A bipartisan energy bill regulating data centers is set for a House floor vote today, while House Democrats introduced legislation to exclude data centers from federal tax incentives amid concerns over energy and water use.
House Democrats unveil bill to block data centers from federal tax breaks
House Democrats led by Reps. Kristen McDonald Rivet (D-Mich.) and Don Davis (D-N.C.) introduced legislation on Wednesday to prevent data centers from accessing certain federal investment incentives. The bill, backed by 21 additional House Democrats including Rep. Jimmy Panetta (D-Calif.), targets tax benefits that data centers currently qualify for under existing programs. Lawmakers cited concerns over rising electricity demand, water consumption, and local development impacts as key motivations for the proposal.
Bipartisan energy bill on data centers heads to House floor vote
A separate bipartisan bill, the Ratepayer Protection Act, sponsored by Rep. Gabe Evans (R-Colo.) and co-sponsored by Rep. Kathy Castor (D-Fla.), is scheduled for a House floor vote today. The legislation passed unanimously out of the House Energy and Commerce Committee over the summer and aims to balance data center growth with infrastructure needs. Evans argued that the U.S. must "strike the right balance" to maintain competitiveness with China in AI development.
Opposition to the energy bill
Some Democrats, including Rep. Rashida Tlaib (D-Mich.), have criticized the Ratepayer Protection Act for not going far enough. Tlaib stated on social media that she would vote against the bill, calling for a national moratorium on data centers and a prohibition on federal lands. Other lawmakers, such as Rep. Frank Pallone (D-N.J.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.), have also expressed opposition, arguing the bill does not adequately address community and environmental concerns.
Context: Data centers and federal incentives
Data centers, critical to AI infrastructure, have seen rapid expansion nationwide. The Trump administration has prioritized their development, streamlining permitting processes to accelerate growth. Federal tax incentives, originally designed for broader economic development, have become accessible to data centers due to their substantial infrastructure investments. Democrats argue these incentives disproportionately benefit large tech companies while imposing costs on local communities.
Rep. Deborah Ross (D-N.C.) highlighted concerns in her district, where tech companies have purchased land without sufficient community input. She criticized the prioritization of corporate interests over local needs, stating that "Washington is giving handouts to Big Tech companies while American families are drowning."
Next steps
The House is expected to vote on the Ratepayer Protection Act today, while the Democrats' tax break bill will undergo further legislative review. The outcome of these votes could shape the future of data center regulation and federal incentives as the AI industry continues to expand.