The Data Center Fight Has Moved Past Who Pays

When the White House launched its Ratepayer Protection Pledge this spring, it drew a line that was as deliberate as it was narrow. "Local infrastructure decisions remain with states and localities," the administration stated, positioning the federal role as a financial backstop — companies would pay their own grid costs, and that was where Washington's responsibility ended ^[1]. The pledge recruited 23 governors and more than 187 companies, and the Federal Energy Regulatory Commission followed with orders requiring grid operators to rewrite their tariffs so data centers could not shift costs onto residential ratepayers ^[2]. The consensus on who pays is now as settled as any policy question in a divided government can be. The question the pledge did not answer — the one the White House explicitly returned to the states — is who decides. In Hill County, Texas, the county's own attorney warned commissioners before their moratorium vote that no state statute authorized them to enact one ^[3].

Neither the state constitution nor any state statute authorizes the county commissioners to enact a moratorium. — Beautiful Day

The moratorium passed 4–1 anyway. A month later, it was gone. Developer RCM Hill filed a $100 million federal lawsuit, and the commissioners voted to rescind the ban. The county judge put it plainly.

Ultimately, we would have loved to have just been able to stop every project and everything, and that’s not what the moratorium did. — Shane Brassell

In one month, Hill County's moratorium collapsed under a lawsuit the county could not afford to fight. The ban was replaced with a developer checklist — a document with no power to stop a project ^[4]. Hill County's experience is not the only one. In Taylor, Texas, residents gathered signatures to ban data centers by popular vote, only to be told by the Mayor Pro Tem that state law prohibits zoning changes via ballot initiative. They could not even force a vote on whether to host a facility ^[5].

State law does not allow a city to enact or change its zoning by popular vote. — Kelly Cmerek

In El Paso, 183 residents testified against a Meta deal, citing water and electricity costs. The city council voted 5–3 to keep the agreement after the mayor warned that breaking it could expose the city to $800 million in litigation liability ^[6].

If you were to enter into any litigation with that particular company, and if El Paso was to lose, we would also have to pay their attorney fees. So that would be a significant amount of money that would be based on the taxpayers. — Renard Johnson

In Upper Hanover Township, Pennsylvania, a developer submitted its application days before the board adopted new data center restrictions, then filed a validity challenge. The developer's attorney argued that if a zoning ordinance does not provide for data centers as a permitted use, it is "substantively invalid as a matter of law" — a theory that would force municipalities to accept facilities they never chose to allow ^[7].

Conversely, if the township asserts that data centers are not within the scope of uses permitted within the zoning district, the zoning ordinance is substantively invalid as a matter of law for failure to provide for that legitimate land use. — Celso L. Leite Jr.

The federal government, meanwhile, has made its own decisions that deepen the local burden. In July, the Department of Energy ordered the PJM grid operator to force data centers onto backup diesel generators during a heat wave to relieve strain on the regional grid. Local officials in Pennsylvania noted that those generators produce more nitrogen oxides and particulate matter than coal plants ^[8].

The billionaires that are driving this AI revolution that we hear about all the time in the news, they want communities like Lackawanna County to bear the burden while they reap all the rewards. — Bill Gaughan

A Lackawanna County commissioner was blunt.

They’re even worse than coal. — Tom Schuster

Separately, the Environmental Protection Agency scrapped 2024 soot standards to keep coal plants running for AI-driven electricity demand. The Labadie coal plant in Missouri — the highest combined sulfur dioxide and nitrogen oxide emitter among U.S. coal plants — will now run for another decade to serve projects including a 1,000-acre Amazon facility in Maryland. The pollution falls on predominantly Black neighborhoods in North St. Louis; the data center sits in another state ^[9].

Ensuring affordable baseload power, including coal, is essential for keeping the lights on and heating American homes. — United States Environmental Protection Agency

These are not failures of the Ratepayer Pledge. They are separate federal actions — generation decisions made to keep the grid running — that create new environmental burdens in the very communities the pledge's cost-shifting logic was supposed to protect. The diesel generators and the coal-plant extensions are the federal government's own contribution to the local resistance it says it wants states and localities to resolve. Some communities do approve data centers. Joliet, Illinois, voted 8–1 to greenlight a $20 billion project, citing 700 permanent jobs and $2.1 billion in tax revenue ^[10]. In Franklin, Tennessee, a $1.6 billion project won approval after the developer committed to water usage caps and monthly public updates ^[11]. In Rural Hall, North Carolina, the town council reversed its opposition after the developer increased setbacks and reduced the building count ^[12]. But in none of these cases did the federal cost-shifting model resolve the local concerns. Joliet was swayed by the sheer scale of the economic benefit; Franklin and Rural Hall extracted concessions on the physical impacts — water, noise, setbacks — that the pledge does not require. The deals got done because developers chose to negotiate what the federal framework left unaddressed. The cost-shifting consensus is real. Companies will pay for their own substations, accept higher tariffs, and negotiate separate rate structures. That question is closed. The question now moving through county commission chambers and city council hearings across the country is different: when a community looks at a proposed data center and decides the water demands, the diesel exhaust, the noise, and the farmland loss are not worth the tax revenue, does it have the power to say no? The answer, in more places than not, is that it does not. Moratoriums can be broken by lawsuits. Zoning rules can be gamed by developers who file ahead of them. And in some states, counties never had the authority to say no in the first place.