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Anticipated Third-Party Litigation Targeting Data Centers in 2026
Environmental litigation brought by third parties is increasingly targeting data center development, and that trend is expected to accelerate in 2026. As demand for cloud computing, artificial intelligence, and hyperscale infrastructure continues to grow, data centers are drawing heightened scrutiny for their energy consumption, water usage, emissions profiles, and siting considerations, particularly when compared to older, smaller facilities. What began primarily as advocacy and regulatory engagement is now evolving into coordinated litigation strategies that reach beyond traditional zoning and land use disputes and into complex environmental regulatory challenges.
In Virginia, multiple lawsuits have been filed against developers and environmental review agencies challenging the individual and cumulative environmental impacts of “Digital Gateway,” a proposed data center development that, if constructed, would reportedly be the largest in the world, spanning approximately 2,100 acres. Similarly, in Minnesota, the Minnesota Center for Environmental Advocacy has filed suit challenging a municipality’s environmental review of “Project Skyway,” a proposed 482-acre mixed-use development that includes at least 100 acres of data centers. The challenge alleges deficiencies in the environmental analysis, including its failure to include a mitigation plan with specific, enforceable measures. And in Tennessee, a coalition of civil rights and environmental groups challenged an air quality permit authorizing the operation of 15 methane gas turbines at a Memphis data center built by Elon Musks’s data center company, xAi. Although that appeal was dismissed as moot last month, it underscores the growing likelihood that air emissions permitting, often coupled with environmental justice claims asserting disproportionate impacts on surrounding communities, will be a focal point of future challenges.
Importantly, many of these cases may be less about ultimate success on the merits and more about the real-world consequences of litigation. Even where claims lack merit, litigation can delay construction, complicate financing, increase carrying costs, and create reputational risk. Experienced third-party plaintiffs recognize that schedule disruption alone can have meaningful implications for large-scale data center projects, particularly those tied to customer commitments, power purchase agreements, or phased development plans.
These developments underscore a growing set of risks for data center developers, owners, and operators, but they also point to concrete steps that can be taken to mitigate exposure. Those steps include stress-testing permit applications and environmental reviews, carefully documenting engagement with regulators and stakeholders, and evaluating litigation risk in parallel with permitting timelines. Early and close coordination among legal, environmental, and development teams is critical, as is planning for the possibility of litigation even where regulatory approvals appear well-supported.
Looking ahead, 2026 is likely to mark a shift from episodic challenges to a more systematic litigation strategy by third parties targeting data center development, as demand for these facilities continues to grow.
