NIMBY backlash threatens U.S. data center boom

Artificial intelligence is supercharging U.S. investment, but many communities don’t want the giant facilities that power it in their backyard.

AI investment meets local resistance

As President Donald Trump promotes AI data centers as key to economic competitiveness—especially against China—local resistance is rising. Spending on tech infrastructure has become a dominant growth driver, accounting for more than half of U.S. GDP growth in the first half of the year. Yet neighborhood pushback has stalled or derailed projects across the country, raising questions about where and how the next wave of AI infrastructure will be built.

Indianapolis: a high‑profile reversal

One of the most visible clashes came in Indianapolis, where Google abruptly withdrew plans for a 468-acre data center campus minutes before a City Council vote expected to go against the project. Residents organized around concerns about round-the-clock noise, light pollution, and heavy demands on local water and power—along with frustration over long-term tax breaks for equipment under Indiana law.

Andrew Filler, a mechanical engineer who keeps a small farm nearby, said visiting another data center convinced him the facilities are far more industrial than described, with outdoor generators and cooling gear and a constant mechanical hum. A growing coalition filled public meetings and ultimately persuaded a majority of council members to oppose the rezoning. Google said it pulled the application for the Franklin Township site, expressing disappointment but noting it still sees opportunities to expand in Indiana.

“There is absolutely a movement here,” said Tyson Slocum, who leads the energy program at the nonprofit Public Citizen.

Nationwide opposition spreads

The pushback is not isolated. In Virginia—the global epicenter of data centers—at least 42 local groups have formed to resist additional projects, according to Data Center Watch, a research firm backed by AI security company 10a Labs. The group estimates that from May 2024 to March 2025, community opposition delayed or blocked roughly $64 billion in data center investments across 28 states, with more projects hitting obstacles since then.

Water and energy flashpoints

Water and energy use are central flashpoints. In Tucson, residents rallied against a proposed 290-acre campus projected to require hundreds of millions of gallons annually in a drought-prone region. City officials denied the operator’s bid for annexation and access to municipal water, and the county later tightened rules for large water users. In Kentucky, farmers helped defeat a rezoning request for a prospective data center, citing fears of increased strain on the power grid and threats to groundwater many farms depend on.

Economic trade‑offs

Economically, data centers can bring investment and tax base growth, but typically create fewer permanent jobs than other major industrial projects. A $7.3 billion Microsoft data center in Wisconsin is projected to support about 800 ongoing roles, while a $7.6 billion Hyundai car plant in Georgia is expected to employ about 8,500.

Transparency and industry response

Slocum argues residents are reacting not only to resource use but also to opaque dealmaking that can involve nondisclosure agreements for public officials. The Data Center Coalition, an industry group, did not respond to questions about the local opposition trend. The coalition has previously cited sizable economic benefits, including a study it funded estimating data centers added $2.1 trillion to U.S. GDP from 2017 to 2021—a figure likely higher today.

Momentum continues despite resistance

Despite the resistance, few expect the AI buildout to stall. Governors are offering rich incentives to attract data center campuses, and the four largest hyperscalers together are on track to spend more than $300 billion in capital expenditures this year, much of it on building and equipping facilities.

Where projects are going now

To avoid clashes, companies are increasingly siting projects far from dense neighborhoods. Several of the largest U.S. data center developments are rising in West Texas, where land is abundant, including a megaproject known as Stargate involving OpenAI. Meta is constructing a large campus in rural Louisiana tied to three newly built natural-gas plants; the project is distant from major population centers and has secured state approvals.

Design tweaks to reduce impact

Some developers are also tweaking designs to ease local worries. Beale Infrastructure, the sponsor of the Tucson project, revised its plans to include an air-cooling system that uses minimal, recirculated water, which the company says would eliminate industrial water consumption. The proposal still needs regulatory sign-off.

Bottom line

A robust AI economy is colliding with community priorities over water, energy, and land use. The NIMBY movement may not stop the data center surge, but it is already reshaping where facilities go—and the conditions under which they get built.