Transform Communities By Adaptive Reuse of Legacy Coal Infrastructure to Support AI Data Centers
The rise of artificial intelligence (AI) and the corresponding hyperscale data centers that support it present a challenge for the United States. Data centers intensify energy demand, strain power grids, and raise environmental concerns. These factors have led developers to search for new siting opportunities outside traditional corridors (i.e., regions with longstanding infrastructure and large clusters of data centers), such as Silicon Valley and Northern Virginia. American communities that have historically relied on coal to power their local economies have an enormous opportunity to repurpose abandoned coal mines and infrastructure to site data centers alongside clean power generation. The decline of the coal industry in the late 20th century led to the abandonment of coal mines, loss of tax revenues, destruction of good-paying jobs, and the dismantling of the economic engine of American coal communities, primarily in the Appalachian, interior, and Western coal regions. The AI boom of the 21st century can reinvigorate these areas if harnessed appropriately.
The opportunity to repurpose existing coal infrastructure includes Tribal Nations, such as the Navajo, Hopi, and Crow, in the Western Coal regions. These regions hold post-mining land with potential for economic development, but operate under distinct governance structures and regulatory frameworks administered by Tribal governments. A collaborative approach involving Federal, State, and Tribal governments can ensure that both non-tribal and Tribal coal regions share in the economic benefits of data center investments, while also promoting the transition to clean energy generation by collocating data centers with renewable, clean energy-powered microgrids.
This memo recommends four actions for coal communities to fully capitalize on the opportunities presented by the rise of artificial intelligence (AI).
- Establish a Federal-State-Tribal Partnership for Site Selection, Utilizing the Department of the Interior’s (DOI) Abandoned Mine Land (AML) Program.
- Develop a National Pilot Program to Facilitate a GIS-based Site Selection Tool
- Promote collaboration between states and utility companies to enhance grid resilience from data centers by adopting plug-in and flexible load standards.
- Lay the groundwork for a knowledge economy centered around data centers.
By pursuing these policy actions, states like West Virginia, Pennsylvania, and Kentucky, as well as Tribal Nations, can lead America’s energy production and become tech innovation hubs, while ensuring that the U.S. continues to lead the AI race.
Challenge and Opportunity
Energy demands for AI data centers are expected to rise by between 325 and 580 TWh by 2028, roughly the amount of electricity consumed by 30 to 54 million American households annually. This demand is projected to increase data centers’ share of total U.S. electricity consumption to between 6.7% and 12.0% by 2028, according to the 2024 United States Data Center Energy Usage Report by the Lawrence Berkeley National Lab. According to the same report, AI data centers also consumed around 66 billion liters of water for cooling in 2023. By 2028, that number is expected to be between 60 and 124 billion litres for hyperscale data centers alone. (Hyperscale data centers are massive warehouses of computer servers, powered by at least 40 MW of electricity, and run by major cloud companies like Amazon, Google, or Microsoft. They serve a wide variety of purposes, including Artificial intelligence, automation, data analytics, etc.)
Future emissions are also expected to grow with increasing energy usage. Location has also become important; tech companies with AI investments have increasingly recognized the need for more data centers in different places. Although most digital activities are traditionally centered around tech corridors like Silicon Valley and Northern Virginia, the need for land and considerations of carbon emissions footprints in these places make the case for expansion to other sites.
Coal communities have experienced a severe economic decline over the past decade, as coal severance and tax revenues have plummeted. West Virginia, for example, reported an 83% decline in severance tax collections in fiscal year 2024. Competition from natural gas and renewable energy sources, slow growth in energy demand, and environmental concerns have led to coal often being viewed as a backup option. This has led to low demand for coal locally, and thus a decrease in severance, property, sales, and income taxes.
The percentage of the coal severance tax collected that is returned to the coal-producing counties varies by state. In West Virginia, the State Tax Commissioner collects coal severance taxes from all producing counties and deposits them in the State Treasurer’s office. Seventy-five percent of the net proceeds from the taxes are returned to the coal-producing counties, while the remaining 25% is distributed to the rest of the state. Historically, these tax revenues have usually funded a significant portion of county budgets. For counties like Boone in West Virginia and Campbell County in Wyoming, once two of America’s highest coal-producing counties, these revenues helped maintain essential services and school districts. Property taxes and severance taxes on coal funded about 24% of Boone’s school budget, while 59% of overall property valuations in Campbell county in 2017 were coal mining related. With those tax bases eroding, these counties have struggled to maintain schools and public services.
Likewise, the closure of the Kayenta Mine and the Navajo Generating Station resulted in the elimination of hundreds of jobs and significant public revenue losses for the Navajo and Hopi Nations. The Crow Nation, like many other Native American tribes with coal, is reliant on coal leases with miners for revenue. They face urgent infrastructure gaps and declining fiscal capacity since their coal mines were shut down. These tribal communities, with a rich legacy of land and infrastructure, are well-positioned to lead equitable redevelopment efforts if they are supported appropriately by state and federal action.
These communities now have a unique opportunity to attract investments in AI data centers to generate new sources of revenue. Investments in hyperscale data centers will revive these towns through revenue from property taxes, land reclamation, and investments in energy, among other sources. For example, data centers in Northern Virginia, commonly referred to as the “Data Center Alley,” have contributed an estimated 46,000 jobs and up to $10 billion in economic impact to the state’s economy, according to an economic impact report on data centers commissioned by the Northern Virginia Technology Council.
Coal powered local economies and served as the thread holding together the social fabric of communities in parts of Appalachia for decades. Coal-reliant communities also took pride in how coal powered most of the U.S.’s industrialization in the nineteenth century. However, many coal communities have been hollowed out, with thousands of abandoned coal mines and tens of thousands of lost jobs. By inviting investments in data centers and new clean energy generation, these communities can be economically revived. This time, their economies will be centered on a knowledge base, representing a shift from an extraction-based economy to an information-based one. Data centers attract new AI- and big-data-focused businesses, which reinvigorates the local workforce, inspires research programs at nearby academic institutions, and reverses the brain drain that has long impacted these communities.
The federal government has made targeted efforts to repurpose abandoned coal mines. The Abandoned Mine Land (AML) Reclamation Program, created under the Surface Mining Control and Reclamation Act (SMCRA) of 1977, reclaims lands affected by coal mining and stabilizes them for safe reuse. Building on that, Congress established the Abandoned Mine Land Economic Revitalization (AMLER) Program in 2016 to support the economic redevelopment of reclaimed sites in partnership with state and tribal governments. AMLER sites are eligible for flexible reuse for siting hyperscale AI data centers. Those with flat terrains and legacy infrastructure are particularly desirable for reuse. The AMLER program is supported by a fee collected from active coal mining operations – a fee that has decreased as coal mining operations have ceased – and has also received appropriated Congressional funding since 2016. Siting data centers on AMLER sites can circumvent any eminent domain concerns that arise with project proposals on private lands.
In addition to the legal and logistical advantages of siting data centers on AMLER sites, many of these locations offer more than just reclaimed land; they retain legacy infrastructure that can be strategically repurposed for other uses. These sites often lie near existing transmission corridors, rail lines, and industrial-grade access roads, which were initially built to support coal operations. This makes them especially attractive for rapid redevelopment, reducing the time and cost associated with building entirely new facilities. By capitalizing on this existing infrastructure, communities and investors can accelerate project timelines and reduce permitting delays, making AMLER sites not only legally feasible but economically and operationally advantageous.
Moreover, since some coal mines are built near power infrastructure, there exist opportunities for federal and state governments to allow companies to collocate data centers with renewable, clean energy-powered microgrids, thereby preventing strain on the power grid. These sites present an opportunity for data centers to:
- Host local microgrids for energy load balancing and provide an opportunity for net metering;
- Develop a model that identifies places across the United States and standardizes data center site selection;
- Revitalize local economies and communities;
- Invest in clean energy production; and,
- Create a knowledge economy outside of tech corridors in the United States.
Precedents for collocating new data centers at existing power plants already exist. In February 2025, the Federal Energy Regulatory Commission (FERC) reviewed potential sites within the PJM Interconnection region to host these pairings. Furthermore, plans to repurpose decommissioned coal power stations as data centers exist in the United States and Europe. However, there remains an opportunity to utilize the reclaimed coal mines themselves. They provide a readily available location with proximity to existing transmission lines, substations, roadways, and water resources. Historically, they also have a power plant ecosystem and supporting infrastructure, meaning minimal additional infrastructure investment is needed to bring them up to par.
Plan of Action
The following recommendations will fast-track America’s investment in data centers and usher it into the next era of innovation. Collaboration among federal agencies, state governments, and tribal governments will enable the rapid construction of data centers in historically coal-reliant communities. Together, they will bring prosperity back to American communities left behind after the decline in the coal industry by investing in their energy capacities, economies, and workforce.
Recommendation 1. Establish a Federal-State-Tribal Partnership for Site Selection, Utilizing the Department of the Interior’s (DOI) Abandoned Mine Land (AML) Program.
The first step in investing in data centers in coal communities should be a collaborative effort among federal, state, and tribal governments to identify and develop data center pilot sites on reclaimed mine lands, brownfields, and tribal lands. The Environmental Protection Agency (EPA) and the Department of the Interior (DOI) should jointly identify eligible sites with intact or near-intact infrastructure, nearby energy generation facilities, and broadband corridors, utilizing the Abandoned Mine Land (AML) Reclamation Program and the EPA Brownfields Program. Brownfields with legacy infrastructure should also be prioritized to reduce the need for greenfield development. Where tribal governments have jurisdiction, they should be engaged as co-developers and beneficiaries of data centers, with the right to lead or co-manage the process, including receiving tax benefits from the project. Pre-law AMLs (coal mines that were abandoned before August 3, 1977, when the SMCRA became law) offer the most flexibility in regulations and should be prioritized. Communities will be nominated for site development based on economic need, workforce readiness, and redevelopment plans.
State governments and lawmakers will nominate communities from the federally identified shortlist based on economic need, workforce readiness and mobility, and redevelopment plans.
Recommendation 2. Develop a National Pilot Program to Facilitate a GIS-based Site Selection Tool
In partnership with private sector stakeholders, the DOE National Labs should develop a pilot program for these sites to inform the development of a standardized GIS-based site selection tool. This pilot would identify and evaluate a small set of pre-law AMLs, brownfields, and tribal lands across the Appalachian, Interior, and Western coal regions for data center development.
The pilot program will assess infrastructure readiness, permitting pathways, environmental conditions, and community engagement needs across all reclaimed lands and brownfields and choose those that meet the above standards for the pilot. Insights from these pilots will inform the development of a scalable tool that integrates data on grid access, broadband, water, land use, tax incentives, and workforce capacity.
The GIS tool will equip governments, utilities, and developers with a reliable, replicable framework to identify high-potential data center locations nationwide. For example, the Geospatial Energy Mapper (GEM), developed by Argonne National Laboratory with support from the U.S. Department of Energy, offers a public-facing tool that integrates data on energy resources, infrastructure, land use, and environmental constraints to guide energy infrastructure siting.
The DOE, working in coordination with agencies such as the Department of the Treasury, the Department of the Interior, the Bureau of Indian Affairs, and state economic development offices, should establish targeted incentives to encourage data center companies to join the coalition. These include streamlined permitting, data confidentiality protections, and early access to pre-qualified sites. Data center developers, AI companies, and operators typically own the majority of the proprietary operational and siting data for data centers. Without incentives, this data will be restricted to private industry, hindering public-sector planning and increasing geographic inequities in digital infrastructure investments.
By leveraging the insights gained from this pilot and expanding access to critical siting data, the federal government can ensure that the benefits of AI infrastructure investments are distributed equitably, reaching communities that have historically powered the nation’s industrial growth but have been left behind in the digital economy. A national site selection tool grounded in real-world conditions, cross-agency coordination, and private-public collaboration will empower coal-impacted communities, including those on Tribal lands and in remote Appalachian and Western regions, to attract transformative investment. In doing so, it will lay the foundation for a more inclusive, resilient, and spatially diverse knowledge economy built on reclaimed land.
Recommendation 3. Promote collaboration between states and utility companies to enhance grid resilience from data centers by adopting plug-in and flexible load standards.
Given the urgency and scale of hyperscale data center investments, state governments, in coordination with Public Utility Commissions (PUCs), should adopt policies that allow temporary, curtailable, and plug-in access to the grid, pending the completion of colocated, preferably renewable, energy microgrids in proposed data centers. This plug-in could involve approving provisional interconnection services for large projects, such as data centers. This short-term access is critical for communities to realize immediate financial benefits from data center construction while long-term infrastructure is still being developed. Renewable-powered on-site microgrids for hyperscale data centers typically exceed 100–400 MW per site and require deployment times of up to three years.
To protect consumers, utilities and data center developers must guarantee that any interim grid usage does not raise electricity rates for households or small businesses. The data center and/or utility should bear responsibility for short-term demand impacts through negotiated agreements.
In exchange for interim grid access, data centers must submit detailed grid resilience plans that include:
- A time-bound schedule (typically 18–36 months) for deploying an on-site microgrid, preferably powered by renewable energy.
- On-site battery storage systems and demand response capabilities to smooth load profiles and enhance reliability.
- Participation in net metering to enable excess microgrid energy to be sold back to the grid, benefiting local communities.
Additionally, these facilities should be treated as large, flexible loads capable of supporting grid stability by curtailing non-critical workloads or shifting demand during peak periods. Studies suggest that up to 126 GW of new data center load could be integrated into the U.S. power system with minimal strain if such facilities allow as little as 1% curtailment time (when data centers reduce or pause their electricity usage by 1% of their annual electricity usage).
States can align near-term economic gains with long-term energy equity and infrastructure sustainability by requiring early commitment to microgrid deployment and positioning data centers as flexible grid assets (see FAQs for ideas on water cooling for the data centers).
Recommendation 4. Lay the groundwork for a knowledge economy centered around data centers.
The DOE Office of Critical and Emerging Technologies (CET), in coordination with the Economic Development Administration (EDA), should conduct an economic impact assessment of data center investments in coal-reliant communities. To ensure timely reporting and oversight, the Senate Committee on Energy and Natural Resources and the House Committee on Energy and Commerce should guide and shape the reports’ outcomes, building on President Donald Trump’s executive order to pass legislation on AI education. Investments in data centers offer knowledge economies as an alternative to extractive economies, which have relied on selling fossil fuels, such as coal, that have failed these communities for generations.
A workforce trained in high-skilled employment areas such as AI data engineering, data processing, cloud computing, advanced digital infrastructure, and cybersecurity can participate in the knowledge economy. The data center itself, along with new business ecosystems built around it, will provide these jobs.
Counties will also generate sustainable revenue through increased property taxes, utility taxes, and income taxes from the new businesses. This new revenue will replace the lost revenue from the decline in coal over the past decade. This strategic transformation positions formerly coal-dependent regions to compete in a national economy increasingly shaped by artificial intelligence, big data, and digital services.
This knowledge economy will also benefit nearby universities, colleges, and research institutes by creating research partnership opportunities, developing workforce pipelines through new degree and certificate programs, and fostering stronger innovation ecosystems built around digital infrastructure.
Conclusion
AI is growing rapidly, and data centers are following suit, straining our grid and requiring new infrastructure. Coal-reliant communities possess land and energy assets, and they have a pressing need for economic renewal. With innovative federal-state coordination, we can repurpose abandoned mine lands, boost local tax bases, and build a knowledge economy where coal once dominated. These two pressing challenges—grid strain and post-coal economic decline—can be addressed through a unified strategy: investing in data centers on reclaimed coal lands.
This memo outlines a four-part action plan. First, federal and state governments must collaborate to prepare abandoned mine lands for data center development. Second, while working with private industry, DOE National Labs should develop a standardized, GIS-based site selection tool to guide smart, sustainable investments. Third, states should partner with utilities to allow temporary grid access to data centers, while requiring detailed microgrid-based resilience plans to reduce long-term strain. Fourth, policymakers must lay the foundation for a knowledge economy by assessing the economic impact of these investments, fostering partnerships with local universities, and training a workforce equipped for high-skilled roles in digital infrastructure.
This is not just an energy strategy but also a sustainable economic revitalization strategy. It will transform coal assets that once fueled America’s innovation in the 19th century into assets that will fuel America’s innovation in the 21st century. The energy demands of data centers will not wait; the economic revitalization of Appalachian communities, heartland coal communities, and the Mountain West coal regions cannot wait. The time to act is now.
This memo is part of our AI & Energy Policy Sprint, a policy project to shape U.S. policy at the critical intersection of AI and energy. Read more about the Policy Sprint and check out the other memos here.
There is no direct example yet of data center companies reclaiming former coal mines. However, some examples show the potential. For instance, plans are underway to transform an abandoned coal mine in Wise County, Virginia, into a solar power station that will supply a nearby data center.
Numerous examples from the U.S. and abroad exist of tech companies collocating data centers with energy-generating facilities to manage their energy supply and reduce their carbon footprint. Meta signed a long-term power-purchase agreement with Sage Geosystems for 150 MW of next-generation geothermal power in 2024, enough to run multiple hyperscale data centers. The project’s first phase is slated for 2027 and will be located east of the Rocky Mountains, near Meta’s U.S. data center fleet.
Internationally, Facebook built its Danish data center into a district heating system, utilizing the heat generated to supply more than 7,000 homes during the winter. Two wind energy projects power this data center with 294 MW of clean energy.
Yes! Virginia, especially Northern Virginia, is a leading hub for data centers, attracting significant investment and fostering a robust tech ecosystem. In 2023, new and expanding data centers accounted for 92% of all new investment announced by the Virginia Economic Development Partnership. This growth supports over 78,000 jobs and has generated $31.4 billion in economic output, a clear sign of the job creation potential of the tech industry. Data centers have attracted supporting industries, including manufacturing facilities for data center equipment and energy monitoring products, further bolstering the state’s knowledge economy.
AMLER funds are federally restricted to use on or adjacent to coal mines abandoned before August 3, 1977. However, some of these pre-1977 sites—especially in Appalachia and the West—are not ideal for economic redevelopment due to small size, steep slopes, or flood risk. In contrast, post-1977 mine sites that have completed reclamation (SMCRA Phase III release) are more suitable for data centers due to their flat terrain, proximity to transmission lines, and existing utilities. Yet, these sites are not currently eligible for AMLER funding. To fully unlock the economic potential of coal communities, federal policymakers should consider expanding AMLER eligibility or creating a complementary program that supports the reuse of reclaimed post-1977 mine lands, particularly those that are already prepared for industrial use.
Brownfields are previously used industrial or commercial properties, such as old factories, decommissioned coal-fired power plants, rail yards, and mines, whose reuse is complicated by real or suspected environmental contamination. By contrast, Greenfields are undeveloped acreage that typically requires the development of new infrastructure and land permitting from scratch. Brownfields offer land developers and investors faster access to existing zoning, permitting, transportation infrastructure, and more.
Since 1995, the EPA Brownfields Program has offered competitive grants and revolving loan funds for assessing, cleaning up, and training for jobs at Brownfield sites, transforming liabilities into readily available assets. A study estimated that every federal dollar spent by the EPA in 2018 leveraged approximately $16.86 in follow-on capital and created 8.6 jobs for every $100,000 of grant money. In 2024, the Agency added another $300 million to accelerate projects in disadvantaged communities.
In early 2025, the U.S. Department of Energy (DOE) issued a Request for Information (RFI) seeking input on siting artificial intelligence and data infrastructure on DOE-managed federal lands, including National Labs and decommissioned sites. This effort reflects growing federal interest in repurposing publicly-owned sites to support AI infrastructure and grid modernization. Like the approach recommended in this memo, the RFI process recognizes the need for multi-level coordination involving federal, state, tribal, and local governments to assess land readiness, streamline permitting, and align infrastructure development with community needs. Lessons from that process can help guide broader efforts to repurpose pre-law AMLs, brownfields, and tribal lands for data center investment.
Yes, by turning a flooded mine into a giant underground cooler. Abandoned seams in West Virginia hold water that remains at a steady temperature of ~50–55°F (10–13°C). A Marshall University study logged 54°F mine-pool temperatures and calculated that closed-loop heat exchangers can reduce cooling power enough to achieve paybacks in under five years. The design lifts the cool mine water to the servers in the data centers, absorbs heat from the servers, and then returns the warmed water underground, so the computer hardware side never comes into contact with raw mine water. The approach is already being commercialized: Virginia’s “Data Center Ridge” project secured $3 million in AMLER funds, plus $1.5 million from DOE, to cool 36 MW blocks with up to 10 billion gallons of mine water held at a temperature of below 55°F.
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