Even as partisan rifts define Washington, lawmakers have found a rare motivator for bipartisan collaboration: data centers. Lawmakers from both parties believe the proliferation of data centers and development of the artificial intelligence they power will determine U.S. economic competitiveness and national security for decades.
Congressional leaders are hoping to capitalize on this bipartisan agreement to push through federal energy project permitting reform legislation, which has failed to gain the necessary support in recent years. Lawmakers and interest groups alike view energy permitting reform as key to the continued growth of the data center industry. A deal would reshape the regulatory landscape, providing significant opportunity and risk for data center operators and energy producers.
Data Centers Power AI Advancement
There are several major factors attracting lawmakers to data centers. First, both parties recognize the need to further develop artificial intelligence technologies. Second, both the construction and operation of data centers have massive economic value, which lawmakers hope to bring to their states and districts. Because of this, key congressional leaders believe data centers could help push through an elusive permitting reform deal, even in a divided Congress.
However, there are major obstacles to such a deal. The parties’ disagreement on the future of renewable energy is a primary barrier, with Democrats apprehensive to agree to any deal that would allow the Trump administration to prioritize non-renewables and block new green energy projects.
There are data centers in every state and nearly every Congressional district. According to one dataset, there are nearly 4,100 active data centers across the U.S., with more on the way. Data centers bring jobs and economic productivity, driving lawmakers’ desire to continue supporting the industry’s rapid growth. As the labor market and broader economy begin to show warning signs, AI and data centers have driven economic growth this year. Tens of billions of dollars are being invested in this industry across the country, and lawmakers hope to keep these investments flowing by incentivizing further data center construction and development of the energy projects necessary to power them.
Data Center Energy Use Spiking Nationally
According to a 2024 Department of Energy report, data centers are expected to make up between 6.7% and 12% of U.S. energy demand in 2028. Consumers across the country have already seen rising energy prices as a result of data center demand, and federal regulators have concerns about PJM Interconnection’s grid capacity as data centers strain the system.
This increased energy use has pushed Senate Majority Leader John Thune (R-SD), Senate Minority Leader Chuck Schumer (D-NY), and House Minority Leader Hakeem Jeffries (D-NY-08) to acknowledge that increased energy production will be necessary to meet the demand from data centers. House Energy and Commerce Committee Chair Brett Guthrie (R-KY-02) also argued in an op-ed that current energy permitting regulations were unsustainable given the rapid growth in energy demand from data centers.
Congressional Momentum Growing, but Obstacles Remain
Key Senate committee leaders have indicated that they too hope to work on permitting reform in the 119th Congress. Additionally, House Majority Leader Steve Scalise (R-LA-01) has said that the House would act on permitting reform before the end of the year, but the ongoing government shutdown has likely delayed this timeline.
As bipartisan political support has grown for a permitting reform deal, House Natural Resources Committee Chair Bruce Westerman (R-AR-04) and Rep. Jared Golden (D-ME-02) introduced a bill to overhaul the National Environmental Policy Act (NEPA). The SPEED Act (H.R.4776), would rein in legal and regulatory roadblocks that often stall federal infrastructure projects. Specifically, it would limit environmental lawsuits and duplicative environmental reviews at the federal level. In September, Westerman held a hearing on this bill. Data centers were a key point of discussion throughout, with both Republican and Democratic lawmakers emphasizing the need for permitting reform legislation to fuel the growth of data centers.
While key Republicans are on board with a permitting reform push, Democratic lawmakers will not accept a deal without provisions reining in the Trump administration’s attacks on renewable energy. In a recent Senate Environment & Public Works Committee hearing, Ranking Member Sheldon Whitehouse (D-RI) spoke to Democrats’ concerns, asking, “Why would we want to do bipartisan permitting reform during an administration that won’t faithfully execute that law?” He went on to liken the Trump administration’s energy policies to the mafia, calling the bureaucratic process under this administration “Al Capone-quality stuff.”
These comments come after the Trump administration attempted to revoke approval for an off-shore wind plant in Rhode Island in August. This and other efforts by the Trump administration to cancel renewable energy projects will continue to shape negotiations. Whitehouse will be key to any permitting reform deal; he is the top Democrat on the committee with jurisdiction over NEPA and has a strong relationship with Chair Shelley Moore Capito (R-WV). Their relationship will be key, as the top Republican and Democrat on the Senate Energy & Natural Resources Committee, who led previous permitting reform proposals, have a tenuous working relationship.
In addition to the added challenges posed by the Trump administration, challenges remain to permitting reform passage. In 2024, Sens. Joe Manchin (I-WV) and John Barrasso (R-WY) introduced a bipartisan permitting reform bill, the Energy Permitting Reform Act (S.4753), which would have limited judicial review and environmental litigation and weakened regulatory barriers that have slowed energy projects.
After easily passing the Senate Energy & Natural Resources Committee, which Manchin chaired at the time, negotiators failed to secure a final deal on the legislation. Republicans feared the bill would raise electricity prices in their states, and Democrats opposed weakening environmental rules for oil and gas projects. These dueling concerns were intractable. Despite bipartisan optimism, the bill never received a vote on the Senate floor. The Manchin-Barrasso bill has been the starting point for Senate negotiations in the 119th Congress, according to reports.
Data centers have the potential to bridge partisan divides and energize a true overhaul of the federal energy regulatory landscape. Less ambitious legislation related to data centers has been moving through the 119th Congress, but a bipartisan permitting reform bill would provide interested stakeholders with an incredible opportunity to capitalize on support for data centers to shape federal regulations around energy production, transmission, and pollution for years to come.
