Big Datacenter
America is big mad about Big Tech’s unruly, IDGAF, teenage offspring, Big Datacenter
The closing credit roll of the film The Big Short (2015) provides factoids about how some of the main characters fared in the wake of the crisis, and Scion Capital founder Michael Burry was said to be “investing in water“. It seemed a little odd at the time, but eccentricities were a big part of Christian Bale’s portrayal of Burry in the film adaptation of Michael Lewis’ book on the 2008 subprime mortgage meltdown. It doesn’t seem odd now. It’s 2026, and if you’re following AI datacenter stories, you’re probably reading a lot about water. In fact, you’re probably reading a lot about the power grid, electricity demand, aquifers at risk of depletion, renewable energy policy, drought-stricken regions of the US, and why our electric bills keep getting higher.
America is not happy with AI, including new university graduates entering the workforce, as commencement speakers have recently discovered. But the most active battle taking place in the US pertains to datacenters.
The AI datacenter buildout story is as much about private-public alliances than it is about anything else. It’s not like the movies, where small town governments and their citizens join forces to fight off the scourge of corporate greed (Promised Land (2012) for example). When it comes to modern datacenters, the reality is one in which small town governments in search of tax revenue instead join forces with these very corporations while hiding the ball from their own citizens. This has happened in The Dalles, OR, Racine, WI, and now Fayetteville, GA, where citizens discovered previously undisclosed water connections to a datacenter when homeowners in the affluent neighborhood of Annelise Park complained to the local utility about drops in water pressure. The datacenter developer, Quality Technology Services (QTS), used nearly 30 million gallons of water that was unaccounted for and not procured, due to what the local water system director called “a procedural mix-up”. According to Politico’s reporting, Fayette County officials say the planned 615-acre, 16-building campus will generate tens of millions of dollars in annual property taxes … a familiar pitch, but the community is not persuaded, including lawyer and property rights advocate James Clifton, who said,
We get this notification from Fayette County water system saying you need to stop watering your lawns to help conserve water … So the first thing they do is lean on the individuals and the citizens to stop water consumption when we have QTS that’s just absolutely draining us — most months it’s the No. 1 consumer of water in the county.
QTS disputes the claim. Regardless, the Fayetteville City Council voted in April to ban new datacenters in every zoning district within the city. Fayette County, about 20 miles outside of Atlanta, has become a flashpoint in a state with more than 200 datacenters, and emblematic of a nationwide trend.
Of course, private equity
Private equity firm Blackstone owns QTS. If you’ve recently taken your pet to a VCA clinic for a veterinary checkup or visited a Subway to pay $12 for what used to be a “5 dollar footlong”, or shopped at an O’Reilly Auto Parts store to find near-zero employees there to help, you (like the rest of America) have likely been quietly screwed over by the ghouls who work in private equity.
I could do 1,000 words right here on how private equity has made the world a demonstrably crappier place, but my old boss has already done that, so give this a read if you want a primer. In the meantime, this scummy industry is lurking in the background of many of these monstrosities, including a well-publicized $100 billion project in Utah led by the insufferable Kevin O’Leary. You’ve probably seen it in the news, with the project described as “gargantuan” and “twice the size of Manhattan”, covering 62 square miles over three sites in Box Elder County in northwestern Utah. In early May, local county commissioners approved the project despite vocal backlash from nearly 4,000 Utah residents over environmental impacts, among other things. O’Leary is meanwhile pitching job creation and natsec with a dollop of on Sinophobia in an attempt to move the sentiment needle. It’s not going well, forcing him to reach into the bottom of the desperation barrel by claiming:
What’s happening in Utah right now, we think over 90% of the protesters are actually not people who live in Utah or Box Elder County … They’re being bussed in
Ah, yes, the ol’ out-of-state-paid-protester trope, and quite the embarrassing come-down for the former FTX spokesman and brand ambassador who became famous condescending to entrepreneurs on Shark Tank about the correct way to make a pitch. Defensive messaging is becoming the norm for these increasingly embattled projects. Generally speaking, if you need to lie in order to defend your position, you should maybe rethink your position, but then again private equity is not renowned for introspection.
Local revolt
Local governments would be wise to start reading the room. In the small Missouri town of Festus, just outside of St. Louis, the city council approved a $6 billion datacenter project in March of this year over the loud objections of citizens:
Following two hours of public comments, during which Festus residents pleaded with their council to either reject or table the hyperscale data plan from developer CRG, the Festus City Council approved the plan by a 6-2 vote during a special meeting at Festus High School. The setting mattered. On March 30, hundreds packed the high school gym to demand the council reject the data center. Instead, the council approved it.
In a familiar refrain, city officials deliberately hid the ball from citizens in anticipation of pushback, and they got caught …
In correspondence posted publicly on the City of Festus’ website, officials acknowledged efforts to keep conversations about the project under wraps, with some officials’ names redacted before the documents were released. … In one text exchange last fall, unidentified Festus officials said the City Council must avoid “getting caught in the sideshow of uneducated people.”
Words matter, and dismissing legitimate concerns as rants of the uneducated created a firestorm, to say the least. In April, the political reckoning came for the Council, as Festus voters went to the polls and ousted all four incumbent council members running for reelection.
The local government tide might be turning. For all of the rhetoric surrounding Texas as a business-friendly refuge for firms fed up with taxes and regulations, Texas is fast becoming ground zero for opposition to datacenter projects, with small town governments siding with their citizens. Local reporting describes Texas as “being invaded by big tech” and illuminates a trend in which Texans support the state playing an important role in US leadership in AI but won’t accept the state’s smaller communities bearing the brunt of the cost. In Grimes County, TX, County Citizens for Responsible Development founder Marie Egyed commented:
We were so dry out here … we were losing 100-year-old oak trees because we didn’t have enough water to keep them alive and they’re (planning on) building things out here that (are) going to take even more water.
The latest salvo came from tiny, unincorporated Hill County, Texas, about an hour outside of Fort Worth, where the Hill County Commissioners Court voted 3-2 to impose a one-year ban datacenter development. County Commissioner Jim Holcomb said:
The data center folks have found a sweet spot in the state that has limited regulations, limited enforcement … and they’ve come even faster than we can keep up with … I think it’s imperative, given the empirical evidence of the data centers that have been developed here before, that we tap the brakes and we get our arms around what we’re faced with and we do the research.
There are other counties in Texas considering similar legislation, spurred in part by Van Zandt County, about an hour east of Dallas, which was credited by Egyed as setting a precedent with its moratorium on all green energy projects pending review of impacts. While datacenters were not catalyst for that legislation, the outcome created a blueprint for how the democratic process in Texas can and should reflect the will of the people.
Political climate
Relative to historical technology waves, the capital investment cycle here is backwards. With cloud computing, for example, investment at the bottom of the app stack is generally where things began … large datacenters filled with server racks, followed by scalable operating environments, NoSQL databases, middleware for security and traffic management, new scalable backend applications, and ultimately presentation-tier apps you saw on your screen, all talking to the cloud. With AI, it’s in reverse: we already have device-level access to AI (often for free) due to early investment in the models themselves while the low-level infrastructure capacity lags behind the curve. This is what’s driving the urgency to get these datacenters built, and the supply-side has massively miscalculated public sentiment, choosing instead to believe that we’re all consumed with childlike wonder over what this amazing tech can do. Uh, no. People are pissed off.
The politics of this are every bit as unsettling as the profit-seeking. A recent bill proposed in the US House of Representatives is particularly problematic. H.R. 8037 is the Protect American AI Act of 2026, introduced by Representative Michael Baumgartner (R–WA). The core provisions of H.R. 8037 are intended to limit the impact of environmental litigation on the permitting and approval process for datacenters. The title of the bill of course says “AI,” but the bill’s text defines the scope to be specifically about datacenter site selection, construction, expansion, and operation. The policy goal of this bill is clear: grant datacenter developers immunity from claims of harm to surrounding communities. A vocal opponent to this bill was Thomas Massie (R-KY), who wrote on X last month,
I wasn’t the only Republican uncomfortable with a bill to exempt data centers from standard environmental regulation. I was ready to offer an amendment to prevent favorable regulatory treatment for DATA CENTERS BUILT on FARMLAND. Thankfully the bill got pulled from consideration.
When Republican lawmakers are opposing your bill based on concerns about the environment, you really need to pause and reflect. Regardless, I fear it’s a harbinger of things to come … there will be others. In a climate of moving fast and cleaning up the resultant mess later, we will see more of the datacenter-friendly legislative attempts that will pit local lawmaking against the specter of federal preemption.
If you’re running for elected office, either as a Democrat or a Republican, be prepared to explain to voters a.) where you stand on this issue, and b.) how much money (if any) you’ve received from the tech industry or datacenter developers. Someone is going to ask … a voter, a reporter, an opponent in your campaign, an anonymous troll on the internet, or a cranky caller into C-SPAN. And by “elected official” I’m not simply referring to candidates for seats in Congress. State and local governments are where these battles are mostly waged, and the councilmember of the small town you’ve never heard of wields extraordinary power in what is now a national debate.
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