Data Center Development in NJ: When Eminent Domain Comes Knocking

Data center development is booming across the United States. The next site might be closer to home than you think. These facilities store and manage huge amounts of digital data, including the data that powers AI. That takes a lot of infrastructure, and it comes at a cost. Data centers can use up to 5 million gallons of water a day. They also put serious strain on local power grids. When utilities need land or new power lines for data center development, they may turn to eminent domain. New Jersey property owners aren’t automatically safe from that risk. That’s the reality behind a growing number of eminent domain NJ cases tied to utility expansion today.

How Does Eminent Domain Apply to Data Center Development?

Eminent domain lets the government, and in some states, private utilities, take private property for public use. The owner must be paid just compensation in return. In New Jersey, public utilities hold this power for data center development projects. They mainly use it to build the power lines and towers that carry extra electricity to these facilities.

Only government bodies used to have this power. New Jersey is one of several states that also give it to public utilities, sometimes called common carriers. That means an electric company can file a condemnation action against a private landowner. This can happen if the utility needs the land for a power line tied to nearby data center development.

Utilities most often use eminent domain to add grid capacity. Data centers strain that capacity in the first place. Without new data centers, many of these projects wouldn’t be needed at all.

Why Do Data Centers Create Environmental and Grid Risks?

Data centers can use up to 5 million gallons of water a day. They can also destabilize local power grids. This causes voltage spikes that damage appliances and raise fire risk. These risks are part of why about 70% of Americans oppose new data center construction near them.

The strain isn’t just about water. Data center development pulls huge, constant amounts of electricity. That can make the power grid unstable. Voltage spikes from this demand have been linked to power outages, damaged appliances, and a higher risk of house fires. A San Diego Union-Tribune commentary looks at these risks and the pace of expansion in more detail.

These effects can reach past a utility’s own property line. Because of this, private property laws usually require that any taking serve a real public purpose. It can’t just be for corporate convenience.

Is Eminent Domain Already Being Used for Data Center Development?

Yes. Several states are already building data centers, including Pennsylvania. Some have used eminent domain to get private land for these projects. They’ve also used it for the extra power generation these facilities need.

The Sun Gazette has reported on land takings in Luzerne County, Pennsylvania. Landowners there received compensation offers. Those offers reportedly didn’t account for damage to the rest of their property caused by the data centers. That’s a preview of what New Jersey residents could face as data center development moves east.

What Protections Do New Jersey Property Owners Have?

New Jersey adds protections on top of the Fifth Amendment. That amendment says private property can’t be taken for public use without just compensation. New Jersey also adds an extra step. Any taking of private property for an electrical project must first be approved by the Board of Public Utilities. Owners must also be paid just compensation before a utility can take title or possession.

These rules apply whether a government agency or a private utility does the taking. They were tested in the PennEast pipeline cases. Those cases went all the way to the United States Supreme Court. The question was about sovereign immunity, a state’s shield from certain lawsuits. Could that shield block the federal government’s power to take land?

If you’re deciding whether to fight or settle, an eminent domain attorney in NJ can help. They can walk you through the Board of Public Utilities process. They can also check that any offer covers damage to your remaining property, not just the land taken outright.

Data center development can touch other areas of property law, too. A partial taking or nearby construction can lower a property’s assessed value. When that happens, you may need help. A property tax lawyer NJ owners trust can seek a fair reassessment before your next tax bill. Some projects get more complex when a town uses NJ redevelopment law to designate an area for new facilities. That adds another layer of review before any taking can move forward.

Data center development isn’t slowing down. Neither is the chance that a utility could look at your property to support it. Know your rights under New Jersey’s eminent domain protections. Get legal help early. That can be the difference between a fair outcome and a frustrating one.

This article was written by Joseph W. Grather of MROD, with research support from 2026 summer intern Morgan Soehnlein, a Bachelor of Arts candidate (2028) at The College of New Jersey.

Worried About Taking Tied to Data Center Development?

MROD’s eminent domain attorneys have spent decades protecting New Jersey property owners against utility takings, from power lines to condemnation actions of every size. Talk to our team before you sign anything or accept a first offer. Schedule a consultation today!