The data center expansion is taking place across the U.S. to power rising AI use, but work often lacks transparency, and communities want more of a voice in shaping these projects — especially because without proper controls in place, they may impact electricity costs for consumers and challenge sustainability goals.
“Tech giants are cutting backroom deals with utilities and government officials to build massive data centers at breakneck speed, while passing the costs onto working families through higher electricity bills, polluted air and water, and false claims about job creation,” Deanna Noël, climate campaigns director with Public Citizen’s Climate Program, said in a statement.
These projects frequently include non-disclosure agreements (NDAs), which indicates a contrast between their development and public interest; opposition has been seen in communities nationwide, in Indiana, Arizona and beyond. In fact, one report found a 125 percent surge in data center opposition in the second quarter of 2025.
Governments, however, can take steps to ensure transparency and accountability as data centers expand, which could help protect communities by reducing public health risks and shielding individuals from rising electricity costs.
Thursday’s report from Public Citizen explores policy solutions state and local governments can implement, and recommended federal reforms. Public Citizen is a largely nonpartisan organization that is focused on consumer advocacy and the defense of democracy.
“This guide is a call to action,” Noël said in a statement. “Policymakers at all levels of government must act with urgency to rein in Big Tech’s unchecked expansion.”
First, the report recommends governments consider placing temporary moratoriums on new data center development until baseline protections are implemented. These projects often advance without binding protections for consumers, so the report recommends establishing baseline criteria prior to considering any data center proposal.
The baseline criteria governments should establish prior to considering any data center project include continuous community engagement, a ban on NDAs, requiring minimum operational commitments, strict water conservation measures, renewable energy procurement, and committing to local hiring and apprenticeship programs.
In addition to prohibiting NDAs, the report says governments should be required to disclose information about projects at least 90 days before issuing or responding to a request for proposals. This information should include the developer’s and operator’s identities, proposed tax incentives, expected water and energy use, environmental impact, short- and long-term job creation claims and supporting evidence, and potential harms like noise pollution. This should all be accessible to the public on a state website or other public channels.
Many states approve data center projects before studying the impacts to the electric grid and water resources, so the report recommends state-commissioned independent studies that estimate both short- and long-term energy demand, water use, operational costs, and required infrastructure.
Data centers are often seeking financial incentives such as tax breaks in exchange for the promise of job creation, but these projects create few permanent, high-paying jobs, per the report. As such, states and local governments should ensure that incentives are strictly conditional and meet demands such as using clean and renewable energy, investing in local workforce development, and preventing consumer electricity price increases.
Monthly electricity bills have risen 267 percent or more in five years in regions that have a lot of data centers, but state and local policymakers can protect consumers by establishing a new rate class where data centers pay the full costs of energy needs. Data centers should also be required to cover the full cost of new infrastructure needed to power them, the report’s authors write.
To address the energy impact, data centers should be required to use renewable energy, and new fossil fuel infrastructure should be prohibited. Contracts that enable fossil fuel expansion should be disclosed. Energy efficiency standards should be established. Grid reliability for consumers can also be protected by requiring load flexibility during peak demand periods.
A single large data center can use up to 5 million gallons of water per day — roughly equivalent to what a city of 50,000 people uses during the same period — so policies should require full transparency on water usage and require strict conservation measures. An annual fee on data centers for every thousand gallons of potable water used can be imposed.
These projects often tout local job creation, but there is little evidence to suggest significant growth in long-term, high-paying job opportunities, according to the report. As such, data centers should be required to adhere to high labor standards including local hiring commitments, investing in local workforce development and supporting the right to unionize.
The report also recommends several federal reforms to protect the public interest.
The U.S. Congress should regulate data centers under federal bulk power market reliability standards, require load flexibility, create new authorities to scrutinize data center energy use, codify the November 2024 Federal Energy Regulatory Commission (FERC) order into law, make data center computer systems subject to federal energy efficiency standards, and prohibit federal pre-emption to build data centers.
The November 2024 order deemed it unjust to shift power generation away from the bulk market to serve a data center, but the report indicates FERC could try to nullify it. Federal pre-emption — as has been seen recently in efforts to limit state-level AI safeguards — could be used to support data center build-outs and override state, county or municipal laws like zoning regulations.
“Policymakers must act with urgency to confront the harms already unfolding from unregulated data center expansion,” the report concludes.
