Data Center & Digital Infrastructure Practice

As demand for digital infrastructure continues to grow, data centers have become a significant area of investment. Developing, financing, and operating these facilities requires navigating a range of legal and business considerations across multiple jurisdictions.

Hodgson Russ represents developers, investors, operators, and lenders involved in data center and digital infrastructure projects, including hyperscale and colocation facilities. Our team addresses the legal and business issues that arise throughout a project's life, drawing on experience in real estate, energy, corporate, and regulatory matters. We support projects from initial site selection through development, financing, and ongoing operations, with a focus on the factors that affect feasibility, timing, and long-term performance.

Site conditions, land use constraints, and access to reliable power often determine whether a data center project is feasible and how it is ultimately developed. Early-stage planning typically requires addressing zoning and permitting matters, coordinating with governmental authorities, and structuring the project in alignment with business and operational objectives.

Project Siting, Entitlements, and Environmental Review

Project viability often depends on securing a suitable site and obtaining required approvals. Land use constraints, environmental conditions, and local review processes can affect both the timing and structure of a project.

Our attorneys advise on land use and entitlement matters, including special use permits, variances, rezoning, and State Environmental Quality Review Act (SEQRA) compliance. We regularly work with municipalities and state agencies across New York to move projects through the approval process and address issues that arise during public review.

Acquisition and development of both greenfield and brownfield sites often involve additional environmental and regulatory considerations. Our work includes matters under New York’s Brownfield Cleanup Program, such as site designation, remedial planning, and the structuring of related tax benefits. We also address environmental conditions, land use restrictions, and other requirements that affect long-term site use.

Power, Energy, and Infrastructure

Access to sufficient electrical capacity can determine whether and where a data center project moves forward. Electrical capacity, service timing, and infrastructure limitations can affect both site selection and overall project design.

Our attorneys are involved in addressing these issues as projects take shape, including power supply arrangements, utility coordination, and electrical interconnection with New York utilities and the New York Independent System Operator (NYISO). This work includes navigating interconnection requirements, addressing capacity constraints, and aligning project needs with available infrastructure.

Project requirements related to load, redundancy, and reliability also influence how facilities are designed and operated. We address these considerations across both initial development and ongoing operations, particularly where energy use and regulatory requirements affect long-term performance.

Construction and Project Delivery

Data center construction requires agreements that account for schedule, cost, and performance in a highly technical environment. Project timelines and operational requirements often place added pressure on how these agreements are structured and executed.

Our attorneys handle construction and development agreements for data center projects, including design-build and engineering, procurement, and construction (EPC) contracts. This work involves addressing scope, performance standards, commissioning, and risk allocation in a way that reflects the technical and operational demands of these facilities. We regularly work with project owners and contractors to structure agreements that address coordination, sequencing, and performance obligations based on facility requirements.

Construction-related issues can affect timing, cost, and project performance. We address disputes involving delay, defective work, and performance issues, as well as claims that arise during construction and commissioning.

Transactions, Financing, and Commercial Arrangements

Layered ownership and financing structures are common in data center projects, with multiple stakeholders playing different roles in development and operation. These arrangements shape how projects are capitalized, operated, and positioned for long-term use.

We advise on transactions involving data center assets and platforms, including acquisitions, dispositions, joint ventures, and investment structures. This work requires aligning legal frameworks with commercial terms, operational requirements, and investor expectations across the life of a project.

Financing considerations are closely tied to development timelines and performance requirements. We represent borrowers and lenders in construction financing and related credit facilities and address the terms that govern funding, performance, and project delivery. Our work also extends to leasing, colocation, and service agreements between operators and their customers, where operational obligations and service expectations are central to the relationship.

Tax Planning and Incentives

Decisions about site selection and project structure are often driven in part by available tax incentives and how those incentives can be applied. Property tax considerations, sales tax exemptions, and available incentives can materially affect overall project cost and long-term viability.

Our attorneys advise on property tax assessments, the availability of industrial development authority (IDA) incentives, and payments-in-lieu-of-tax (PILOT) agreements, as well as the application of sales tax exemptions for qualifying data center equipment and infrastructure. This work involves structuring transactions and project arrangements to align with applicable incentive programs and regulatory requirements.

We also assist clients in securing and maintaining these benefits, including addressing compliance requirements and responding to audit or refund issues where they arise.

Operational, Regulatory, and Workforce Considerations

Once operational, data centers are subject to ongoing legal and regulatory obligations that extend beyond development and construction. Workforce requirements, operational controls, and data-related considerations shape how facilities are managed on a day-to-day basis.

We advise clients on labor and employment matters associated with both construction and ongoing operations, including prevailing wage requirements and workforce considerations tied to highly controlled environments. Our work also includes addressing regulatory requirements that apply once facilities are in service, particularly where operations intersect with broader compliance obligations.

Data centers also present unique considerations related to data security and privacy. We assist clients in addressing applicable legal and regulatory requirements, including obligations that arise in connection with the storage and management of sensitive information, as well as in responding to related inquiries or incidents as they arise.

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