By: Noor Chawla
Published: September 13, 2025
The artificial intelligence boom, while groundbreaking in many respects for technology development and its related industries, has created unexpected environmental and ethical concerns. Among these concerns are the significant levels of energy and natural resources required for the data centers’ operation of artificial intelligence systems.[1] Corporations like Microsoft and Meta are rapidly expanding their data centers to support the integration of AI into more of their operations and process the massive amounts of data their AI models collect.[2] One central component of data center expansion is the increasing demand for commercial electricity production, which has been relatively stable for the last decade, but has seen exponential growth connected to the data center boom.[3] Along with labor resources; large amounts of unoccupied land; and utility support, this integration requires large amounts of water to rapidly cool the data centers’ servers and equipment generating neural network connectivity.[4] Further, the geographic placement of the data centers disproportionately impacts communities that are unable to support such large-scale technological infrastructure.[5] The lack of regulation and legal precedent to guide new infrastructure development generates uncertainty as infrastructure grows more rapidly than in the past. This requires municipal and commercial actors in data center sites to evaluate water supply before construction begins. Such evaluation should be spearheaded by the federal government, which can and should take strong regulatory measures to ensure compliance with general environmental and conservatory guidelines.
Regulators must account for economic and environmental factors associated with data center construction because of the rapid rate at which data centers are being built. Factors such as energy consumption and efficiency are essential for legislatures to consider in data center construction and compliance. The United States Department of Energy (DOE) has issued basic guidelines and strategies for how standard modern data centers should operate—including airflow management restrictions, cooling and electrical system baselines, and continuous benchmarks and parameters for companies to measure their facilities against.[6] However, even the federal guidelines acknowledge that “no design guide can offer ‘the most energy-efficient’ data center design” and offer minimal resources beyond the Department of Energy’s general statements. Further, the DOE’s guidelines are only enforceable against data centers receiving federal funds for their construction.[7] Federal agencies must provide more specific instructions for companies to measure their energy efficiency against.
Additionally, several of the same regulatory bodies that are responsible for oversight and regulation of data center construction are motivating big technology companies to continue building more data centers through the use of tax breaks and economic development incentives.[8] For state and federal legislatures, this phenomenon creates competing interests between the creation of economic opportunity for constituents and the preservation of natural resources—the economic interests often win out. For example, the state of Michigan, which has historically experienced water shortages and contamination issues,[9] is being impacted by the data center boom; specifically, disadvantaged communities are being affected. These communities have experienced this before: “In 2016, when Nestle wanted to take 576,000 gallons of [Michigan’s] water each day, tens of thousands of Michigan residents spoke up in opposition. Just one large data center would take between two and five times as much water as Nestle, and these evaporative cooling systems are not capable of reusing the water or returning it to the ecosystem.”[10] Given this response from the affected Michigan community to non-data center commercial development, it is clear that technology companies—whose artificial intelligence resource requirements are exponentially larger—would face opposition and concern regarding water allocation in Michigan. But the legislature’s actions do not always reflect the community’s concerns, as seen by the continued rapid technology expansion and the tax exemptions granted to the responsible corporations.[11]
One detailed case study of the data center boom and its unforeseen complications comes from agricultural concerns in Cheyenne, Wyoming, where Meta will soon build a large data center. Local farmers worry that a massive facility with extensive resource requirements will disrupt their irrigation channels and use up the water that is necessary for their annual crop production.[12] The data center initiative, known as Project Cosmo, began in 2019 and is scheduled to open in 2027.[13] The project—which will cost about $800 million and occupy 715,000 square feet of land—is being locally publicized by Meta as an investment in Wyoming’s infrastructure as an important source of employment for the local community.[14]
By recent measure, the City of Cheyenne requires a maximum of 43,800 megawatts of energy per year. In contrast, an existing data center closest in size and scale to Project Cosmo used 517,718 megawatts of energy in 2022.[15] Additionally, the amount of water required to cool data centers’ massive servers, which rapidly cycle through high amounts of energy and electricity, is a source of worry to Wyoming agricultural community, who are concerned about irrigation and potential harvest season shortages.[16] The mayor of Cheyenne has dismissed the community’s worries by assuring farmers that Meta has agreed to conservation guidelines, but farmers maintain that “agriculture is supposed have a higher priority than industrial water use.”[17] The municipal and commercial actors in the state must balance economic and regulatory concerns before the data center plans are complete due to these disputes over water rights and whether the water supply is limited in itself. To guide regulatory bodies in the right direction, the federal government should expand its basic guidelines on energy-efficient data center design, especially regarding the foundational research that has already been published on technical requirements that can help accomplish this goal.[18] Additionally, both state and federal legislatures should take stricter regulatory stances throughout data center construction processes to ensure compliance with those guidelines. Such oversight is crucial for recognizing the economic, environmental, and social concerns of the communities in which data centers development are being developed.
[1] See generally Christelle Khalaf, Critical Considerations for Regulators on Data Centers, The University of Illinois Chicago Government Finance Research Blog (Dec. 17, 2024), https://gfrc.uic.edu/the-government-finance-research-blog/critical-considerations-for-regulators-on-data-centers/ (providing statistics on technology giants’ consumption of water and energy in various data center sites nationwide).
[2] See generally Reuters, Meta in talks for $200 billion AI data center project, The Information Reports, Reuters (Feb. 25, 2025), https://www.reuters.com/technology/meta-talks-200-billion-ai-data-center-project-information-reports-2025-02-26/ (reporting on Meta’s rumored plans to build a data center following the success of Microsoft’s backing of OpenAI’s large language model ChatGPT).
[3] See Khalaf, supra note 1 (adding that “about 40% of the expected increase in the demand for power by 2030 is tied to data centers”).
[4] See Federal Energy Management Program, Cooling Water Efficiency Opportunities for Federal Data Centers, U.S. Department of Energy, https://www.energy.gov/femp/cooling-water-efficiency-opportunities-federal-data-centers (stating that “the process is energy intensive, with data center IT equipment operating 24 hours a day and requiring cooling on a continuous basis”).
[5] See Clean Water Action, Silicon Valley Billionaires Line Up For State Tax Handouts And Massive Great Lakes Water Withdrawals (May 13, 2024), https://cleanwater.org/releases/silicon-valley-billionaires-line-state-tax-handouts-and-massive-great-lakes-water (compiling remarks from Michigan education nonprofit spokespeople regarding tax breaks given to companies constructing data centers in the Detroit area, specifically in smaller and less economically developed neighborhoods).
[6] See Federal Energy Management Program, Best Practices Guide for Energy-Efficient Data Center Design, U.S. Department of Energy (July 26, 2024) (specifying information included in federal guidelines accessible to companies when implementing energy use procedures in data center design).
[7] Id.; see also Federal Energy Management Program, Services for Federal Agencies, U.S. Department of Energy, https://www.energy.gov/femp/federal-energy-management-program.
[8] See Khalaf, supra note 1 (naming Illinois as one of the states in which tax incentives for data centers were adopted by legislators back in June 2019).
[9] See generally Noah D. Hall, Flint’s Fight for Environmental Rights, 117 Nw. U. L. Rev. 123, 127 (2022), https://scholarlycommons.law.northwestern.edu/nulr/vol117/iss1/5 (summarizing the Flint water crisis through the lens of environmental rights and state inaction regarding clean drinking water between 2011 and 2015).
[10] See Clean Water Action, supra note 5 (quoting Sean McBrearty, Clean Water Action Michigan Director, regarding tax breaks Silicon Valley-affiliated companies building data centers in the state).
[11] See id.
[12] See generally Leo Wolfson, Meta (Facebook) Formally Announces Massive $800M Data Center In Cheyenne, Cowboy State Daily (July 2, 2024), https://cowboystatedaily.com/2024/07/02/meta-formally-announces-massive-800m-715-000-square-foot-cheyenne-data-center/ (detailing the planning and development of Meta’s Cheyenne data center beginning in 2019, known as Project Cosmo and including several agreements between Meta and Wyoming state leadership).
[13] Id.
[14] Id.
[15] Id. (describing the specifications of a data center in Odense, Denmark).
[16] See generally Mark Heinz, Cheyenne Farmers Worry Huge Data Center Will Suck Up Their Irrigation Water, Cowboy State Daily (Mar. 7, 2025), https://cowboystatedaily.com/2025/03/07/cheyenne-farmers-worry-huge-data-center-will-suck-up-their-irrigation-water/ (explaining farmers’ concerns that data centers will impact their longstanding state water rights).
[17] Id. (quoting Louis Ferguson, whose family has been farming grass hay and alfalfa near Cheyenne, Wyoming for several generations); see also Minnesota Trout Unlimited, Data Centers and Coldwater Fisheries (May 12, 2025), https://mntu.org/data-centers-and-coldwater-fisheries/ (expressing concerns over rapid funneling of groundwater for cooling Minnesota data centers and its effects on local fisheries and household wells that depend on cold and oxygen-rich water to operate).
[18] See, e.g., Federal Energy Management Program, supra note 7.