Data Centers & AI Infrastructure

The continued development of artificial intelligence (AI) infrastructure and data centers is influencing local economies, utility systems, and community planning nationwide. These projects raise complex and often competing considerations involving energy supply and transmission capacity, water resources, telecommunications infrastructure, land use and zoning approvals, environmental compliance, economic development incentives, and long-term municipal fiscal impacts.

Best Best & Krieger LLP (BBK) advises clients on the legal, regulatory, and strategic issues associated with the planning, siting, development and operation of AI infrastructure and data center facilities. BBK combines the experience of attorneys across Energy, Water, Environmental, Telecommunications, Infrastructure, Real Estate and Land Use, Municipal Law, Government Affairs, Public Finance, and Business to provide integrated legal counsel to clients involved in the development and operation of AI infrastructure and data center projects.

Understanding the Unique Legal Issues Surrounding Data Centers

Planned data centers present concentrated infrastructure demands and policy sensitivities that share some similarities with those posed by traditional industrial or commercial development, and also present new combinations of issues. BBK advises clients on issues including:

Use of Public Property and Rights of Way – Advise clients on local government authority to regulate deployment of data centers and supporting infrastructure while protecting finances. BBK attorneys have decades of experience advising municipalities on negotiating with technology and communications companies over 5G and broadband deployment, cellular site leases, and cable franchises.
Energy Generation, Transmission & Capacity Constraints – Securing reliable and affordable power in constrained markets, negotiating power procurement strategies, addressing substation and transmission upgrades, evaluating distributed generation, battery storage and emerging nuclear technologies such as small modular reactors, and navigating federal and state utility regulation.
Water Supply, Cooling & Wastewater Permitting – Structuring recycled water use agreements, securing water rights, identifying federal infrastructure funding opportunities, navigating regulatory requirements, addressing cooling technology impacts, permitting for water quality and discharge, fire suppression requirements, and mitigating wastewater contamination risks.
Real Estate Transactions, Property Rights & Occupancy Structures – Advising on purchase and sale agreements, title and survey due diligence, easements for access, utilities, fiber, drainage and shared infrastructure, ground leases, landlord/tenant and subtenant structures, assignment and use restrictions, service interruption risk, maintenance obligations, restoration, surrender obligations and related disputes.
Land Use, Zoning & Development Agreements – Site selection and due diligence, general plan and zoning amendments, conditional use permits, development agreements, community facilities districts (CFDs), and subleasing structures, and allocation of long-term land use and regulatory risk. Analysis of federal preemption issues affecting local land use regulation, including existing federal zoning in the telecommunications sector. Address emerging questions regarding potential Federal Communications Commission (FCC) action and other federal initiatives that may preempt or limit local zoning authority in connection with AI and advanced technology infrastructure deployment.
CEQA, NEPA & Environmental Review – Managing significant California Environmental Quality Act (CEQA) and other state environmental review challenges, coordinating National Environmental Policy Act (NEPA) compliance for interstate transmission or federally funded components, addressing environmental justice considerations, and defending approvals against litigation.
Telecommunications & Fiber Deployment – Securing fiber access and local permits, navigating federal and state preemption frameworks, coordinating with communications providers, and addressing FCC regulatory considerations.
Lobbying, Federal Agency Advocacy and Government Affairs – Monitoring emerging policy developments, engage with key decision-makers, advocate for favorable outcomes, and assess the potential impacts of federal action on state and local regulatory authority. BBK lobbyists leverage relationships across Congress, federal agencies, and national stakeholder organizations to ensure clients' interests are effectively represented throughout the policymaking process.
Public Finance & Municipal Impacts – Analyzing impacts on local tax base and long-term municipal revenues, structuring revenue-sharing arrangements, evaluating limited job creation against infrastructure burdens, advising on lifecycle planning and adaptive reuse, and supporting clients both pursuing and responding to proposed data center projects.
Risk & Policy Considerations – Addressing power scarcity and transmission bottlenecks, water availability, political sensitivity and public opposition, environmental justice concerns, electronic waste, and long-term facility reuse challenges.

A Coordinated, Multi-Disciplinary Approach

BBK attorneys routinely advise cities, counties, special districts, utilities, developers and infrastructure providers at the intersection of energy, water, land use and public finance. Because BBK represents public agencies as well as private entities, we understand the regulatory, fiscal and political considerations on both sides of the table.

BBK attorneys have advised on controversial infrastructure projects involving significant public concern, opposition, and contested public hearings for decades. By combining our depth in public law, utilities, telecommunications and complex real estate development, BBK is uniquely positioned to guide clients through the full lifecycle of data center and AI infrastructure projects, from initial site evaluation and entitlement through utility coordination, construction, operation and long-term policy planning.

Public-private partnerships and innovative finance approaches for infrastructure
Draft and negotiate numerous utility-scale and behind-the-meter power purchase agreements and master purchase and sale agreements for
Advised on infrastructure development agreement obligations for 6,000-acre development including transportation obligations, road fees and community facility district finance issues.
Advised on development and construction of cogeneration, solar, LFGE, biomass, fuel cell and natural gas injection facilities.
Advised on all aspects of transportation corridor improvements and flood control improvements, including CEQA/NEPA, State Fish and Wildlife and regional Water Board permits, design and construction contracts, developer and municipal cooperative agreements, real estate and public funding issues.
Advised joint powers operation of $200 million public safety radio communications system between county and more than 130 partner agencies, including $150 million p25 upgrade.
Representing local governments in challenges to FCC orders preempting local regulatory authority and franchising authority
Developed the first model license agreement for telecommunication infrastructure access to categories of local government properties and helped negotiate some of the leading cable franchise and small cell agreements in the nation.