Eminent Domain and AI Data Center Infrastructure

Power Companies Use Eminent Domain for AI Infrastructure

Power companies are increasingly utilizing eminent domain to acquire private land for the transmission lines required to support the rapid expansion of AI data centers. This trend is driven by the massive energy demands of AI infrastructure, which accounted for more than 4% of total U.S. electricity use in 2024. As the U.S. sees over 3,000 existing data centers and another 1,500 in development, the resulting stress on electrical grids has forced utilities to seek land for new transmission lines, often against the will of private landowners.

The Legal Framework of Eminent Domain

Eminent domain is the government's inherent power to seize private property without a landowner's consent, provided the seizure meets two constitutional requirements under the Fifth Amendment's takings clause: it must be for "public use" and the landowner must receive "just compensation."

While the federal government can initiate these actions, most are handled by state and local governments. These governments often delegate the power of eminent domain to "common carriers," such as power and water companies. However, the application of this power varies by state:

• Restrictive Standards: In Texas, the state Supreme Court has ruled that a project must serve the public and cannot be built solely for the builder's exclusive use to qualify as a common carrier.
• State-Level Protections: Following the 2005 Kelo v. City of New London Supreme Court decision—which allowed the seizure of homes for private economic development—45 states enacted reform laws to limit such practices. States like Michigan, Ohio, and Oklahoma have prohibited seizing private property to transfer it to another private party purely for economic development.

The 'Public Use' Debate for Data Centers

The central legal conflict is whether transmission lines built primarily to serve private data centers qualify as a "public use." Courts have historically been permissive, but recent cases show a nuanced approach:

Valid Public Use

Courts in South Dakota and Vermont have affirmed seizures by power companies, ruling that improving power grid reliability and providing energy to in-state customers constitute valid public uses, even if a private entity is a primary beneficiary.

Invalid Public Use

The Mississippi Supreme Court rejected a condemnation action in 1984 when a transmission line would have run from Mississippi into Louisiana without providing any benefit to Mississippi customers. This suggests that if a transmission line serves a data center but offers no reliability or energy benefits to the local or in-state population, landowners may have stronger grounds for a legal challenge.

Industry and Public Perspectives

The push for AI infrastructure has highlighted a divide between national strategic goals and local property rights. While the U.S. government has promoted AI advancement as crucial to national security and economic stability, polling indicates that 7 in 10 Americans oppose AI data centers in their communities due to concerns over noise, pollution, water usage, and rising utility bills.

Community discussion reflects a range of perspectives on the necessity of these seizures:

"Eminent domain for power lines is about the most reasonable use of the tool. This kind of thing is what it's there for."

Conversely, critics argue that the power of the state is being leveraged to benefit private capital over public needs:

"I lean to it’s absolutely not ok to use eminent domain when the receivers of the benefits of the taken property are primarily one private industry and its owners."

Other technical perspectives suggest that land acquisition, rather than technology, is the primary bottleneck for critical energy projects, such as ultra-high-voltage DC lines needed to move wind energy from the U.S. wind belt to high-load urban areas.