AI Data Centres & Supporting Infrastructure

We act for municipalities, Indigenous communities and other potential stakeholders who will be impacted by AI data centres. We have extensive experience assisting these groups understand and address various issues combining our areas of experience (e.g. regulatory, Indigenous, municipal and technical to provide comprehensive advice and recommendations for our clients.

AI data centres are commercialized and operated through a range of customer deployment models, including rack‑based colocation, private suites, powered‑shell and wholesale arrangements. Across all of these models, success depends on a clear and workable commercial framework governing access, privacy, security, service delivery and operational responsibility.

We act for both data centre operators and data centre customers in drafting and negotiating the core agreements that govern the day‑to‑day operation and use of data centre facilities. This includes master services agreements (MSAs), colocation and shell‑based service arrangements, cross‑connection and interconnection agreements, and shared‑facility (co‑tenancy) provisions.

For operators, these agreements are critical to maintaining control over infrastructure, enforcing access, privacy and security standards, managing capacity and uptime commitments and allocating operational and liability risk in a scalable way. For customers, the focus is on service levels, flexibility to scale, clarity around maintenance and outages, cost certainty and alignment with internal compliance, privacy, security and business requirements.

We take a practical, commercially grounded approach to these agreements, informed by deep IT industry and in‑house experience. Our focus is on producing contractual frameworks that support secure, reliable operations while remaining workable for both data centre operators and the customers that rely on them. We understand the need for cost certainty and the importance of service levels and service level management as well as the related privacy and security issues.

AI data centres collect, process and store enormous volumes of personal information and personal health information on behalf of their clients. Under Canadian and International law, the obligations that attach to this personal information and personal health information are extensive and the consequences of non-compliance can be severe. We can assist with privacy legal compliance with Federal, Provincial and international standards and offer practical approaches to address these issues within your customer contracts. We have direct and specific experience with data residency and sovereignty issues.

AI data centres represent high-value targets for threat actors. The Canadian Centre for Cyber Security has identified critical infrastructure – including the digital infrastructure underpinning AI workloads – as a primary target for both state-sponsored and criminal cyber threat actors. Establishing robust cybersecurity governance is not merely a technical exercise, it is a legal and operational imperative. We can assist with the development of effective cybersecurity governance and policies.

Data centre proponents will need to consider most appropriate corporate structure based on proposed project – e.g. the difference between data centre site without generation compared to proposed data centre campus with onsite generation. There may be a need for separate entities involved in the generation facilities compared to data facilities. This could be driven by taxes (including incentives), regulatory permitting requirements, merger and acquisition opportunities, etc.

Data centres are capital-intensive projects that may require sophisticated financing arrangements or capital stacks – e.g. a mix of private equity, institutional investors and bank lending.

Financial structures will be closely linked with the front end tax planning – e.g. developers will want to use available tax incentives and government programs, such as investment tax credits for qualifying clean energy, infrastructure or AI-related investments.

Increasingly there are other government grants or strategic supports that may need to be considered for project structuring.

Large data centre investments can trigger regulatory reviews. Some facilities are treated as critical infrastructure, so acquisitions or foreign capital injections may face scrutiny under the Investment Canada Act (national security review) and/or need Competition Bureau review or approval.

Data centres are extremely power intensive. How they secure power may differ based on the project or province – e.g. Alberta’s deregulated “energy-only” electricity market (managed by AESO) that allows private PPAs, versus Saskatchewan’s Crown utility system (need for SaskPower involvement or consent).

Large facilities often require dedicated infrastructure like on-site generation or power purchase agreements. The process for connecting to the grid, and whether such connections are even permitted, will differ for each province.

Adequate site selection and municipal buy-in will be key for data centres. Projects may need appropriate industrial/special-use zoning and will likely need to comply with local bylaws for noise, building height, traffic, etc.

Understanding planning authority requirements and early engagement with planning authorities will be important, as community land-use concerns can derail projects. For example, an Alberta county recently refused a large AI data centre campus due to conflicts with agricultural land use and resident opposition.

Developers need to also account for or consider subdivision requirements or foreign ownership of land restrictions. For example, Saskatchewan or Alberta may limit non-Canadians from owning large tracts of farm land when assembling sites for data centres under their applicable foreign ownership of land laws. Assessments or applications may be required based on the size or location of a possible site.

The may also be other parties with interests on title that need to be dealt with for a proposed data centre development.

Data centres are complex infrastructure projects that will involve complex construction contracts, specialized equipment procurement (for power substations, cooling plants, fiber-optic connectivity, etc.) and coordination with public utilities.

Construction agreements and supply contracts will need to be carefully negotiated to manage risks related to project delivery.

As we saw from the Bell announcements in Saskatchewan, some projects may be public/private partnerships which will require developers to navigate government procurement processes and permitting for infrastructure works, and to ensure local content or Indigenous participation commitments are met.

Data centres will need to navigate environmental regulations based on their size, location and use of resources.

Data centres (or aspects of them, such as the large energy generation) may require environmental assessments and permits based on potential impacts on water, emissions, noise, and/or use of hazardous materials. For example, high-capacity cooling systems can draw substantial water, requiring water approvals or licences, and projects or their energy generation components may emit noise and emissions.

Regulatory permitting will often require early stakeholder engagement related to large infrastructure projects (e.g. consultation with Indigenous group, municipalities, supply chain organizations, etc).

For example, in Alberta, regulators have halted projects if filings or consultation are inadequate – as seen when Alberta’s Utilities Commission denied a proposed 1.4 GW data centre power plant over deficient information and community consultation.

The environmental and social impacts may also trigger consultation requirements.