Digest Original

Iranian drones struck two Amazon Web Services data centers in the United Arab Emirates on March 1, 2026, and a third AWS facility in Bahrain on April 1, in what Rest of World and other outlets described as the first known military strikes on a hyperscaler's infrastructure. The attacks, launched amid Iran's broader retaliation for U.S. and Israeli strikes on its territory, knocked out services for regional apps including the ride-hailing platform Careem and payment service Alaan, and the April strike on Bahrain's ME-SOUTH-1 facility, operated by telecom company Batelco and described as Amazon's largest Middle East data center, caused a fire, according to Bahrain's interior minister. Days later, Iran's Islamic Revolutionary Guard Corps named 18 U.S. companies, including Microsoft, Apple, Alphabet, Meta, Amazon, and Nvidia, as legitimate military targets in the region.

“Physical attacks are only going to become more common moving forward as AI becomes more significant,” Sam Winter-Levy of the Carnegie Endowment told Rest of World. IDC's Ashish Nadkarni described the shift more starkly: “Now suddenly, protecting data centers is like protecting top-security government offices.” The industry has historically built its defenses around cyberattacks and natural disasters; the drone strikes forced a reckoning with the idea that a data center could simply be bombed.

That reckoning has domestic roots too. On April 6, 2026, Indianapolis city-county councilman Ron Gibson said someone fired 13 shots into his home just after midnight while he and his 8-year-old son were inside; a note reading “No Data Centers” was left at the door. No one was injured, and police called it an isolated, targeted incident with the FBI assisting. Gibson had voted days earlier to support a rezoning petition for a Metrobloks data center project in his district. Jordyn Abrams, a research fellow at George Washington University's Program on Extremism, told the Associated Press that data centers have increasingly become a symbol for grievances spanning the political spectrum, citing energy and water consumption concerns and confidential utility power deals as recurring flashpoints.

Security researchers say the physical exposure compounds an already underappreciated vulnerability in data centers' operational technology. More than half of data center professionals identified human threats, internal or external, as their biggest security risk, according to a 2026 AFCOM survey cited by Bloomberg Law. Anthony Ferrante, global cybersecurity head at FTI Consulting, told Bloomberg Law that compromising the systems controlling cooling, fire suppression, and access control “could essentially shut down” a facility's computers entirely. Dave Wulf, co-founder of the Center for Cross-Sector Coordination, warned that a data center failure can cascade into banking, pipelines, hospitals, and defense systems that depend on it.

Congress has not settled on how to respond. The House Homeland Security Subcommittee on Cybersecurity and Infrastructure Protection has held hearings on whether data centers, or AI infrastructure more broadly, should become the 17th federally recognized critical infrastructure sector. “If a major data center is attacked, disrupted, or taken offline, the consequences can reach far beyond one company,” Rep. Andy Ogles said, arguing the current framework lacks a clear, unified approach. Industry witnesses split on the remedy: USTelecom's Robert Mayer and the Space Information Sharing and Analysis Center's Samuel Visner backed a standalone sector designation, following the United Kingdom's own move to designate data centers as critical infrastructure, while the IT-ISAC instead created a “special interest group” for data center providers rather than pushing for new federal machinery. The debate is complicated by capacity at the agency that would have to run it: CISA's headcount has fallen from roughly 3,300 to about 2,200 employees over the past year, including 96 of 189 people in its Stakeholder Engagement Division, according to a letter five House Democrats sent the Government Accountability Office asking it to investigate what capabilities were lost.

A year ago, data centers were mostly discussed in terms of power bills and zoning fights. Between a foreign government's drones, a councilman's front door, and a Congress still arguing over jurisdiction, the industry is now confronting a threat model it did not build for, and no clear consensus yet on who is responsible for closing the gap.

Community opposition, not power or land, has become the U.S. data center industry's central bottleneck in 2026. Data Center Watch, a project of AI intelligence firm 10a Labs, found that opponents blocked or delayed at least 75 projects worth about $130 billion in the first quarter of 2026 alone, the most in any quarter since the group began tracking in 2023. The number of active opposition groups more than doubled over the same stretch, from 396 at the end of 2025 to 833 across 49 states by March. Separately, Carbon Direct found that at least 46 AI data center projects worth $170 billion were publicly delayed or cancelled between January 2024 and May 2026, with a lack of transparency around ownership, power, and water needs the single most common cause. JLL's own research captures the underlying gap: 93% of communities agree data centers matter in the abstract, but only 35% support one built near them.

That gap is reshaping state and local law at a record pace. State lawmakers introduced at least 375 data center bills by mid-July 2026, according to The Washington Post, up from 243 in all of 2025, 75 in 2024, and 54 in 2023. Nine states have proposed statewide moratoriums, and 27 states are advancing “large load” legislation that requires developers to cover the cost of new energy infrastructure, with California, Ohio, and Utah already enacting versions of it. Seven major AI companies, including Amazon, Google, Meta, Microsoft, and Oracle, signed a voluntary Ratepayer Protection Pledge with the White House in March 2026, committing to cover their own power and infrastructure costs, though the pledge carries no legal enforcement mechanism. As the Digest has reported, that legal uncertainty is also opening a new front in litigation: law firms including ArentFox Schiff, Davis Wright Tremaine, and Taft have built dedicated data center practice groups in 2026 as opposition groups increasingly challenge project approvals on procedural grounds rather than waiting on new legislation. The real friction now sits locally: state-level moratorium bills have faced resistance in statehouses, while dozens of municipalities have moved ahead with local construction pauses instead. New Hampshire is a case in point: Governor Kelly Ayotte says she will seek a multi-year statewide moratorium after the head of ISO New England told her a large data center would raise regional energy prices.

Across the Digest's own coverage and trade outlets including Data Center Dynamics and Data Center Frontier, the same idea keeps surfacing: trust, not physics, is now the binding constraint on growth. “The next constraint on data center growth, we thought it was going to be power, but it may be community acceptance and political durability,” Loudoun County Economic Development's Buddy Rizer said on a Data Center Frontier podcast, alongside PR strategist Adam Waitkunas of Milldam Public Relations. Some community opposition is genuinely merited; a lot of it stems from mistrust of unfamiliar corporate entities, a lack of basic information, or a project becoming a stand-in for broader anxiety about AI. Below are five moves each side can make to close that gap.

Five things developers can do

1. Lead with radical transparency on power, water, and ownership before site selection becomes public. Carbon Direct's research found that opaque ownership structures, NDAs with local officials, and undisclosed end users consistently triggered faster, sharper opposition; the firm recommends treating transparency as a siting strategy rather than a legal afterthought.
2. Negotiate real, enforceable Community Benefit Agreements, not PR gestures. As one CBA advocate wrote for Data Center Dynamics, a strong CBA “is not a public-relations gesture or a list of voluntary commitments”; it is a negotiated, enforceable partnership that defines responsibilities and impacts, giving developers predictability and communities tangible, long-term value.
3. Map opposition and engage stakeholders before acquiring a site. Identifying local advocacy groups, environmental organizations, and civic leaders early, before land is under contract, can prevent costly delays once a project becomes public.
4. Fund the infrastructure a community actually needs, not just tax revenue. Communities increasingly expect developers to pay for the power and water infrastructure their projects require; some operators have pledged to replenish more water than they consume or to fund local education and workforce programs.
5. Drop the NDA-heavy playbook with local officials. Confidentiality agreements that limit what elected officials can say publicly create a perception of secrecy that can poison a relationship before a developer has formally introduced itself, even when there are legitimate commercial reasons behind them.

Five things communities can do

1. Organize early and understand real negotiating leverage before a developer shows up. Communities that organize ahead of time can negotiate more effectively, aligning corporate needs with local priorities on things like workforce pipelines, rather than reacting only after a project is already announced.
2. Push for a formal Community Benefit Agreement process instead of ad hoc protest. A CBA process typically moves through public education, negotiation, and contract drafting, and once signed it obligates a developer to deliver specific, monitored commitments rather than vague promises.
3. Use zoning and permitting tools to shape projects rather than simply block them. Mason, Michigan is a working example: rather than an outright ban, its city council adopted a new zoning framework in February 2026 that tightened local rules on data centers after a contentious public meeting.
4. Demand transparency as a condition of engagement, not a courtesy. Since opaque disclosure of ownership, power, and water needs was the single most common reason cited across Carbon Direct's 46 delayed or cancelled projects, communities that insist on upfront disclosure are better positioned to evaluate real tradeoffs instead of relying on rumor.
5. Separate legitimate, project-specific concerns from generalized anti-AI sentiment. Distinguishing real site-specific harms, like a documented water or noise impact, from broader distrust or misinformation strengthens a community's credibility and its actual negotiating leverage with both developers and state regulators.

The throughline across nearly every source here is the same: both sides do better with a formal, enforceable Community Benefit Agreement negotiated early, before a site is acquired and before NDAs harden positions. Tax revenue alone is no longer enough to earn public support, and a blanket moratorium is not a substitute for the transparent, ongoing oversight that actually resolves these conflicts, which is exactly the middle ground a well-built CBA is designed to occupy.

The National Institutes of Health's All of Us Research Program illustrates how much computing power modern medical research already demands. In its June 2026 data release, the program made genomic and health data from more than 747,000 participants available to registered researchers, bringing total enrollment past 883,000. The dataset now includes more than 535,000 whole genome sequences, 1.3 billion genetic variants, and nearly 482,000 linked electronic health records, all housed on a secure Researcher Workbench built on Google Cloud Platform. “There’s a paradox at the heart of precision medicine,” NIH Director Jay Bhattacharya said in announcing the release. “To tailor treatments to individuals, you actually need very large populations to uncover the patterns that connect genetics, lifestyle, and the environment to health outcomes.”

That kind of population-scale genomic analysis runs on infrastructure most people never see. Biowulf, the NIH’s in-house Linux computing cluster, is described by the agency’s Center for Information Technology as the world’s most powerful supercomputer dedicated solely to biomedical research. It has grown to more than 100,000 processor cores and 60 petabytes of storage, is used by roughly 75% of NIH principal investigators, and in fiscal year 2024 alone consumed more than 1 billion core-hours and 6 million GPU-hours. The system helped the Telomere-to-Telomere Consortium publish the first complete, gapless human genome sequence in 2022, and NIH says COVID-19 research on Biowulf consumed more than 87 million CPU hours and produced more than 50 peer-reviewed publications.

That demand is emerging just as the broader market for AI compute tightens. Apollo Global Management’s wealth insights team described on-demand GPU capacity as “effectively sold out” in a June 2026 analysis, noting that rental rates for Nvidia H100 GPUs rose from roughly $1.85 an hour in late 2025 to about $2.40 an hour by March 2026, while spot prices for high-bandwidth memory chips climbed roughly eightfold since early 2025. Apollo named healthcare specifically as one of the sectors “only beginning to deploy AI at scale” just as that squeeze sets in, alongside legal services and financial analysis. Data Center Knowledge reported the binding constraint has shifted from the power shortages that dominated 2024 and 2025, when Microsoft CEO Satya Nadella said the company had “a bunch of chips sitting in inventory that I can’t plug in,” to semiconductor manufacturing capacity itself. “Silicon is the binding short-term constraint. Power is the binding long-term constraint,” HyperFrame Research’s Stephen Sopko told the outlet.

Drug makers with the capital to do so are responding by building and owning compute capacity rather than competing for it on the open market. Recursion Pharmaceuticals brought online BioHive-2, a supercomputer built with Nvidia using 504 H100 GPUs delivering 2 exaflops of AI performance, which debuted at No. 35 on the TOP500 list of the world’s most powerful supercomputers. Recursion’s chief technology officer said the company can now get “80% of the value with 40% of the wet lab work” that traditional drug discovery required. Roche has gone further, announcing an AI factory spanning more than 3,500 GPUs across facilities in Europe and the United States, built on Nvidia’s newest Blackwell chips and expected to be fully operational by early 2027. “Everybody wants to get their hands on Nvidia chips,” biopharma AI consultant Christian Hein told SWI swissinfo.ch.

Hospitals, by contrast, mostly cannot build their own supercomputers and instead depend on outside vendors and cloud infrastructure for the same AI capacity pharma companies are racing to own. In 2026, the U.S. Department of Veterans Affairs began scaling its ambient AI scribe tool from a 10-site pilot to all of its more than 130 medical centers nationwide. Mount Sinai Health System integrated OpenEvidence’s AI clinical decision support directly into its Epic electronic health record system across all seven of its hospitals. HonorHealth rolled out Abridge’s ambient documentation platform to roughly 3,000 physicians and advanced practice providers, and the University of Texas System’s earlier pilot with Qualified Health generated more than $15 million in run-rate financial impact within six months before expanding across all eight of its health institutions. Each of these systems now depends on rented, high-capacity cloud infrastructure to keep those tools running, in a market where that same infrastructure is getting harder and more expensive to secure.

That dependence is starting to show up in how healthcare organizations plan their own facilities, too. Commercial real estate firm Colliers has noted that hospitals and health systems increasingly compete with data center developers for the same scarce inputs, reliable electricity, available land, and network connectivity, while their own IT infrastructure has to support higher computing density and GPU-ready systems that older hospital data centers were never built for. For an industry historically organized around clinical staffing and bed capacity, the amount of processing power behind a diagnosis, a drug candidate, or a documentation tool is quickly becoming a resource healthcare organizations can no longer take for granted.

A wave of local moratoriums and lawsuits over data center development is creating a new legal specialty, and law firms are positioning on both sides of it. Major firms including ArentFox Schiff, Davis Wright Tremaine, Jenner & Block, Norton Rose Fulbright, and Taft have all built or expanded dedicated data center practice groups in 2026, while a separate and newer trend has opposition groups and developers alike turning to litigation as moratoriums spread across dozens of jurisdictions.

ArentFox Schiff operates a group it calls Data Center Legal Solutions, led in part by Amy Antoniolli, the firm's Energy & Cleantech Industry Group co-leader, and has published state-by-state compliance guidance covering energy, water, zoning, and tax rules. Davis Wright Tremaine has released its own guide addressing the spread of moratoriums and AI infrastructure rules across US jurisdictions, advising both developers and local governments. Taft launched a dedicated Data Centers, Digital Infrastructure, and Powering AI group in February 2026, and Norton Rose Fulbright has said it built its group to bring together lawyers with experience across the full range of digital infrastructure work. At Bracewell, attorney Jared Berg described the scope of the work as covering “all elements of the value chain of the data center,” from real estate and construction contracts to power generation agreements.

The fastest-growing part of this legal market may be procedural litigation. According to Bloomberg Law, opponents in multiple states have shifted from challenging data centers on environmental or community-harm grounds to challenging the approval process itself. In Prince William County, Virginia, a court found officials failed to properly notify the public before a Board of Supervisors meeting that approved more than 1,500 acres for data center use; Blackstone's QTS and Compass Datacenters both abandoned the project that followed. In Wilmington, Ohio, a federal judge ruled that officials violated public meetings requirements in approving a proposed $4 billion Amazon Web Services complex and barred further action by the planning commission. Similar procedural challenges have succeeded or forced reversals in Festus, Missouri; Hill County, Texas; Stokes County, North Carolina; and Doña Ana County, New Mexico, where advocacy groups challenged a $165 billion Oracle and OpenAI campus known as Project Jupiter over closed-door sessions and withheld public records. One attorney told Bloomberg Law the approach reflects a deliberate strategic shift: “The law often favors the discretion of government officials, so picking apart the process is a stronger strategy.”

The pattern is playing out in real time in individual disputes. In Gibraltar, Michigan, developers Raeden Acquisitions and Cal Realty filed suit in August 2026 after the city enacted a one-year moratorium blocking their proposed 100 megawatt data center on a former steel plant site, seeking court approval of their site plan and damages. In Lowell, Massachusetts, the Conservation Law Foundation's environmental justice program is representing residents seeking a preliminary injunction against a data center operator's expansion plans, including additional diesel generators and cooling towers. And in Inver Grove Heights, Minnesota, attorney Jacob W. Steen of Larkin Hoffman sent city officials a letter on behalf of developer QLevr LLC warning of potential litigation if the city moved forward with a proposed moratorium, a preemptive tactic that did not stop the city council from approving a pause anyway.

For an industry accustomed to treating permitting as a formality, the legal bills are becoming a real line item. Developers are retaining specialized counsel earlier in the site selection process, and opposition groups are finding that procedural challenges succeed more often than substantive ones. As long as new moratoriums keep appearing, and 2026 has already produced dozens of them, both sides of this fight appear likely to keep hiring.