A bill could make AI companies pay more for data centers. It may also encourage more of them.

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As Congress returns to Washington this week, the massive power demands of the AI boom have forced a reckoning over data center infrastructure.

The Senate is preparing for a pivotal procedural vote on legislation that would speed approvals for energy projects while requiring large data centers to shoulder more of the costs they impose on the power grid. The bipartisan bill would add much-needed regulations on data centers, but, as some politicians believe, may also encourage more data center construction.

Silicon Valley vs. a changed D.C.

In the sweeping and history-making midterm elections last week, voters didn’t just elect a new generation of Democratic lawmakers. They also sent a pretty unmistakable message to Big Tech, particularly the artificial intelligence industry: Enough with the data centers already. Or, more bluntly, “get out of town.”

Across the country, local communities are pushing to stop, restrict, or impose conditions on data center development. The election results reinforced that message, making clear that the AI gold rush is facing growing resistance.

For the last two years, Silicon Valley has busied itself building more, building bigger and doing it ASAP. If a tech giant wanted to drop a warehouse-sized data center into a community, local governments often offered tax breaks and other incentives, then told residents it was harmless and would mean more jobs.

Voters increasingly aren’t buying it.

Democrats now find themselves in a pickle. Many campaigned on restricting data center development, responding to voters concerned about electricity costs, water consumption, and the impact these enormous facilities have on their communities. 

Now, the aforementioned pending legislation forces a stark about-face — since, as Reuters reports, some Democrats believe provisions in the proposed bill could encourage the creation of more data centers. If that comes to pass, incoming lawmakers would need to explain why those campaign promises to halt data center construction no longer apply. 

Can data centers be built responsibly?

There’s a risk, too, in the new Democratic Congress pushing too forcefully for restrictions on AI, specifically on data centers. My well-seasoned brain believes AI companies will respond to restrictions not simply by complaining about the cost of doing business, but by slowing down the rollout of new technology.

Some of that slowdown will be unavoidable. Without enough data centers, electricity, and computing capacity, companies cannot expand indefinitely. But some of it could be strategic.

I suspect the message from Silicon Valley will be slightly PR-ish: If you don’t want us building data centers, don’t expect your ChatGPT, Claude, or Siri to keep getting faster, smarter, and more capable. That “hurry up and now” diagnosis for your sore knee might take a little longer.

Picture AI as something other than a magical cloud floating above our heads. Every time you ask an AI assistant to write an email, generate an image, or summarize a document, powerful chips in actual buildings are cranking away, consuming tremendous amounts of electricity and water and pressuring local power grids. 

And all that power costs mega cash. Utility rates, grid upgrades, and higher electricity bills have turned an abstract technology debate into something much more personal.

I don’t blame communities for pushing back. Why should residents subsidize a multibillion-dollar technology company’s expansion while wondering whether their electric bills will keep climbing? They’re already fed up with rising gas and grocery prices and the cost of a new home.

But there’s another side to this costly coin that Democrats shouldn’t ignore. Data centers can bring economic benefits, too, provided technology companies invest in the communities that host them.

While data centers rarely employ local, low-skill workers directly, AI companies can bridge this gap by funding local infrastructure projects that immediately put the existing workforce to work. Furthermore, the resulting influx of permanent, high-salaried technicians injects new tax revenue into the community, triggering a powerful economic ripple effect for local restaurants and shops.

Communities shouldn’t have to choose between protecting residents and benefiting from technological investment. Companies that want to build in these towns should contribute meaningfully to their economic well-being.

The risks of slowing down the AI gold rush

Government intervention, even when well-intentioned, can also produce unintended consequences that ultimately hurt consumers.

Just look at Europe. In 2024, Apple said it would hold back Apple Intelligence and other new features from EU customers, citing “regulatory uncertainties” tied to the Digital Markets Act. Regulators were trying to rein in Big Tech and protect competition. Whether you buy Apple’s explanation or see it as a pressure tactic, European customers were left waiting while others got the shiny new toys.

This doesn’t mean all regulation is bad. It’s a reminder that lawmakers cannot promise to put a tight leash on an industry without potentially creating bottlenecks in the products and services it provides. That’s precisely the dilemma Democrats now face.

If they make it too difficult or expensive to build data centers, AI companies will have fewer places to house the computing power necessary to expand their products. New features could take longer to arrive. More sophisticated applications could cost more.

And I wouldn’t be surprised if the industry makes sure consumers understand exactly who’s responsible. They’ll be smug about it: “OK, you wanted restrictions. You got them. Now don’t lose it when your AI assistant takes longer to answer. Or, we might have you paying a monthly fee.”

It’s a convenient argument for Big Tech, shifting attention away from an industry that hasn’t always sought communities’ permission or given much thought to ordinary consumers.

That’s why Democrats need to be thoughtful about what comes next. Protecting communities, keeping electricity affordable, and demanding that tech companies pay their fair share are entirely reasonable goals. But a political victory over data centers could become a consumer defeat if lawmakers don’t consider the consequences.

This article represents the opinions of its writer.

John Casey is a columnist at Raw Story, the Advocate, Daily Beast, and Outsports. He’s also the author of Love: The Heroic Stories of Marriage Equality.