How contractors can prepare for community crackdown on data centers

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This feature is part of ‘The Dotted Line’ series, which takes an in-depth look at the complex legal landscape of the construction industry. To view the entire series, click here.

Before the first shovel hits the ground on a data center project, contractors already have to juggle labor shortages and high material costs. They may now also need to prepare for another type of construction risk.

The job site is ready, but community pushback against building the data center means the project isn’t.

at least 75 data center projects According to a recent report by Data Center Watch, roughly $130 billion worth of absolute building blocks or delays in the first quarter of 2026. This level nearly equaled the total number of disrupted projects in all of 2025.

“The contractor’s biggest risk isn’t necessarily that the project is canceled. It’s that the project is delayed long enough that all of the assumptions underlying the contractor’s price and schedule become obsolete,” Mark Carter, a partner in the Atlanta office of the Buchalter law firm, told Construction Dive. “Contractors can handle almost anything if they know what they’re dealing with.”

While contractors won’t have much in their toolbox to keep the community from getting sidetracked on a project, construction attorneys agree that companies can take steps to prepare for potential roadblocks during the approval process.

Delays at the workplace

Community opposition to a project can take many forms, including permit appeals, zoning challenges, environmental reviews, utility approval delays, lawsuits, political pressure and temporary construction moratoriums, Carter said.

In other words, even if a project has all the foundations to go ahead, progress can still be stalled for months. These delays can create a number of downstream problems for contractors.

For example, a shutdown could cause work crews to be reassigned to another location or equipment to become idle, Carter said. Also, pricing assumptions and project schedules may have to be completely reworked, as materials for data center facilities, especially electrical equipment, often have long lead times, he said.

“[Contractors] they can’t eliminate the risk of community opposition, but there are things they can do to avoid becoming the insurer of that risk,” Carter said. “The industry seems to be recognizing that rights challenges, utility limitations, and community opposition are not just remote possibilities; they are actually foreseeable risks that need to be addressed up front.”

Key protections of the construction contract

Because contractors do not control approvals or community relations, attorneys stress that the best opportunity to manage risk comes before a construction contract is signed.

This starts with understanding exactly where a project is in the approval process. Contractors need to know if there is pending litigation or appeals, or if environmental reviews or utility commitments have been obtained, said Viktor Pregel, an attorney at Greenstein DeLorme & Luchs, a Washington, D.C.-based law firm.

“A contractor has the most leverage to mitigate the risks of community opposition before the construction contract is signed and shovels hit dirt,” Pregel told Construction Dive. “Contractors should ensure that the definition of force majeure in the construction contract includes local public protests, community-led injunctions, citizen-initiated zoning lawsuits, and municipal construction moratoriums in order to shift risk to the owner, rather than contact.”

Pregel’s added contracts should also address cost and liability management. Then, even when contracts provide protections for these types of project interruptions, contractors still need to make sure they have detailed records to recover costs, said Tom Curran, an attorney in the New York office of the Duane Morris law firm.

“Contractors will be well-advised, for example in pre-construction and early construction, when these disruptions are likely to occur, to keep up to date with their documentation, because they will have contracts to cover the work that has been carried out up to the point of any disruption,” Curran said. “A lot of contractors, especially with data centers and especially in today’s environment, are really on top of this, and they’re smart about it.”

Additionally, contractors may face difficult staffing decisions if projects hit roadblocks. Some property owners may even agree to help cover the cost of retaining key field personnel in order to be ready once construction resumes, Curran said.

Pregel’s added contractors should also negotiate reimbursement for ongoing costs incurred during a shutdown. That includes expenses related to trailer and crane rental, site security, demobilization, remobilization and retention, he said.

“It’s important for contractors to have a contractual right to be reimbursed,” Pregel said. “There are ongoing operating costs that don’t go away during a hiatus … that would have to be reimbursed by the project owner.”

Lawyers say these legal and contractual considerations are becoming a more common part data center project planning. The focus should increase further as opposition to data center construction spreads, Carter said.

“The data center boom isn’t really changing the fundamentals of construction risk allocation; it’s exposing how important those fundamentals really are,” Carter said. “The projects that will perform best will be those where the parties identify the risks early and clearly decide who is responsible for them before construction begins.”

The data center construction boom continues

However, not all disputes over data center projects result in a work stoppage, Curran noted. Instead, there is more attention to the impacts of these projects on communities.

“What I’ve seen is a growing concern about taxation on local grids, particularly rural grids that are not prepared for increased energy demand,” Curran told Construction Dive. “But data center owners and developers are really at the forefront of this. They’re actively looking for solutions because they don’t want governments to impose them if they can avoid it.”

Construction economists noted while data center demand Impressively, community pushback and infrastructure constraints around energy and water are “headwinds that will continue to intensify in the coming months,” said Juan Arias, CoStar’s national director of U.S. industry analysis. This should lead to more investment in related infrastructure, he said.

“With the size and scope of these projects, and these increased risks to the schedule, contract writing is becoming much more sophisticated,” Carter said. “There’s a lot of attention to long lead acquisition risks, a lot of attention to escalation provisions, utility delay risks, rescission rights, owner-directed resequencing, extended overhead recovery, those kinds of things. Owners and contractors are focusing a lot more on schedule resiliency.”