A call from a powerful House Democrat to impose a nationwide moratorium on new data center development exposed new divisions in Congress over how aggressively to regulate the fast-moving industry — and whether to act at all.
The surprise call from Energy and Commerce ranking member Frank Pallone (D-N.J.) overshadowed a vote Wednesday on bipartisan legislation to make sure ratepayers don’t foot the bill for energy infrastructure associated with data center expansion.
And even if the Ratepayer Protection Act can get through the House, top Senate lawmakers are divided on how and whether to move forward with federal data center legislation.
Pallone, who would take over Energy and Commerce next year should Democrats win back the House, called that bill and others being considered by the Energy Subcommittee “not nearly enough.”
Citing the significant energy needs of data centers and other environmental impacts, Pallone said, “we need action, not toothless promises from Big Tech.”
Rep. Kathy Castor of Florida — the top Democrat on the subcommittee and Ratepayer Protection Act co-sponsor with Rep. Gabe Evans (R-Colo.) — said she was not supportive of the moratorium but understood Pallone’s position.
“I was talking to the ranking member, and he explained that back home he’s got local government sending him resolutions all the time opposing [artificial intelligence] data centers,” Castor said. “But I don’t think you can say, ‘We’re going to just stop everything now.’”
Energy and Commerce Chair Brett Guthrie (R-Ky.) through a spokesperson declared the moratorium idea “not the answer” and argued it risks “slowing innovation” in AI to compete with China, even as Republicans seek to “work through legitimate concerns from constituents.”
The bill would require states to consider a federal standard that would ensuring large power customers cover 100 percent of the costs of new generation and transmission upgrades. But state regulators could ultimately reject that federal standard.
Google and Microsoft have come out in favor of the legislation. The Data Center Coalition — which represents a host of tech giants and argues data centers are not to blame for higher electricity prices — said it “supports the approach taken by the Ratepayer Protection Act.”
Moratorium bill introduced
Environmental groups like Greenpeace, Friends of the Earth and Food and Water Watch fired off a letter urging lawmakers to vote against the Ratepayer Protection Act.
And Rep. Alexandria Ocasio-Cortez (D-N.Y.) formally introduced legislation to instill a national moratorium. She has been leading the charge with Sen. Bernie Sanders (I-Vt.).
“I was surprised and very encouraged to hear the ranking member come out and say that,” Ocasio-Cortez told POLITICO about Pallone. “It takes a lot of courage, but it’s also a testament to a lot of the organizing that is happening in communities across not just the state of New Jersey, but the country as well.”
The Ratepayer Protection Act — which seeks to codify President Donald Trump’s ratepayer protection pledge with tech companies — ended up passing by voice vote despite the drama.
Lawmakers also found consensus on the other data center-related bills, including the Load Forecasting Enhancement Act, H.R. 9332, and the Affordable Innovation for the Grid Act, H.R. 9339. Those bills would enhance load forecasting for future data centers and boost grid-enhancing technologies.
Evans said, “Two things can be true: the AI phenomenon — that toothpaste is not going back in the tube. The only question is, do we lead on it or do we cede ground to the Chinese? The second thing is also true: These costs should not be borne by ratepayers, and people want to know how we’re going to pay for this.”
What about the Senate?
The Senate Energy and Natural Resources Committee has yet to take up any data center legislation, and Chair Mike Lee (R-Utah) said Wednesday, “I don’t currently have that identified as a priority.”
Lee added he’s “happy to look at” the Ratepayer Protection Act, which still needs to be approved by the full Energy and Commerce Committee before moving to the House floor.
Sen. Kevin Cramer (R-N.D.) cited action last week from the Federal Energy Regulatory Commission to address the data center surge and its associated electricity growth as a reason for Congress to take a step back.
“It gives everybody a little bit of a breather,” Cramer said, pointing to FERC tasking regional grid operators with coming up with plans to address data center energy demand.
“I’m not taking my eye off the ball necessarily, but the reality is we’re probably not going to do anything this Congress,” said Cramer, a former energy regulator in his state.
Some senators suggested they feel pressure to take at least some action on data centers this year in response to rising concerns among voters in both parties.
“I know this is an issue that has really skyrocketed in importance with the electorate, particularly the Virginia electorate, over the last two years,” said Sen. Tim Kaine (D-Va.), who represents a major hub of data center activity, even as he acknowledged congressional debate on the topic is in a “somewhat early stage.”
Sen. Josh Hawley (R-Mo.), a populist Republican, said the Senate should “absolutely” take up the Ratepayer Protection Act and that “there shouldn’t be any more data center development until it’s done.”
“These companies need to take the pledge. We need to pass the law, and the fact that all of them aren’t just saying absolutely, we’ll do that, that they’re still trying to finagle their way into getting working people to pay for their massive electricity costs is ridiculous,” Hawley said.
Environment and Public Works Chair Shelley Moore Capito of West Virginia, who is a part of Republican Senate leadership, said she’s supportive of the concept of the Ratepayer Protection Act.
She said while data centers are an “important topic” and there’s been “major pushback” to them, the issue has not become a part of negotiations she’s leading to ease permitting rules for energy projects.
Amelia Davidson contributed to this report.
