Data Centers Need a New Approach to Community Benefits

Key Takeaways

• Community Benefits Agreements (CBAs) have existed for two decades, and the data center buildout is exposing where the legacy model breaks.
• Across 46 cancelled or stalled US data center projects that Relae analyzed, late-stage benefits packages may be insufficient to change outcomes. Process, transparency, and proof of delivery did.
• The next generation of CBAs, especially for data centers, needs to be meaningful in scope and community voice, measurable in delivery and outcomes, and durable across political and generational divides.

Communities Are Rejecting the Legacy Benefits Model

In a white paper published earlier this year, Relae documented 46 US data center projects that were cancelled, stalled, or withdrawn between January 2024 and May 2026. Together, these projects represent more than US$170 billion in announced investment associated with projects canceled, stalled, or withdrawn following community opposition. Developers led with projects that included reactive communications and limited benefits packages negotiated under the pressure of rapid development timelines and local permitting and approval processes.

[stat]

Across these cases, local communities expressed concerns ranging from environmental and natural resource concerns to electricity rate impacts, to the lack of transparency and accountable development approaches. Even more importantly, communities do not clearly see how AI-driven data center development directly benefits them and advances their priorities and local social and economic goals.

The legacy community benefits models that data center developers are deploying were designed for a different kind of project, in a different political context. The public and local communities are demanding a new model to meet the current moment.

What Is a Community Benefits Agreement? A Brief History of CBAs

Community Benefits Agreements, or CBAs, have been a feature of US infrastructure development for twenty years. The foundational practitioner manual was published by Julian Gross, Greg LeRoy, and Madeline Janis-Aparicio in 2005, and the Partnership for Working Families coalition has carried the practice forward since. 

The frame has expanded. Just Transition principles from labor and climate justice coalitions, the former federal Justice40 Initiative, and contemporary CBA templates from civil rights organizations like the NAACP have pushed the field toward binding equity commitments, durable community ownership stakes, and, where Indigenous or culturally significant sites are implicated, free prior and informed consent. These frameworks moved the field forward. 

Relae examined CBAs across 40 US climate and clean energy projects in our prior white paper, Codifying Community Benefits in US Climate and Clean Energy Projects. Our analysis found that developers now routinely integrate multiple benefit types, including fiscal, workforce, infrastructure, environmental, and procedural commitments. CBAs for climate and clean energy projects have evolved, and this has brought many improvements, even though imperfections remain. The absence of a shared standard for defining and monitoring those benefits can leave outcomes uneven and often inequitable across host communities. Some efforts attempted to create a unified structure. For example, the Department of Energy had a Community Benefits Plan requirement on every Bipartisan Infrastructure Law and Inflation Reduction Act application, weighted at twenty percent of technical review. 

Even still, these models were subject to political whims and did not advance localized and community-driven benefits. The gap now is in the timing, verification, and enforcement layer that turns those commitments into outcomes.

Community Data Center Opposition Is Breaking the Old CBA Model

Data center capital is arriving faster than any wave of large-load infrastructure since the shale gas boom. BCG estimates hyperscalers will spend US$1.8 trillion on data center-related capex in the US between 2024 and 2030. According to Dell'Oro Group, the four largest US cloud providers (Amazon, Microsoft, Google, and Meta) spent over US$340 billion in 2025 alone, with Amazon leading at $125 billion. Communities are responding faster, too. According to both Data Center Watch and Relae's own Data Center Cancellations Tracker, the opposition wave documented is mobilizing in weeks, not months.

Data center opposition in the US is bipartisan. It spans red and blue counties, every region, and multiple grid operators, with nearly two-thirds of the blocked investment sitting in counties that voted for Donald Trump in 2024.

By the time a developer reaches a public hearing with strong local community organization, the path of the project is largely set. Late-stage benefits packages that are offered as contractual agreements to side-step community concerns are proving to be ineffective. Communities read them as concessions, not commitments. Good Jobs First has now turned that critique on the data center sector, warning that hyperscale developers risk using the CBA label to whitewash bad deals.

What Makes a Community Benefits Agreement Actually Work?

The next generation of community benefits needs to pass three tests: meaningful, measurable, and durable.

1. Meaningful. Benefits should be calibrated to the host community's burden and vulnerability profile and be developed in collaboration with local community leaders and community-based organizations. Developers should draw on best-in-class methods in environmental justice analyses to help develop strong and responsible community engagement plans to involve residents and impacted communities in data center design decisions. Communities most exposed to siting harm must be at the table on equal footing with adjacent jurisdictions.

2. Measurable. For developers to be accountable to local communities, benefits frameworks need to include metrics for tracking and verifying both investment and outcomes. SMART (specific, measurable, attainable, relevant, and time-bound) milestones, independent monitoring, and secured financial obligations should be the default, not the exception. Historically, DOE's Community Benefits Plan requirements provided an example of incorporating measurable community commitments into federal funding applications. Although these federal requirements have since been rescinded, their emphasis on specific milestones and accountability offers lessons for voluntary community benefits frameworks and have set a usable floor, with at least one specific, measurable, achievable, realistic, and time-bound milestone per budget period. RMI's analysis shows how that floor translates to project-level design. The same logic applies to data centers. If a commitment cannot be measured by the community, it is not a commitment.

3. Durable. Benefits have to survive political winds and local electoral politics. Any benefits that a developer delivers should also be intergenerational in scale, or at least be scaled to the planned lifecycle operations of the data center itself. A CBA built only on conversations negotiated in a closed room will not hold. Durable benefits are written with enforcement mechanisms, conditional triggers, and modification rights that the community can exercise. The strongest form of durability is community ownership, in the shape of revenue share, community trust structures, or potential co-ownership of infrastructure or assets like battery storage or renewable energy generation. Microsoft's Community-First AI Infrastructure framework is a useful industry signal, but voluntary frameworks do not substitute for instruments the community can enforce.

Where Developers and Capital Partners Go From Here

The cancellation surge is a structural feature of the current data center siting environment. The patterns are legible enough to act on now. Three moves matter most.

1. Engage early, and well before site selection. Genuine engagement means naming the end user on the application, opening pre-application discussions to the public, and treating disclosure as a siting strategy rather than a legal afterthought.

2. Calibrate benefits to the host community, not to a template. Pre-siting analysis of demographic, environmental, and infrastructure indicators tells a developer whether drinking-water investment, energy burden protection, noise mitigation, or air-quality remediation will land as a real benefit for that community. Likewise, community involvement and voice in benefits design are equally important to shape calibrated and meaningful benefits. The same investment delivers very different value across communities.

3. Build verification into the instrument from day one. SMART milestones, independent monitoring, secured financial obligations, and modification rights the community can exercise belong in the agreement at signing, not bolted on later. Capital partners should expect to see these structures in their own diligence. A commitment without measurement is a promise, and communities are no longer accepting promises.

The Next Generation of Community Benefits Is Being Written Now

The next generation of community benefits is being designed right now, across municipal halls, civic coalitions, capital diligence checklists, and developer playbooks. The frameworks that will work are the ones that pass three tests: meaningful in scope and community voice, measurable in delivery and outcomes, and durable across political and generational divides.

Relae's Responsible Development team works with developers, capital partners, and host communities to build these frameworks from the ground up. Pre-siting community intelligence, burden-calibrated benefits design, and the verification scaffolding that converts commitments into outcomes.

The shift from reactive to proactive community engagement puts the focus on whether developers are willing to advance the capital to develop meaningful, measurable, and durable community benefits.

[cta]

Frequently Asked Questions

Why do data centers need community benefits agreements?
Communities opposing data center projects cite concerns ranging from environmental and rate impacts to a lack of transparency, and often don’t see how the project benefits them directly. Across 46 cancelled or stalled US data center projects Relae analyzed, representing more than US$170 billion in blocked investment, late-stage benefits offered under pressure didn’t change outcomes. A community benefits agreement lets developers deliver benefits proactively and make them verifiable, rather than reactively once opposition has organized. 

What’s the difference between a legacy community benefits agreement and a next-generation one?
Legacy CBAs were often negotiated with specific legal and formal entities like County Commissions or City Councils and had narrow focuses on workforce or economic development. Oftentimes, these tools were offered as concessions through negotiation, rather than commitments, which is why communities are rejecting them. A next-generation community benefits agreement is meaningful, measurable, and durable from the start, with benefits calibrated to the host community rather than bolted on later.

Who should be involved in negotiating a community benefits agreement for a data center?
Benefits should be developed with local community leaders and community-based organizations, with the most affected communities at the table on equal footing with adjacent jurisdictions. Developers, capital partners, and host communities all have a role in building the SMART milestones and independent monitoring that turn those commitments into outcomes.

Key Takeaways

• Community opposition has blocked, withdrawn, or stalled more than $170 billion in announced AI data center investment across 20 US states since January 2024. The pace is accelerating: 6 cancellations in 2024, 25 in 2025, and more than 20 additional cancellations by May 15, 2026.
• Data center opposition is bipartisan. It spans red and blue counties, every region, and multiple grid operators, with nearly two-thirds of the blocked investment sitting in counties that voted for Donald Trump in 2024. 
• Process and transparency, more than resource concerns alone, drive the fastest and most durable opposition. How a developer runs the engagement process shapes both community sentiment and the project’s ultimate success.

How Many AI Data Center Projects Have Been Cancelled? 

Between January 1, 2024, and May 15, 2026, community opposition blocked, withdrew, or stalled 46 announced AI data center projects across 20 US states, representing more than $170 billion in announced investment. These values are disclosed or derived for 35 of the 46 projects; the remaining 11 carry no public figure.

[stat]

The pace of successful opposition has accelerated sharply. Cancellations rose from 6 in 2024 to 25 in 2025. The first five months of 2026 added more than 20 additional cancellations, the fastest stretch on record. 

Virginia leads the state count with 11 blocked projects, followed by Indiana with 7 and Texas with 5. Together, those three states account for roughly half of all cancellations in the dataset. The PJM grid region carries the largest single share of blocked investment at $70 billion across 13 projects, followed by MISO at $37 billion.

Is Opposition to Data Centers Bipartisan?

Yes. The opposition wave crosses party lines on every measure we examined. Republican-leaning counties hosted 28 of the 46 projects (61%), Democratic-leaning counties hosted 16 (35%), and 2 fell within five points.

Weighted by announced investment, about two-thirds of blocked dollars sat in Republican-voting counties. Strong Republican counties (those Trump won by more than 15 points) account for $99 billion across 23 projects. Strong Democratic counties account for $29 billion across 9 projects. The remaining $44 billion spans Lean Republican, Tossup, and Lean Democratic counties.

Why Are Communities Opposing Data Centers?

Communities raise a consistent set of concerns across the country: water demand, electricity rates, air quality where developers propose gas co-generation, rural character, and a lack of transparency in the development process. 

Across the seven cases that we studied in depth, process, and transparency concerns were the most consistently cited factors associated with opposition. Non-disclosure agreements between developers and local officials, ownership structures in which the ultimate end-user was not publicly identified, and closed-door pre-application negotiations produce opposition faster and more durably than any other concern.

The pattern holds across very different communities: a diffuse civic mobilization in rural Georgia, an NGO water coalition in a Texas college town, a conservation coalition anchored by the Southern Environmental Law Center in Southside, Virginia, and an institutional civic organization with legal-expert and celebrity support in northern Virginia. Each produced the same outcome, and each flagged process and transparency as a dominant or top-three concern in the public record.

By the time a project reaches its first public hearing against organized community opposition, the political path of the project is largely set. Late-stage benefits packages consistently fail to reverse that trajectory. Communities read them as concessions, not commitments.

Assess Community Opposition Risk Before You Site

Community opposition is now a structural feature of the AI data center siting environment. The patterns are clear enough to act on now. Relae's Community Impacts team helps developers and capital partners implement responsible development standards through pre-siting community intelligence, calibration of benefits design to specific community contexts, and building the verification scaffolding that turns commitments into outcomes. 

[cta]

Frequently Asked Questions 

Which states are banning data centers in the US?

The first statewide moratoriums on data centers have arrived. In July 2026, Governor Hochul signed the country's first statewide moratorium, an executive order pausing state environmental permits for up to one year for new data centers of 50 MW or more. Texas followed weeks later, halting approvals of new data center grid connections until state regulators audit their power, water, tax, and ownership details. This is a snapshot from August 2026, and we will likely see additional changes in the months ahead.

The local picture is more developed. Individual municipalities and counties have adopted moratoria and zoning ordinance amendments that block or restrict data centers within their jurisdictions. The City of Peculiar, Missouri, removed data centers from its light-industrial zoning entirely. Monroe County, Georgia, and Jones County, Georgia, both adopted moratoria after project denials in 2025. Cassville Township, Wisconsin, and San Marcos, Texas adopted zoning and code amendments in 2026. State legislatures in Virginia, Indiana, Texas, and Missouri have taken up data center siting, ratepayer, and permitting legislation, though most bills remain in progress rather than enacted.

How much data center investment has been blocked in the US?

More than $170 billion in announced AI data center investment has been blocked, withdrawn, or stalled by community opposition across 46 projects and 20 US states between January 1, 2024 and May 15, 2026. 

Relae arrived at this figure from data on 35 of the 46 projects; 11 have no publicly disclosed investment value. The pace has accelerated sharply: 6 cancellations in 2024, 25 in 2025, and more than 20 additional cancellations in the first five months of 2026 alone. Virginia leads the state count with 11 projects. The PJM grid region carries the largest single share of blocked capacity at $70 billion across 13 projects.

What causes a data center project to be cancelled by community opposition?

As of August 2026, communities cite a consistent set of concerns across cancelled projects: water demand, grid strain and residential rate impacts, air quality where developers propose gas-fired co-generation, rural character and farmland conversion, and lack of transparency in the development process. 

In the seven cases we studied in depth, process and transparency were together the most consistent driver of opposition. Non-disclosure agreements between developers and local officials, shell LLC ownership structures that conceal the end-user, and closed-door pre-application negotiations produce faster and more durable opposition than any single resource concern. Late-stage benefits packages consistently fail once that transparency-driven frame has formed.

Key Takeaways 

• AI data centers are driving the fastest electricity demand growth in decades: US data centers consume an estimated 4 to 5% of US electricity today, projected to reach as much as 9 to 17% by 2030 (EPRI).
• Without deliberate cost allocation, residential and small-business ratepayers subsidize private AI infrastructure. 
• Peer-reviewed modeling projects data center growth could raise US power costs 6 to 29% nationally by 2030, and up to 57% in the hardest-hit regions.
• Utility commissioners, state regulators, and policymakers now have working models to draw from, including large-load tariffs, dedicated rate classes, and direct assignment of transmission costs.

AI Data Center Energy Demand Is Testing the Limits of the Grid

AI is driving electricity demand at a pace the US grid has not seen in decades. US data centers already consume an estimated 4 to 5% of the nation's electricity, and EPRI projects that share could reach 9 to 17% by 2030. Behind nearly every AI model and digital product is the invisible infrastructure that powers it: data centers. These facilities are resource-intensive, requiring massive amounts of electricity to power servers, substantial water for cooling, and extensive new grid infrastructure.

In the race to decarbonize the grid, data centers are emerging as a critical pressure point. This infrastructure sits at the intersection of digital growth and climate action, forcing a difficult question: who pays to power AI?

Legacy Utility Models Weren’t Built for this Growth

Utilities must upgrade aging grid infrastructure to meet this new surge in electricity demand, while maintaining reliability. Under legacy utility frameworks, it's often ratepayers who foot the bill for those upgrades. And the costs are not distributed equitably.

Traditional utility planning assumes that increased demand justifies expanded investment in generation and transmission infrastructure. When a new type of large customer, like a tech company, moves into a utility’s service territory, utilities plan new infrastructure to meet that projected demand. 

Utilities typically recover the cost of new infrastructure through a process called rate base cost recovery. This allows utilities to charge all customers in the “rate base” for the expenses incurred, including thousands of individuals, families, and small businesses, even when those costs stem from the demands of just a few large users.   

This legacy model struggles to keep pace in the AI boom era, where massive new electricity demand can double within a few years, a scale of growth that used to take decades. Additionally, while data centers create short-term construction jobs, there are almost no lasting employment benefits for local communities.

It's clearly inequitable for all ratepayers to bear the costs of upgrading the grid to benefit just a small number of massive data centers. But that's not the only problem. If utilities decide to meet new power demand from large data centers with new fossil fuel generation, such as gas peaker plants, they risk creating stranded assets: infrastructure that becomes obsolete or uneconomical as climate targets, clean energy mandates, or the cost-effectiveness of renewables accelerates. Once built, ratepayers will have to continue paying for these long-lived investments for years, even if they are underutilized or retired early due to policy shifts. This risk is no longer hypothetical: to serve projected data center load, Georgia regulators approved a plan to extend the lives of two massive coal plants to as late as 2038, and Virginia regulators stripped roughly $350 million tied to speculative early-stage data center projects out of Dominion Energy's revenue forecast.

If utilities are locking in decades of new fossil fuel generation to meet short-term data center growth, ratepayers may be left holding the bag for infrastructure that contradicts their climate goals and state mandates, with little ratepayer or community input into the decision. Effectively, local communities may be subsidizing a technology that they did not directly ask for in the first place and has little to no direct community benefits. The result is a long-term misalignment between utility investment strategy and the public interest.

Ratepayers Bear the Cost of Private AI Expansion

The economic burden of data center expansion can fall disproportionately on households and small businesses. But data centers, as the largest and fastest-growing users, often negotiate bespoke contracts, subsidized rates, or fixed-price electricity agreements that shield them from long-term cost volatility.

This can result in other customers, especially residential and low-income ratepayers, bearing a disproportionate share of the infrastructure and maintenance costs. In many states, residential and low-income customers already experience energy cost burdens that exceed affordability thresholds. Adding the weight of infrastructure investments to serve energy-intensive data centers, without sharing those costs equitably, exacerbates an already regressive utility cost allocation system.

Georgia shows how these costs reach ratepayers even when regulators act. Georgia Power customers absorbed six rate increases totaling roughly $43 per month between 2023 and 2025, and while regulators approved a base-rate freeze through 2028, the freeze excluded fuel and storm costs. In 2026 fuel-cost proceedings, testimony showed that large industrial and data center customers raise other customers' monthly fuel costs by 5 to 11%, prompting the Georgia Public Service Commission to open an investigation into how fuel costs are allocated between large loads and residential customers. Ratepayers noticed: in November 2025, both Georgia PSC seats flipped in elections run explicitly on utility bills and data center cost-shifting. In Virginia, regulators approved a rate increase of roughly $16 per month for typical Dominion Energy residential customers amid surging data center demand.

These examples are not anomalies. A peer-reviewed study in Environmental Research Letters projects that data center growth could raise US power costs 6 to 29% nationally by 2030, and up to 57% in the hardest-hit regions, with Virginia among the steepest. This is a systemic shift in energy demand, one that places a growing burden on communities and lacks clear public benefits.

Environmental and Community Impacts Are Mounting

Beyond economic impacts, the geography of data center development reveals another layer of inequity: environmental justice. Data center siting often prioritizes affordable land, low resource costs (e.g., electricity, water), and climate considerations like heat variability. They also rely on proximity to pre-existing fossil fuel generation and transmission infrastructure. Research now confirms the pattern this creates: an analysis of 550 EPA-regulated data centers found that air pollution burdens near data centers rise with the share of people of color living nearby, and a 2026 Washington state study found more than half the state's data centers sit in census tracts with the highest concentrations of people of color.

These communities often absorb the negative externalities beyond their electricity bills, including increased air pollution from peaker plants and on-site diesel or gas backup generators, traffic and construction noise, water stress, and land use changes. Simultaneously, they do not receive direct net positive benefits. Frontline communities are paying attention to this trend, and opposition has become a defining force in where AI infrastructure gets built. Gallup finds 71% of Americans now oppose a data center in their own area, and Data Center Watch counted roughly $130 billion in projects blocked or delayed in the first quarter of 2026 alone. The stakes of community opposition are increasing and intensifying. 

The consequences of ignoring communities are now playing out in federal court. At xAI's Colossus facility in Memphis, developers operated dozens of on-site gas turbines without air permits in a majority-Black area already burdened by industrial pollution. After the Shelby County Health Department granted permits for a subset of turbines in July 2025, the fight moved to xAI's second campus across the state line: in April 2026, the NAACP filed a Clean Air Act lawsuit over roughly 27 unpermitted gas turbines at the Colossus 2 site in Southaven, Mississippi, seeking penalties of more than $100,000 per day. On-site power can help reduce demand on the grid, which can be a benefit. But when that generation runs without permits or oversight, nearby communities bear unmeasured health and environmental impacts from hazardous emissions, and the litigation now underway shows how quickly unpermitted power becomes a legal and reputational liability.

To date, data center developers do not appear to have maximized potential community benefits or engagement. Data centers have not typically employed many local residents beyond construction phases, resulting in limited economic benefits, particularly when facility ownership is distant from the local community or has few local ties. When these same communities already experience high pollution burden or economic precarity, the cumulative impact of a new data center can deepen existing vulnerabilities.

Water use is also a mounting environmental justice concern. Many data centers rely on evaporative cooling systems that draw millions of gallons of water per day, and peer-reviewed research finds significant gaps in how the industry discloses its water footprint. In drought-prone regions, this can stress already-depleted aquifers and heighten tensions over water access.

The result is a high-stakes tradeoff between digital infrastructure and local resource resilience, one that communities should be a part of deciding.

States and Regulators Are Writing the New Rules 

Virginia, the "Data Center Capital of the World," is home to 674 data centers that consume an estimated 25% of the state's electricity, a share EPRI projects could reach 39 to 57% by 2030, the highest of any state. After legislators considered but did not pass data center bills in the 2025 session, the 2026 General Assembly passed roughly 15 data center bills, including legislation, signed in May 2026, directing regulators to ensure data center costs are not subsidized by other customers, along with new requirements for site impact assessments and water-use reporting. Virginia's State Corporation Commission had already created a dedicated rate class for high energy use customers, with 14-year contract terms and minimum charges that apply whether or not the projected load materializes, and in August 2026 it went further, ordering Dominion to develop a tariff that directly assigns transmission costs to the data centers that trigger them.

Virginia is not alone. Ohio regulators approved a landmark tariff requiring large data centers to pay for 85% of the capacity they request, whether or not they use it. Oregon's POWER Act created the nation's first legislated rate class for data centers. Texas gave its grid operator authority to curtail large loads during emergencies. Minnesota, California, Alabama, Tennessee, South Dakota, Nebraska, and Florida have all enacted their own ratepayer-protection measures, and at the federal level, FERC ordered the nation's largest grid operator to write new rules for data centers that co-locate with power plants, citing the need for consumer protection and clear cost allocation. State energy officials are also proactively planning for data center expansion.

The direction is clear. The unresolved question is whether these reforms move faster than the costs already flowing to ratepayers.

What Is the Public Good of Data Centers?

AI infrastructure powers innovation, job creation, research, and the technologies we rely on every day. But it may also bring inequitable social and direct financial costs. Like highways, factories, and pipelines before them, the question remains: What is the public good of AI data centers? How should we hold data center developers accountable to the public interest, which values a clean energy future? We need clear-eyed assessments of how data centers impact energy affordability, climate progress, and environmental equity.

Yesterday's utility policy frameworks were not designed for hyperscale AI data centers. The reforms now underway are a start, but without sustained attention they may still force the public to subsidize private expansion, through economic and environmental costs, often without equitable community engagement, climate accountability, or local benefit.

AI Data Center Growth Needs Accountability, Equity, and Reform

To align data center growth with the public interest, the stakeholders involved now have proven models to build on:

• Utilities and regulators can require large customers to pay an equitable share of new infrastructure costs, as Ohio's minimum-take tariff and Virginia's dedicated rate class now do.
• Public Utility Commissions can mandate equity and community impact assessments during siting and permitting, following Virginia's new site assessment requirements.
• States can condition tax incentives and zoning approvals on local hiring, emissions reductions, and community benefits agreements.
• Data center developers can prioritize clean power and commit to transparent, equitable community engagement and benefits plans before opposition, litigation, and cancellations decide the outcome for them.

As we build the digital backbone of the next century, we must avoid repeating injustices of the past. A just energy transition requires more than megawatts: it demands equity, policy interventions, and real climate progress.

[cta]

Frequently Asked Questions

How do utilities typically recover the cost of infrastructure built to serve large data center customers, and why does this burden fall on other ratepayers?

Utilities recover infrastructure investments through rate base cost recovery: regulators approve new generation, transmission, and distribution spending, and the costs are spread across all customers in the rate base through their monthly bills. That model worked when demand growth was gradual and diffuse, but when a single data center campus drives hundreds of megawatts of new investment, standard cost allocation spreads those costs across households and small businesses unless regulators adopt a special tariff or rate class that assigns them to the customer who caused them.

What are stranded assets in the context of data center power demand, and how do they create long-term risk for utilities and ratepayers?

Stranded assets are long-lived infrastructure investments, like new gas plants built for projected data center load, that become underused or uneconomical before they are paid off, whether because demand never materializes or because policy and market shifts overtake them. Because utilities recover those costs through rates over decades, ratepayers keep paying even if the asset sits idle. The risk is acute today because data center demand forecasts are highly uncertain: Virginia regulators removed roughly $350 million tied to speculative data center projects from one utility's revenue forecast in 2025.

Why do data centers often locate in rural or low-income communities, and what are the environmental justice implications?

Data center siting favors cheap land, fast permitting, low-cost power and water, and proximity to existing generation and transmission, conditions most common in rural, low-income, and historically marginalized communities. Research confirms the consequences: analysis of 550 EPA-regulated data centers found air pollution burdens rise with the share of people of color living nearby. These communities absorb the air pollution, water stress, noise, and land use impacts while receiving few lasting jobs or direct benefits.

What regulatory or policy tools can states and Public Utility Commissions use to ensure data center growth doesn't unfairly shift costs to residential and small-business ratepayers?

The toolkit has expanded rapidly since 2025. Commissions can create dedicated large-load rate classes and tariffs with minimum take-or-pay provisions, long contract terms, collateral requirements, and exit fees, as Ohio and Virginia have done; directly assign infrastructure enhancement costs to the customers that trigger them; and require site impact assessments during permitting. Legislatures can codify ratepayer protections, require water and load-forecast transparency, and condition tax incentives on community benefits, models now in place in at least eight states.

This commentary reflects public policy analysis and opinion, not legal advice or regulatory determinations. 

Key Takeaways

• Environmental justice rests on four pillars: distributive, procedural, recognitional, and restorative justice. These apply to any project shaping a community, from a carbon removal project to an AI data center.
• The federal environmental justice architecture was dismantled in 2025: the Justice40 Initiative, which covered more than 500 federal programs across 19 agencies, was rescinded, EPA's EJScreen tool was taken down, and EPA's environmental justice offices were eliminated. The burdens those programs were designed to address still remain, and community organizers and state governments are turning to local solutions to address environmental justice issues. 
• Community benefits plans can be one tool to help advance distributive justice. For example, in the US, community opposition has blocked, stalled, or withdrawn more than $170 billion in announced AI data center capacity since January 2024, making community benefit plans an essential aspect of any large infrastructure project.

Introduction

The EPA reports that in the US, the most severe impacts of climate change fall disproportionately on low-income and Black, Indigenous, and people of color (BIPOC) communities. This climate burden is part of an ongoing legacy of inequity, including redlining and the disenfranchisement of Indigenous peoples, that has excluded these communities from financial and natural resources over generations. As a result, disinvested and underserved communities are experiencing cumulative effects on their health and livelihoods that may be exacerbated by climate change.

Climate mitigation and adaptation efforts do not automatically correct this pattern. Solar panel adoption, electric vehicle adoption, urban forest cover, and FEMA buyouts do not always meaningfully benefit marginalized populations. Climate solutions like carbon dioxide removal are gaining traction, and they carry real social, economic, and ecological benefits. But if communities are excluded from the decision-making processes around these solutions, they cannot realize those benefits. It doesn't have to be this way: decarbonization interventions like carbon dioxide removal are still early enough in their development to center community needs and distribute benefits equitably, before historical inequities are institutionalized again.

Environmental Justice Explained

Environmental justice promotes the equitable distribution of environmental harms and benefits through the meaningful involvement of community members as stakeholders, where their decisions are recognized and acted on. As a practice, environmental justice can encompass anything from promoting equal access to safe, clean drinking water to encouraging equitable design and development of climate mitigation efforts, including carbon removal projects. Environmental justice also promotes resiliency for disinvested communities in a changing climate through inclusive, equitable, and ongoing participation in environmental decision-making. For many, environmental justice is a framework and political project of building a better world for the communities most impacted by the legacies and ongoing realities of environmental racism and industrial development. This movement is led by leaders from Native American Tribes, organizers from communities of color with major roots in Black and Latinx communities, and activist-academics. Policymakers have worked to institutionalize this movement to varying degrees of success and the environmental justice movement has also traveled globally. 

History of Environmental Justice in the US

The US environmental justice movement grew out of the civil rights movement. In 1968, Black sanitation workers in Memphis went on strike over unsafe conditions and unequal pay after two workers were crushed to death by a malfunctioning garbage truck; Dr. Martin Luther King, Jr. went to Memphis to support the strikers and was assassinated there. The strike remains a landmark in the linking of civil rights, labor, and environmental health.

In 1982, residents of Warren County, North Carolina, a majority-Black rural county, organized to block a PCB landfill sited in their community. More than 500 people were arrested, and the protests became the recognized spark of the national movement. It was there that civil rights leader Rev. Benjamin Chavis coined the term "environmental racism" to describe the deliberate concentration of pollution and waste facilities in disinvested communities. Warren County prompted the evidence that made the pattern undeniable: a 1983 Government Accountability Office study found that three of four hazardous waste landfills in the Southeast were sited in majority-Black communities, and the United Church of Christ's 1987 report, Toxic Wastes and Race in the United States, found race was the single strongest predictor of hazardous waste facility siting nationwide.

Dr. Robert Bullard, a leader in environmental justice scholarship, observed: "Whether by conscious design or institutional neglect, communities of color in urban ghettos, in rural 'poverty pockets,' or on economically impoverished Native-American Reservations face some of the worst environmental devastation in the nation."

Over the following decades, and as the result of rigorous community organizing led primarily by Black leaders in the South, environmental justice institutions took shape. The US National Environmental Justice Advisory Council (NEJAC), chartered in 1993, advised the EPA for more than three decades. From 2021 to 2025, the Justice40 Initiative committed 40% of the benefits of select federal investments, spanning climate, clean energy, energy efficiency, and clean transit, to communities that are marginalized, underserved, and overburdened by pollution.

Principles of Environmental Justice

Federal initiatives such as Justice40 drew from the original 17 Principles of Environmental Justice adopted by delegates to the First National People of Color Environmental Leadership Summit in Washington, DC, in October 1991. The US Department of Energy, responding to concerns environmental justice stakeholders raised around carbon management and hydrogen, organized its project design guidance around four types of energy and environmental justice: distributive justice, procedural justice, recognitional justice, and restorative justice. These four pillars remain the working framework for practitioners today, whether or not a federal program funds them.

Distributive Justice

Distributive justice addresses the equitable distribution of burdens and benefits across geographies and populations. Distributive justice is concerned with factors such as distribution of income, wealth, jobs, opportunities, utilities, food security, and water and air quality. This type of justice also refers to the perceived fairness of the distribution of burdens and benefits, or how people evaluate what they receive relative to social and historical contexts.

Procedural Justice

Procedural justice addresses the meaningful involvement of affected communities as stakeholders in environmental decision-making processes. Procedural justice contributes to distributive justice by informing the policies and procedures that determine how environmental harms and benefits are distributed to individuals, nations, and generations.

Recognitional Justice

Recognitional justice accounts for the social, historical, and cultural contexts of a geography or population, and how those contexts have determined the geography's or population's relationship to power. Recognitional justice aims to facilitate the recognition of all community members as actors, affirming their intrinsic value and equal moral standing.

Restorative Justice

Restorative justice directly responds to historical harm, and through equitable decision-making and participation, facilitates opportunities to improve health, safety, and environmental conditions. Restorative justice promotes resolution and remediation, in consideration of distributive, procedural, and recognitional justice.

The Federal Retreat, and What Remains

That federal architecture was dismantled in 2025. On January 20, 2025, Executive Order 14148 rescinded the order that created Justice40, ending a commitment that had grown to cover more than 500 programs across 19 federal agencies. In February 2025, EPA removed public access to EJScreen, the screening and mapping tool practitioners nationwide used to identify overburdened communities; a working reconstruction is maintained by Public Environmental Data Partners. In March 2025, EPA terminated NEJAC and announced the elimination of its Office of Environmental Justice and External Civil Rights along with all ten regional environmental justice offices, and moved to cancel billions of dollars in environmental justice grants. Federal courts have ruled some of those grant terminations unlawful, most recently in June 2026, though the same court declined to restart the program because its staff was already gone. In December 2025, the Department of Justice repealed the Title VI disparate-impact regulations that had served as a principal federal civil rights tool against practices with discriminatory environmental effects.

Yet, the environmental justice movement is enduring, and increasingly, state legislatures are now where environmental justice policy lives: New Jersey's cumulative impacts law still empowers regulators to deny permits for new facilities in overburdened communities; New York adopted implementing regulations for its environmental justice siting law in June 2026; Virginia enacted laws in April 2026 requiring environmental justice strategies in local comprehensive plans; Illinois created a state Office of Environmental Justice in May 2026; and Massachusetts' cumulative impact regulations took effect in July 2026. The movement built its evidence and its principles long before any federal program existed, and both outlast the programs.

Environmental Justice and Carbon Dioxide Removal

From climate resilience to carbon dioxide removal, climate action strategies must center environmental justice to deliver both meaningful and equitable outcomes. And with continued investment in carbon dioxide removal, now is the time to embed environmental justice in every stage of carbon project development from the start.

For communities, doing so can unlock socioeconomic and ecological benefits, from job creation to ecosystem services. For project developers as well as buyers of carbon dioxide removal, incorporating environmental justice helps to ensure the long-term viability of projects by delivering higher quality carbon removal credits that not only have community support but also mitigate risks that could halt project development.

How to Center Environmental Justice in Carbon Removal

By incorporating equitable practices for environmental decision-making, carbon dioxide removal can equitably distribute environmental burdens and benefits, support meaningful community engagement, and remediate past harms.

Equitable Distribution of Burdens and Benefits

In carbon dioxide removal, distributive justice addresses the equitable distribution of environmental burdens and benefits across a geography or population as it relates to a carbon dioxide removal project. Beyond minimizing environmental burdens, carbon dioxide removal projects can also maximize benefits for local communities. Environmental burdens and benefits vary by carbon dioxide removal pathway, and therefore should be assessed on a project-by-project basis, but broadly include the following categories:

• Health & safety: Historical and potential pollutants, contaminants, and other safety considerations, and their impacts on public health
• Ecosystems & biodiversity: Impacts on surrounding ecosystems and associated resources, like soil health, biodiversity, and water
• Sustainable livelihoods: Viability of sustainable livelihoods through job creation, fair and transparent compensation, and project ownership

Meaningful Community Engagement

In carbon dioxide removal, procedural justice represents the meaningful involvement of local communities so that they are present and future stakeholders in carbon project development. This should include direct engagement and community benefit plans that incorporate community needs and priorities. For community members to be involved, project developers must show how they directly, transparently, and periodically engage with local communities throughout the project's lifetime.

Additionally, project developers may actively involve community members in project development, implementation, and subsequent monitoring. Doing so can help to reconfigure those community members' relationships to power, and affirm their role as actors in environmental decision-making.

Remediating Past Harms

For carbon dioxide removal to advance restorative justice, projects must also consider how to address and resolve prior harms. This includes remediating the historic burdens of pollution and greenhouse gasses on health and wellbeing; advancing land and water rights for communities who have been stewards of forests, lands, and coastal environments since time immemorial; and promoting opportunities for inclusive economic growth.

Environmental Justice and AI Data Centers

Current waves of infrastructure development in the US are catalyzing significant environmental justice concerns. Relae (formerly Carbon Direct) analyzed 46 AI data center projects that were blocked, stalled, or withdrawn due to community opposition since January 2024, together representing more than $170 billion in announced capacity. The analysis found that the strongest predictor of project failure is not the technology but the process: how early, how transparently, and how meaningfully developers engage the communities they build in.

[stat]

There are two central findings. First, the communities organizing against data centers span the political spectrum, which shows that procedural justice (i.e., the demand for a real say in what gets built) has become a mainstream expectation for large infrastructure, not a concern confined to any one kind of community. Second, the distributive burdens still fall where they have always fallen: research on EPA-regulated data centers finds air pollution burdens rise with the share of people of color living nearby. 

A real community benefit plan for a data center covers the same ground carbon removal projects already assess, adapted to what a data center actually changes in a community:

• Grid and rate impact: How the project affects local electricity demand, reliability, and rates, disclosed before permitting rather than after residents notice their bills changing
• Water use: How much water the project's cooling systems require and what that means for local supply, addressed up front rather than in response to a lawsuit
• Jobs and local revenue: What the project actually creates for the community, in construction jobs, permanent operating jobs, and tax revenue, stated plainly rather than implied

The Future of Environmental Justice

Without addressing community concerns, meaningfully engaging local stakeholders, or properly assessing project impacts, projects get stopped, whether they are carbon dioxide removal facilities or AI data centers. Stakeholders across both landscapes, from policymakers to project developers, need equitable decision-making strategies to promote the principles of environmental justice today and to prevent the escalation of social injustices in a warming world.

Like the physical science of climate change, environmental justice can also be a data-driven practice. Implementing environmental justice frameworks requires consistent, accurate, and repeatable processes measured against verifiable benchmarks, and those benchmarks must evolve with the best available data, especially now that practitioners can no longer rely on federal tools to supply them.

The federal programs are gone, but the question they were built to answer is being asked in more places than ever, at county commissions, zoning boards, and utility hearings across the country: who carries the burdens of new infrastructure, who receives its benefits, and who decides? Communities are no longer waiting to be asked.

[cta]

Frequently Asked Questions

What is a community benefit plan, and what should it include for a large infrastructure project?

A community benefit plan is a set of specific, public commitments a developer makes to the community hosting a project, developed through direct engagement rather than announced after decisions are made. For a large infrastructure project it should address local community priorities through direct community engagement and cover health and safety impacts, effects on local ecosystems and water, grid and utility rate impacts, jobs and local hiring, tax revenue, and a defined process for ongoing community input over the project's lifetime. The strongest plans are negotiated with community representatives and include enforceable terms, often formalized as community benefit agreements.

How are community benefit plans used to put environmental justice principles into practice?

Community benefit plans translate the four pillars of environmental justice into project terms: distributive justice through the fair sharing of benefits like jobs, revenue, and infrastructure improvements; procedural justice through the community's role in shaping the plan itself; recognitional justice by grounding commitments in the community's specific history and needs; and restorative justice through commitments that remediate existing burdens. They turn principles into commitments a community can hold a developer to.

Why are community benefit agreements becoming standard due diligence for carbon removal and data center developers?

Because skipping them has a measurable cost: community opposition has blocked, stalled, or withdrawn more than $170 billion in announced AI data center capacity since January 2024, and process and transparency failures, not technology concerns, are the most consistent drivers. With federal environmental justice programs dismantled and states writing their own siting and cumulative impact laws, a credible community benefit plan is now both the practical path to permits and the clearest signal that a developer intends to be a long-term neighbor.

How can companies apply environmental justice practices developed for carbon removal siting to AI data center projects?

There are a few key ways: engage communities early, before land is optioned rather than after permits are filed; assess and disclose distributive impacts, including grid and rate effects, water use, and air quality, up front; and build benefit plans around what the community identifies as its needs rather than what is convenient to offer. Carbon removal developers adopted these practices because community support determines project viability, and the same is proving true, at much larger dollar values, for AI data centers.