00:01Residents in Tucson, Arizona are drawing a line in the deserts and not one drop of their shrinking water supply
00:07for a 290-acre AI data center.
00:10Tonight, a first-in-the-nation statewide moratorium sits on a governor's desk, a California county is facing a lawsuit
00:18for daring to say no, and a major U.S. power grid just failed its reliability test for the very
00:24first time in history.
00:27Tucson, Arizona has spent years watching its water supply shrink and residents are now fighting to keep what's left out
00:33of the hands of data center developers.
00:36The campaign is called Not One Drop, and its target is Project Blue, a proposed hyperscale facility planned on 290
00:44acres outside the city limits, developed by Bale Infrastructure, a San Francisco company owned by Blue Owl Capital of New
00:52York.
00:53Tucson's water flows through the Central Arizona Project Canal from the Colorado River and those flows are already 20%
01:00below 20th-century averages.
01:03Arizona could face water cuts of up to 77% under worst-case projections.
01:09On top of that, Tucson Electric Power proposed a 14% rate hike in June 2025, partly to fund grid
01:17upgrades needed for data center growth and other cost local residents say they will be forced to absorb.
01:23That fight is now spreading well beyond City Hall.
01:28That opposition is now making its way into state houses.
01:33And New York just made history.
01:35On June 4, both chambers of the New York State Legislature voted to pass the Responsible Data Center Development Act.
01:45A bill that would impose a one-year statewide moratorium on new building permits for hyperscale data centers drawing more
01:54than 20 megawatts of power.
01:56The Senate approved it 44 to 16.
01:59And the Assembly passed it 102 to 39,
02:04making it the first bill of its kind to clear a state legislature in American history.
02:09If Governor Kathy Hochul signs it, it will be the nation's first statewide data center moratorium.
02:17But she has not yet announced a position.
02:20Industry groups are lobbying hard for a veto,
02:24warning the bill would chill billions in planned investment.
02:28Environmental and community advocates are equally adamant.
02:32New York's grid and its ratepayers simply cannot sustain the load.
02:37And the courtroom fights are getting personal.
02:41In Imperial County, California,
02:45one of the hottest, driest corners of the American Southwest,
02:50the Board of Supervisors did something remarkable this month.
02:54They reversed course.
02:56After unanimously approving a plan for a hyperscale AI data center that would have been the largest.
03:03In California,
03:04nearly a million square feet,
03:07the supervisors changed their minds under sustained pressure from months of public backlash.
03:13They passed a 45-day moratorium and formed an advisory committee to rethink data center zoning from
03:20the ground up.
03:22But the developer,
03:24Imperial Valley Computer Manufacturing, LLC,
03:27has already moved to challenge the moratorium in court,
03:31seeking a temporary restraining order.
03:35Their argument,
03:36the county had no legal basis for declaring an emergency.
03:41This rural desert community's fight over who controls its land is now in the hands of a judge.
03:49And the reason this legal and legislative pressure keeps building comes down to one thing.
03:55The grid,
03:56PJM Interconnection,
03:58the power network serving 65 million Americans across 13 states,
04:04just announced something that has never happened in its history.
04:07Its capacity auction failed.
04:10For the first time ever,
04:12the grid came up 6,623 megawatts short of its reliability requirement,
04:20meaning it cannot guarantee it will keep the lights on during a severe weather event.
04:25Data centers are a primary driver,
04:28accounting for 40%,
04:30or $6.5 billion,
04:33of the record $16.4 billion in total capacity costs.
04:39Capacity prices have already risen 833% between the 2024 and 2026 delivery years.
04:48Those costs flow directly to residential electricity bills.
04:53And with more than 5,000 additional megawatts of data center demand forecast in the next delivery
04:59year alone,
05:01grid operators warn the situation is only going to get worse.
05:07State legislators are taking notice.
05:10In a wave that has swept across 30 state capitals,
05:14More than 300 data center-related bills were introduced in just the first six weeks of 2026.
05:22Targeting energy costs,
05:25water use,
05:26tax incentives,
05:28and zoning,
05:29Arizona enacted a three-year moratorium on its data center sales tax exemption through June 2029,
05:37ending a subsidy program that had helped attract billions in investment.
05:42Illinois and Ohio took similar action on their own incentive packages.
05:48New Jersey Governor Mickey Sherrill unveiled the nation's first comprehensive state data center plan
05:54on May 27,
05:57requiring facilities to directly pay for their own electricity,
06:01disclose power and water consumption,
06:04and negotiate formal community benefit agreements with local residents.
06:10California,
06:11Ohio,
06:12and Utah have already enacted ratepayer protection laws that go beyond the federal government's own
06:19voluntary pledge.
06:21The era of open door,
06:23unlimited incentive data center policy in America is closing fast.
06:29The pressure on the grid is only half the story.
06:33Water tells the other half.
06:36USAI data centers consume 264 billion gallons of water in 2025 alone,
06:44used primarily for cooling systems in an era when climate change is rapidly shrinking the nation's
06:51freshwater supply.
06:52The U.S. Drought Monitor reports that 63% of the country is currently experiencing drought.
07:00Conditions
07:01The driest start to a year since 1910.
07:06NOAA data shows that 517 of the 809 data center projects currently planned across the United States
07:15are cited in areas officially classified as drought-stricken.
07:19A single large data center can use hundreds of millions of gallons per year under peak operating
07:26conditions.
07:28In the water stressed west,
07:30where data center developers are rushing to claim cheap land,
07:34the math is becoming politically untenable.
07:38Communities that have carefully managed scarce water for generations are now competing directly
07:44with hyperscale AI infrastructure for every single drop.
07:50Yet despite that wave of resistance,
07:53construction is pressing forward.
07:56Prime data centers broke ground on three new buildings at its flagship Avondale campus in the
08:02Phoenix Metro on May 21,
08:07The project represents a $3 billion investment and will deliver 240 megawatts of critical IT
08:15capacity when complete,
08:18making it one of the largest data center campuses in Arizona.
08:23The timing is striking.
08:25Phoenix sits in Maricopa County,
08:27The heart of a state now implementing a three-year data center tax freeze and facing some of the
08:34most severe Colorado River water allocation cuts in the American West Texas has already officially
08:41overtaken Virginia as the nation's top data center market,
08:46with Phoenix emerging as a fast-growing secondary hub.
08:50That growth is continuing despite water constraints,
08:54utility rate pressures,
08:57and the legislative headwinds reshaping the industry everywhere else.
09:01The momentum on the ground remains extraordinary,
09:06and the financial commitment behind that construction is staggering.
09:11Private equity investment in U.S. data center deals has hit a five-year high,
09:16according to S&P Global Market Intelligence.
09:20Driven by voracious AI infrastructure demand that shows no signs of slowing.
09:26Blue Owl Capital alone provided more than $50 billion in data center financing in 2025,
09:34including a $27 billion commitment for a single meta campus.
09:39KKR has committed approximately $34 billion in equity across 23 separate digital
09:47infrastructure investments.
09:50The nation's five largest hyperscalers,
09:53Amazon,
09:54Microsoft,
09:56Meta,
09:57Google,
09:58and Apple,
09:59are expected to spend $650 billion combined on data centers and supporting infrastructure in
10:082026 up from roughly $500 billion the year before.
10:13Total future lease commitments across the largest cloud providers have now surpassed $850 billion.
10:21The capital flowing into this sector is extraordinary by any historical measure.
10:27And so,
10:28increasingly,
10:29is the resistance to it.
10:39It helps us cover more of these stories.
10:44It helps us cover more of these stories.
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