U.S. AI Data Center Boom: Eminent Domain Use and Market Implications

The artificial intelligence boom in the U.S. is driving rapid growth in data center construction. There are over 3,000 data centers in the U.S. and 1,500 more under development. These centers host servers that power large language models like ChatGPT, but their operation comes with significant electricity and water consumption. In 2024, data centers accounted for over 4% of the U.S.'s total electricity use. To meet this demand, power companies are building more transmission lines and acquiring land, often through eminent domain. In states like Georgia and Pennsylvania, power companies are seizing private land for transmission lines, citing the need for public use under the Fifth Amendment of the U.S. Constitution. The U.S. Supreme Court's 2005 Kelo v. New London decision allowed economic development to qualify as public use, but 45 states later enacted reform laws. Courts in Michigan, Ohio, and Oklahoma have prohibited seizing private property for purely economic development. As data center demand grows, the argument for transmission lines serving in-state customers will be crucial in determining whether eminent domain seizures qualify as public use.

With rising electricity demand and data center expansion, the use of eminent domain for transmission lines will shape future market dynamics in the U.S.