US Tech Regulation Faces New Test as Congress Takes Up Data Center Bill

The Bipartisan American Affordability and Jobs Act, scheduled for Senate debate Monday, would streamline federal approvals for power plants and transmission projects while requiring large data center operators to cover more of the infrastructure costs associated with their electricity demand.

The legislation also includes provisions intended to protect consumers from costs linked to canceled or unsuccessful data center projects, according to Reuters.

Despite support from President Donald Trump and lawmakers from both parties, the bill faces opposition from environmental groups and Democrats concerned that faster permitting could weaken environmental protections and encourage fossil fuel development.

Investment firm TD Cowen lowered its estimated probability of passage to 25% from 40% before the elections, Reuters reported.

Democrats Push for Stronger Protections

Democrats’ victories in the House and Senate have strengthened calls within the party to seek additional environmental safeguards before approving permitting reform.

Sen. Sheldon Whitehouse, a Rhode Island Democrat involved in drafting the legislation, told Reuters that the proposal would address electricity affordability and hold data center operators more accountable for infrastructure costs.

Jeremy Harrell, chief executive of conservative clean energy group ClearPath Action, also identified the data center provisions as an area of bipartisan agreement, according to Reuters.

Environmental organizations remain opposed to parts of the legislation. The Sierra Club and other groups have raised concerns about weakened environmental reviews and protections for tribal sovereignty.

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Although sponsors introduced amendments Saturday to address objections, opposition continued, Reuters reported.

House Democratic Leader Hakeem Jeffries has called for stronger environmental protections and greater involvement from House Democrats, while Sen. Ron Wyden of Oregon has urged his party to negotiate a better agreement following its election gains.

Data Center Costs at Center of Debate

The legislation comes amid growing scrutiny of the electricity demands of AI data centers and concerns about their effects on consumer utility bills.

Research firm Rhodium Group estimated that the proposed permitting and transmission reforms could reduce greenhouse gas emissions associated with data center electricity supplies by 31% to 90%, depending on the sources of power used, Reuters reported.

The potential reductions would depend on expanded transmission capacity allowing data centers to access cleaner grid electricity rather than relying on dedicated natural gas generation.

The Data Center Coalition, an industry association, has not endorsed the proposal and did not immediately respond to Reuters’ request for comment.

Trump has backed the legislation, arguing that expanding domestic data center capacity is important for maintaining U.S. competitiveness with China.

According to Reuters, investment bank ING considers broad federal restrictions on data center construction unlikely during Trump’s presidency, given the administration’s emphasis on AI competition.

The bill’s prospects remain unclear as lawmakers weigh faster infrastructure approvals against demands for stronger environmental safeguards and protections for electricity customers.

Source: Reuters