Who Decides on Data Centers?
The fight over data centers looks like a war on the future. Underneath sits an old argument about who pays for what a neighbor builds, and who gets to say no.
Somewhere between a zoning hearing and a spy thriller sits the American data center.
This spring, Kevin O’Leary (“Mr. Wonderful” from Shark Tank) took to television to promote his sprawling “Stratos” data center project in Box Elder County, Utah. He told the country that the local residents fighting it were fronts for a foreign power, claiming that the opposition was connected to the Chinese Communist Party.
He produced no proof. By late June he had conceded he had “no evidence” for the accusation, and the network apologized; last month, the Utahns he had named sued him and Fox for defamation.
Strip away the melodrama and a question remains: why does a fight over a warehouse of servers escalate into accusations of treason and a federal lawsuit? The heat is real, and it is national. By one tally, organized local opposition blocked or stalled at least $156 billion across 48 projects in 2025, with more than 188 opposition groups now active across 40 states. More than 300 data-center bills have been filed in over 30 states this year, and over a hundred local moratoria adopted. In June, New York’s legislature passed the first statewide ban in the country, and the governor soon added a freeze of her own.
It is tempting to file all of this under “techlash,” a nation flinching from the steady march of technological progress (and the infrastructure needed to run it). But I believe the debate turns on two far more basic questions: who pays, and who decides. The passionate arguments against these facilities deserve to be met one at a time, on the merits, rather than waved off as sentiment or smeared as sabotage.
Let’s start with electricity, the loudest complaint. A large data center can draw as much power as a small city, and when a utility builds generation and transmission to serve it, a public commission decides who absorbs the cost. Under the old default, that cost is spread across every ratepayer, including households that see none of the benefit. Some critics (or opportunists) like Elizabeth Warren claim that electric bills near these facilities have risen 267 percent, but that figure refers to wholesale prices, not the amount on anyone’s monthly bill. Still, the alarm is warranted, and the remedy is a matter of design. For example, Virginia is shifting costs onto a data-center rate class so residential customers pay less, and several major companies have pledged to cover the price increases they cause. Make the customer who summons the cost carry it, and much of the grievance dissolves. (This is good practice; those newly entering a community should bear the responsibility of mitigating any negative impact they bring to that community.)
Water follows the same logic. Nationally, data centers consume a sliver of water consumption, on the order of 0.14 percent; locally, a single hyperscale facility can use what a town of tens of thousands uses, which during a drought is precisely the kind of thing neighbors are going to resist. The answer here requires closed-loop, recycled-water cooling; reclaimed sources instead of drinking water; and choosing facility locations away from stressed aquifers. Again, simply requiring data center projects to offset their impact ensures that the local community is held harmless.
Another argument against data centers focuses on their role as the backbone of the new surveillance state. The same infrastructure that today streams video and generates benign AI output for your preferred chatbot can, tomorrow, be used by governments and corporations to operate a Flock-like network of cameras and controls. But privacy concerns are questions of law, of warrants, and of regulatory oversight. Zoning a building out of existence doesn’t strengthen privacy protections or stop the surveillance state. The servers will simply be set up somewhere else, carrying their same functionality today and tomorrow. Our liberty is guarded by the rules that govern the data these centers process and store; blocking the facilities that hold said data doesn’t change those rules at all.
Which brings the argument to its center, and to the one place where the critics have the better of it. The scandal in the data-center boom is the tax code. Across the states, sales-tax exemptions and property abatements for these projects run large, long, and mostly uncapped; by one analysis the breaks can exceed two million dollars for every permanent job created, and Virginia’s annual cost alone climbed from $65 million in 2017 to $750 million by 2023. Yes, exempting business equipment from sales tax is ordinary treatment meant to avoid taxing the same input twice. But the tax policy that really resolves the data center debate is neutrality in both directions: the state should neither punish a data center nor pamper it. Trouble arrives the moment governments set aside the general rule to cut a particular deal, dangling bespoke incentives to land a marquee tenant. (Ahem, Mr. Wonderful.) The tax code then stops describing a level field and starts naming winners, and every neighbor reasonably suspects the game is rigged.
Here the whole controversy resolves into a single, unfashionable idea: a person may build what he wishes on his own land, provided he bears the costs he imposes and enjoys no privilege denied to everyone else. That principle cuts cleanly through the noise. It condemns the blanket moratorium, which forbids a lawful use out of generalized fear. It condemns the sweetheart subsidy just as firmly, since a favor handed to one owner is a burden shoved onto the rest. Both are versions of the same error: the state leaning its thumb on the scale, here to stop building, there to bankroll it.
A fairer settlement is not hard to picture, and pieces of it are already arriving. Tax data centers as we tax any other enterprise, no worse and no better. Design electric rates so the load that calls forth new infrastructure pays for it. Require mitigation of water, noise, and grid strain. Remove the favors, and most of the fury departs with them, because the favors are what turned an ordinary land-use question into a scramble for spoils.
O’Leary never needed to cast his neighbors as agents of Beijing. He needed to make his case, carry his own costs, and ask no special treatment. That is the harder path, and the more honorable one. Liberty’s companion is responsibility, and people should be free to build what they desire on their property provided they ensure no one else is harmed in the process. Apply that old rule to the newest industry, and the servers can hum without setting the country against itself.