The market for artificial intelligence (AI) is rapidly growing, spurring the growth of data centers across the U.S. and around the world. That’s happening despite the major social and environmental concerns that data centers pose. What happens if those data centers are no longer used, either because they reach end of life or the AI bubble bursts and companies can no longer maintain them? This blog explores the powers that state and local governments in the U.S. have to impose decommissioning (i.e., clean up) rules for data centers.
Prior to the AI market, data centers that were abandoned (for financial reasons or otherwise) often remained vacant for extended periods of time, employing only a skeleton crew of security and maintenance professionals tasked with not letting the assets fall to ruin while waiting for new buyers. Contemporary hyperscale data centers that stop operating may be even harder to repurpose or restart because they are massive, resource-intensive facilities. Hyperscale data centers can encompass millions of square feet in space to house all associated equipment, including at least 5,000 servers and miles of connection equipment. The specialized nature of the data centers makes it more difficult to lease or sell them for other uses. As such, they risk becoming effectively abandoned warehouses at the end of their lives, wasting major land resources. Data centers also require intensive grid infrastructure upgrades, which may be paid by ratepayers if the company fails and the facility sits idle. Further, data centers naturally generate substantial e-waste, which could pose threats if not properly disposed of.
States could avoid these issues altogether by imposing blanket restrictions on data centers. New York, for example, recently imposed a moratorium on new data center development and other states are considering doing the same. Where data centers are allowed to be built, the owners should be required to develop detailed clean-up and decommissioning plans to ensure waste is properly disposed of and the site is appropriately remediated. This is common in other industries, especially the energy sector, but has received little attention in the discussions about data centers.
State and local governments are authorized to regulate for the health and welfare of their citizens, which is likely a sufficient source of authority to regulate data center decommissionings. Local governments almost always have specific authority to regulate land use as well, which provides additional authority to manage data center decommissioning. They could, for example, instead impose specific decommissioning requirements on data center developers. States could require data center operators to provide financial assurances (i.e., securities and bonds) sufficient to cover the cost of decommissioning the assets in the case of bankruptcy or closure of operations. Similar provisions already exist in both federal and state oil and gas law. Before they can obtain a permit to drill for oil or gas, operators must generally provide financial assurances that would cover the cost of removing the drilling rig and other infrastructure and equipment, and cleaning up the relevant area. When drilling stops, if the oil and gas operator does not conduct the required decommissioning itself, the regulator can use the financial assurances to decommission the assets. Other industries, including the renewables sector, are also subject to similar requirements.
States have already imposed or are considering imposing financial assurance requirements. Ohio approved specific electricity pricing for data-center in June 2025 for projects of at least 25 megawatts, requiring the data center to pay for most of the capacity reserved even if they use less, commit for the load-ramp period plus at least eight years, post financial assurances if their credit is weak, and reimburse the buildout or pay an exit fee to leave early. Wisconsin has considered regulations that would require data centers to provide financial assurances to public utilities in case they are unable to pay for the infrastructure required. These regulations could be expanded to allow the state to require financial assurances covering the entire costs of decommissioning, including removal of the data center itself and associated infrastructure. As with oil and gas, financial assurances should be accompanied with explicit decommissioning plans prior to the permitting and construction of the data center. So even if the data center changes ownership, the new owner would be required to follow the decommissioning plans and would be required to provide the same sort of financial assurance, guaranteeing decommissioning.
In the absence of state action, local governments might impose their own decommissioning requirements,through zoning laws and ordinances, where local governments have significant authority. Local governments could put in place ordinances and other rules that require and operationalize decommissioning plans. This has already occurred in Susquehanna County and Smithfield Township in Pennsylvania. Susquehanna County requires data centers to be decommissioned within twelve months after the end of their useful lives. The ordinance states that decommissioning involves “removal of all hazardous materials and contents, including cabling, electrical components, and any other associated facilities,” and includes bonding requirements to ensure that money is available for this work. Other local authorities could adopt similar or additional requirements, such as a cleanup plan, however their authority to do so varies from state to state.
As an alternative to requiring the full decommissioning of data centers, state and/or local governments could seek to acquire and repurpose them for public use. For example, if an AI company goes bankrupt and its data centers are left abandoned, the state could seize them for public use. This could take the form of state-operated AI operations, utilizing the already existing computing power, or through the utilization of the grid infrastructure, where the new transmission and distribution lines could be used for new renewable energy projects. Coal plants could serve as a model here, where plants have been repurposed by the state into interconnections for solar and wind farms, and have been used as battery storage facilities across the U.S. States could also impose discrete rules, such as clamping down on e-waste. Multiple states have already enacted legislation on e-waste; these laws could be expanded to explicitly cover data centers and the unique threats they pose in terms of scale and form of e-waste.
It is worth noting that imposing new requirements that are only applicable to data centers could, in theory, give rise to a claim that data centers are being arbitrarily singled out for punitive treatment under the U.S. Constitution’s Equal Protection Clause or under state equivalents. The Equal Protection Clause generally requires that similar people be treated in the same way, and has been extended to corporations. For most classifications that do not involve an inherently suspect characteristic (such as sex or race) or a fundamental right (such as a personal constitutional right), the Court applies rational basis review. The rational basis review requires the regulation to be rationally related to a legitimate state interest. Given the unique challenges that AI data centers pose in terms of resource usage, environmental risks and cleanup obligations, and their clear relation to state interests, an equal protection challenge would likely fail.
The risk of abandoned data centers poses a pressing economic and environmental threat that current laws are only starting to address. States and localities have several viable tools at their disposal, including financial assurances, mandatory decommissioning plans, public appropriation rights, and e-waste regulations. Taken together, proactive regulation now can help ensure that people and communities are protected before the bubble potentially bursts.
Ashwin Murthy
Ashwin Murthy is the Negative Emissions Fellow at the Sabin Center for Climate Change Law.
