Local authorities across the US often lack the negotiating power and know-how to work effectively with developers proposing new datacenters in their communities. The Federation of American Scientists (FAS) is trying to fill that gap by arming officials with the right questions to ask and the bargaining tools to use. 

The AI industry has triggered a surge in server farms construction, leaving many local governments to negotiate with developers over massive new facilities, often for the first time. 

To help, FAS has put together a report combining an overview of what local governments are already doing with a look at Community Benefits Agreements (CBA) between authorities and developers.

The document, Before Breaking Ground: A Local Government Guide to Better Data Center Policy and Community Benefits, can be downloaded from the nonprofit think tank’s website.

One key recommendation is that state and local governments should not allow for tax exemptions or provide economic incentives to datacenter operators without the provision of opening these up for negotiation beyond five years.

This is because the property value of the site may increase substantially while the authority ends up out of pocket, as The Register has previously reported. Some states are losing more than $1 billion per year in  tax abatementsand rebates offered as incentives to developers.

CBAs have been used in numerous contexts to ensure local community groups obtain the benefit of the bargain when negotiating with a developer over large infrastructure projects. Their purpose is to ensure developers act in the interest of the community, such as building or upgrading infrastructure, hiring locally, and abiding by sustainable practices.

The report lists 10 CBAs, nut only one - between Lancaster, Pennsylvania and the developers of two AI campuses - is explicitly labeled a CBA and written specifically around community benefits.

In general, they cover a number of policy areas, including taxes and financial contributions, energy and water use, noise, lighting and e-waste, plus legal compliance and potential remedies.

The FAS recommends future agreements specify what happens during a sudden surge in energy demand, and whether the datacenter would generate its own power or draw from the grid.

Likewise, agreements should include reporting requirements on the facility's water use, and the procedure for securing additional water beyond an average day’s demand. However, one activist has already filed a lawsuit against Amazon Web Services, alleging the company published false and misleading statements about water use at its facilities in Virginia.

Authorities wishing to limit noise should consider adding a specific, measurable - and therefore enforceable - numerical figure in their CBA, plus yearly testing near to local residences regardless of whether complaints are received or not.

When looking to specifying remedies, CBAs could include language allowing special or consequential damages, and contain a clause on alternative dispute resolution, like mediation, instead of relying on litigation for issue resolution.

The FAS also advises that CBAs should supplement local authority ordinances – laws or regulations - rather than replacing them. The two also need to be written to reinforce each other because “a CBA cannot fix a zoning gap and a zoning ordinance cannot capture specific project commitments like a CBA can.”

Another notable point in the report relates to decommissioning regulations remaining largely untested. FAS isn't aware of a single case where a datacenter had ceased operations or been formally decommissioned, meaning enforcement provisions in agreements and ordinances have yet to be tested.

However, it recommends that authorities should approve a decommissioning plan before a datacenter gets the go-ahead. ®