Eminent Domain Disputes Rise Amid Data Center Boom and Electricity Demand
The rise of AI data centers is fueling a building boom and increasing electricity demand, often requiring new transmission lines. This leads to disputes over eminent domain, where power companies seek to acquire private land. A legal scholar examines whether seizing private property for data center-related infrastructure constitutes "public use" under the Fifth Amendment.
The rapid growth of artificial intelligence (AI) in the United States is driving a significant expansion of data centers, with over 3,000 existing and 1,500 under development. This boom, however, is met with public opposition, as 7 in 10 Americans reportedly object to local AI data center construction due to concerns about utility bills, pollution, noise, and the loss of green space.
Data centers require immense amounts of electricity, necessitating new transmission lines that often cross private property. When landowners refuse to sell, power companies are increasingly resorting to eminent domain, the government's inherent power to seize private property for "public use" with "just compensation." This has sparked a debate among legal scholars regarding the application of eminent domain for infrastructure serving private data centers.
While the U.S. Supreme Court's 2005 Kelo v. City of New London decision broadly interpreted "public use" to include economic development, a subsequent public backlash led 45 states to enact eminent domain reform laws. State supreme courts in Michigan, Ohio, and Oklahoma have also adopted more restrictive interpretations, prohibiting seizures solely for private economic development. Cases challenging property seizures for transmission lines have yielded mixed results, with some state courts, like South Dakota and Vermont, affirming such actions if they ensure in-state power grid reliability, while Mississippi's Supreme Court rejected a condemnation where the line would not benefit state customers. Legal experts suggest that arguments about whether new transmission lines genuinely serve in-state customers could provide grounds for future challenges by landowners.