Elsberg Baker & Maruri partner Jared Ruocco recently authored an article for Westlaw Today examining the litigation risks associated with power supply contracts for AI data centers. As hyperscalers and AI companies make substantial commitments to secure power for their facilities, Ruocco writes, those agreements face growing uncertainty from evolving state regulations and shifting energy and AI markets.
He points to a rapidly changing regulatory landscape, noting that New York’s governor has imposed a moratorium on data center permitting while regulators study the impact on the state’s electric grid, that Texas’s governor has paused approvals of new data centers pending an audit of their water and power usage, and that hundreds of data center bills have been introduced in more than 40 state legislatures over the past two years. Changes like these, he explains, could alter the economics of power supply contracts and affect whether parties are able or willing to perform them.
Ruocco warns that “there is a significant possibility that many data center-related power supply contracts end up in commercial disputes and litigation.” He also notes: “Though AI technology is new, these disputes and cases are likely to involve many of the same issues that are typically contested and litigated in cases involving long-term power supply contracts, albeit in an AI context.” He identifies the contract provisions most likely to be contested, from minimum off-take requirements and force majeure clauses to price adjustment terms and Commercial Operation Dates.
Read more here > Westlaw Today
