Analysis
The Federation of American Scientists published *Before Breaking Ground: A Local Government Guide to Better Data Center Policy and Community Benefits* on September 14, and its central claim is financial: US states are losing more than $1 billion a year in data center tax abatements and rebates, per The Register's summary. The recommendation is not to refuse the projects but to write better contracts.
The specific asks are unusually operational for a think-tank document. Do not grant tax exemptions without a renegotiation trigger beyond five years. Specify in writing what happens during sudden load surges and whether the facility self-generates or draws from the grid. Require water consumption reporting and a defined procedure for securing supply above average daily use. Set numerical, enforceable noise limits with annual testing near residences regardless of whether anyone complains. Require an approved decommissioning plan before construction approval. And treat community benefits agreements as a supplement to zoning ordinances, never a replacement -- a distinction that matters because a CBA is a private contract while an ordinance binds successors.
“The specific asks are unusually operational for a think-tank document.”
FAS names Lancaster, Pennsylvania as the only agreement it found explicitly written as a community benefits deal, covering two AI campus developments. That is one example out of hundreds of US data center approvals in the current buildout, which is the report's implicit finding: local governments are negotiating multi-decade infrastructure agreements without templates, against counterparties with specialized counsel.
The political ground has shifted under this. Amazon and Microsoft have both publicly sided with communities against utilities over who pays for grid upgrades, calculating that ratepayer backlash is a bigger threat to their siting pipeline than the cost of the upgrades themselves. Data center moratoria and rejections have landed in Virginia, Georgia, Arizona and Indiana over the past two years, and each one adds months to a hyperscaler's capacity plan.
For anyone underwriting data center development, the practical translation is that permitting now sets the project schedule, ahead of equipment lead times. A five-year abatement renegotiation clause changes a project's after-tax return materially, and a decommissioning bond is real money posted up front. Developers who treat FAS's list as a preview of standard terms will price it; those who do not will discover it at the council meeting.
