Mark Trahant
Substack
Congress may soon make it harder for communities to have that better conversation about data centers, or for that matter, energy projects. The Bipartisan American Affordability and Jobs Act will probably make it to the floor for a vote next week after getting enough votes to get past any filibuster.
The basic idea of the legislation is that it takes too long and their are too many rules to get projects constructed. One of the champions of the legislation is the Bipartisan Policy Center: “For decades, reform has been on the agenda, and there is widespread recognition that a permitting system created to protect the environment against industrial pollution more than 50 years ago has morphed into a system that is bad for both the economy and the environment. Reviews that once were completed in weeks or months now take years or decades. And delays on heavily polluting projects now also hold up and block clean energy technologies and conservation projects. But even with this new understanding, reforms have proven controversial and a bipartisan deal has been elusive.”
This legislation is supposed to be that compromise. But the cost to the environment, to tribal sovereignty, and to community engagement is high.
Earth Justice makes the case that Congress should start over after the new year.
“The Trump administration’s playbook is to move fast and break things. This version of BAAJA would still turbocharge that playbook. It would enable presidents to rush through deeply harmful projects, and it would constrain future presidents from repairing the damage. It also fails to provide fixes that fully honor Tribal sovereignty and restore basic protections for water, wetlands, and species.
“The Senate is expected to vote on BAAJA very soon. Earthjustice is urging senators to shelve this version, then come back in the new year and give these reforms the full attention they require.”
The legislation is being rushed — not unlike the pace of construction of data centers. Instead of a new law that makes it easier and quicker to build data centers, we need a collective moment to pause and think. (Indeed in a weird twist, this legislation may lead more communities to turn down projects because the standardized template won’t work on a local level.) It’s the perfect metaphor. Rush a bill for an industry in a rush.
Read the room
The law firm Foley & Lardner outlined a few of the challenges in a memo:
“One of the clearest signals from the election results is that data centers have become a political issue, including in markets that have historically welcomed large-scale infrastructure investment.
“That shift could translate into greater scrutiny of proposed projects and, in some markets, slower development.
“Developers should increasingly expect communities and regulators to look closely at how a project will affect local resources and residents. Concerns surrounding electricity costs, access to power, water consumption, and broader community impacts are likely to remain important considerations as projects move through the development and permitting process.
“Against that backdrop, projects that enter the process with strong community support, secured power, and demonstrable economic benefits will be better positioned to advance.
“The result may not be an end to development, but a higher bar for getting projects approved and built.”
These are the very challenges that are opposite world from The Bipartisan American Affordability and Jobs Act.
A reader of this newsletter pointed out in comments that tribes and communities can respond by enacting ordinance before the new permitting law goes into force.
Marc from The Steward’s Walk:
“The bill’s trade of full cost for less local control swaps a veto for a payment. A county that loses the power to stop a project keeps only what its own code already prices. Should tribal nations write data center ordinances before the bill reaches the House?”
“Great points. I think the earlier the better for code ordinances. Tribes are still hoping to kill the permitting bill. (Run out the clock strategy)”
Marc from The Steward’s Walk:
“An ordinance written now holds whether the clock runs out on the bill or not, so the code work is the one step that pays under both outcomes. Thank you for the answer.”
This is an important point. What gives the industry so much leeway is that tribes, states and local jurisdictions are using zoning rules that work better for an industry of the past. (Another advantage tribes have no matter what happens with the legislation is that most land deals would be a long term leases rather than private property, so specific “asks” that would not be allowed under the Bipartisan American Affordability and Jobs Act would be requirements in the lease not regulation.)
Data centers need to have different rules and taxing structures designed for this era.
What about corruption?
One way the the Bipartisan American Affordability and Jobs Act fails to read the results from the last election is a rush to develop without new safeguards to prevent public corruption.
Earth Justice lists a “fatal flaw” in the legislation this way: “Section 1401 of the bill would still give the Trump administration very broad authority to fast-track projects of all kinds (not just clean energy projects). And, it would still constrain future administrations from reconsidering them — even if they were granted illegally.”
So a public official, from the president on down the line, can invest in a specific industry or company and yet have the broad power to approve a deal without any recourse later. Makes no sense. And it’s not theoretical.
“Officials across the Trump administration also stand to profit from the White House’s support for AI and data centers. For example, 380 of President Donald Trump’s political appointees or their spouses hold stocks or have other financial connections to Nvidia, which has become the world’s most valuable company thanks to the data center boom. More than 320 have ties to Alphabet, Google’s parent company, which plans to spend at least $195 billion this year building data centers and AI-related technology. And more than 240 are invested in or otherwise have financial ties to Meta Platforms, which is developing a “fleet” of data centers. This is according to an analysis of records added last week to the Trump Team Financials database developed by ProPublica to make accessible the financial disclosures of administration officials.”
Nvidia has its own problems with its current leadership but it’s worth noting that some critics wonder if this is the beginning of a major capital crisis.
From the Council on Foreign Relations:
“Nvidia, valued at more than $4 trillion, makes the chips that underpin the large language models and data centers that have become pillars of U.S. economic growth. CFR Senior Fellow Rebecca Patterson said that Nvidia “is central to America’s AI efforts, both in terms of its size and weight in major equity indices, as well as its status as the so-called central bank for the AI ecosystem.”
“For now, investors appear to see the risks from the incident as specific to Nvidia. The S&P 500 and the tech-focused Nasdaq each rose more than 2 percent on Monday, even as Nvidia’s shares closed down more than 4 percent following the disclosure of the affair and alleged spying. The stock extended its losses on Tuesday, falling more than 3 percent in morning trading.”
So the law that Congress is considering doesn’t address capital, or over capacity, or corruption … but it does make it easier to build faster. Right.
