Congress makes progress on data center legislation

Key Takeaways

Addressing the impacts of rapid data center expansion has been a priority for federal lawmakers in the 119th Congress. Before Congress adjourned for the October recess ahead of the midterm elections, lawmakers made significant progress on this issue for the first time this year. When Congress returns to Capitol Hill, it is critical that lawmakers build on this momentum and advance legislation to protect counties and individual ratepayers from rising electricity costs associated with data center development.

The national conversation around data centers has shifted dramatically in recent years, and data center development has become a prominent political issue throughout the midterm election cycle. As residents continue to raise concerns about new data center projects, county leaders should stay informed about how Congress and their state legislatures are addressing the challenges associated with data center growth.

Recent congressional action

Republicans and Democrats in Congress have introduced dozens of bills addressing various aspects of data center development. However, the approaches outlined in these bills differ significantly, reflecting a lack of consensus on how best to address the issue. Lawmakers in both parties have called for moratoriums on data center development, while others support continued development to create construction jobs in their districts and maintain U.S. competitiveness in artificial intelligence.

Of the data center-related bills introduced during the 119th Congress, NACo has endorsed two measures aimed at providing electricity cost relief to ratepayers.

On Sept. 16, the House passed the Ratepayer Protection Act in a strong bipartisan vote of 417-3. The legislation would require states to consider adopting a federal standard directing data centers with electricity demand of 100 megawatts (MW) or more to cover the incremental costs of the electricity infrastructure upgrades needed to serve them. The bill establishes a federal framework for consideration by state regulators while preserving state authority over electricity markets. It also builds on efforts already underway in states to protect residential customers and small businesses from shouldering the costs of infrastructure upgrades.

On Sept. 30, Senate lawmakers introduced the Bipartisan American Affordability and Jobs Act, a broad permitting reform package. In addition to reforming federal environmental review and permitting processes, the legislation includes provisions requiring data centers with electricity demand of 20 MW or more to cover their associated transmission costs. Unlike the Ratepayer Protection Act, which directs states to consider adopting a standard, the Senate proposal would establish a more direct requirement for covered data centers to pay these costs.

Counties support the responsible management of electric grid infrastructure to prevent ratepayers from shouldering the costs of upgrades needed to serve new data centers. The House passage of the Ratepayer Protection Act and the inclusion of ratepayer protections in the Senate permitting package signal growing congressional support for ensuring that data center developers bear the costs of the infrastructure needed to serve their facilities, rather than shifting those costs to existing ratepayers.

What counties should tell Congress

With a limited number of legislative days remaining in the 119th Congress, counties should contact their congressional delegations and urge their members to support the Bipartisan American Affordability and Jobs Act. When Congress returns to Washington following the midterm elections, lawmakers should advance legislation that protects counties, residents and small businesses from bearing the electricity infrastructure costs associated with data center development.