Digital Infrastructure
& Data Centers

Data center clients often face significant challenges in identifying optimal locations for their facilities, navigating complex zoning regulations, and securing necessary approvals from local authorities. These hurdles can delay projects and increase costs if not managed effectively.

With a deep knowledge of Texas’ political and business landscape, Jackson Walker addresses these issues by guiding clients through the entire site selection process, ensuring that chosen sites meet operational, infrastructure, and regulatory requirements. The firm’s attorneys handle all aspects of zoning, represent clients at public hearings, and work directly with city councils, government agencies, and elected officials to secure approvals. This comprehensive support helps clients overcome regulatory barriers and obtain incentives, streamlining project development from the outset.

Our SALT team has extensive experience negotiating tax abatement agreements for data centers and reconciling that process with qualification for the important sales tax exemptions potentially applicable to data centers. Many Texas cities or counties want to attract data center projects and are willing to offer tax abatements or other structured incentives. The Texas Comptroller oversees an application process for sales tax exemptions applicable to certain qualifying data centers. The sales tax exemption can apply to much of the equipment in use at a data center as well as to ongoing electricity purchases, up to 20 years.

Reliable power is critical for data center operations, yet clients often struggle with securing sufficient and resilient energy sources, developing microgrids with onsite and backup generation, navigating procurement processes, and ensuring regulatory compliance.

Jackson Walker is recognized as having one of the most experienced and influential electric power teams in Texas. Known for helping data center clients secure reliable and scalable power, we advise clients concerning power supply and back up generation, microgrids, and other onsite power generation systems, along with regulatory compliance counsel and negotiating power purchase and other related agreements to ensure robust, resilient power solutions for continuous operation and expansion.

Increasing challenges in acquiring sufficient power for data centers have led our clients to develop and implement forward-thinking strategies to power acquisition, generation, and management.

Securing dependable gas and water supplies presents regulatory and commercial challenges for data center clients, and Jackson Walker’s large and experienced energy team helps data center clients navigate those challenges.   Our in-depth knowledge of interstate and intrastate pipelines and fuel storage—as well as the challenges associated with securing the most advantageous terms on the pipeline grid– is one of the key assets Jackson Walker’s team brings to its large end-use clients, including data centers. 

We counsel clients on all aspects of gas and water supply and transportation, from negotiating agreements and easements to representing clients before regulatory bodies such as the Texas Railroad Commission and local water districts. The firm’s proactive approach ensures clients have reliable access to essential utilities while mitigating regulatory and operational risks.

Data Center financings rely on sophisticated and complex capital stacks, often involving a combination traditional bank debt, private credit, equity, structured finance, and project financing.  These capital sources combine loans, equity investments and securitization to raise capital that supports everything from the initial purchase and construction of a datacenter facility to operation and expansion of the data center project.  Balancing the asset value, operational flexibility, and risk allocation among owners, lenders and borrowers is a critical focus of the project. 

Similarly, the financing needs and considerations of a client that is constructing a facility from the ground up may differ from a client that is purchasing an existing data center facility or is retrofitting an existing structure into a data center facility.  At Jackson Walker, we have expertise in all stages and structures of data center financing, to get your project financed from start to completion and beyond. 

Transactions for data centers are rapidly evolving fueled by the rising demand for cloud computing, artificial intelligence, big data, and digital transformation across industries.  Hyperscalers, infrastructure funds, and data center operators are pursuing mergers and acquisitions, joint ventures and private equity investments as strategic growth methods to expand their digital footprint or capabilities. 

Our team has deep experience advising clients seeking to increase their digital infrastructure whether through acquisitions and development of large-scale data centers.  We understand the unique legal, operational, and technical considerations that drive value in digital infrastructure deals and bring practical, market-savvy counsel to each stage of the full range of transactions in this sector—from equity financing, including complex joint ventures, as well as large-scale and programmatic acquisition initiatives.

Data center projects are subject to stringent environmental regulations, and clients often encounter difficulties with due diligence, permitting, and ongoing compliance, which can threaten project timelines and budgets.

Jackson Walker’s environmental team guides clients through every stage of environmental compliance, including due diligence, permitting, enforcement, and microgrid considerations. With deep experience before regulatory agencies, the firm addresses air quality, water permitting, carbon management, and climate strategies, helping clients efficiently resolve environmental challenges and maintain compliance throughout the project lifecycle.

The rapidly evolving legislative landscape can create uncertainty for data center clients, who must anticipate and respond to new laws and regulations that may impact their operations.

Jackson Walker advocates for clients before federal and state agencies, such as the Public Utility Commission of Texas and the Texas Commission on Environmental Quality, as well as the Texas State Legislature and the Electric Reliability Council of Texas. Jackson Walker monitors and influences legislation and regulations that affect data center development and operations. The firm’s strong relationships and legislative expertise enable clients to better anticipate policy changes, protect their interests, and adapt to new regulatory requirements.

Data center projects are vulnerable to supply chain disruptions, market fluctuations, and logistical challenges, all of which can delay project delivery and increase costs.

Jackson Walker supports clients in managing these complexities by drafting and negotiating procurement and construction contracts, identifying and mitigating supply chain risks, and leveraging multidisciplinary experience to navigate regulatory requirements and logistical hurdles. This comprehensive approach ensures timely and efficient project delivery, even in a dynamic market environment.