June 24, 2025 - 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.