relief (i.e., injunctions) and the merits, will affect siting decisions and the legal risk calculus going forward. Such trends could also have major implications for investments in other types of infrastructure development.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.