A group of House Democrats introduced legislation Wednesday that would bar data centers from claiming certain federal investment tax incentives, setting up a clash with President Donald Trump’s push to expand the facilities as part of his artificial intelligence agenda.
The bill was unveiled by Reps. Kristen McDonald Rivet, D-Mich., and Don Davis, D-N.C., and has the backing of 21 additional House Democrats, including Ways and Means Committee member Rep. Jimmy Panetta, D-Calif.
The tax incentives at issue were not written specifically for AI or data center projects, but the industry’s large-scale infrastructure investments have made it eligible for the benefits. That has drawn objections from Democrats worried about the toll data centers take on electricity and water supplies, along with their effects on local communities.
At a press conference outside the Capitol, McDonald Rivet criticized the arrangement as misplaced priorities.
“Washington is giving handouts to big tech companies while American families are drowning. I hear that word in my district more than any other,” McDonald Rivet said.
“From rising costs, groceries, gas, housing, healthcare, and a lot more. These are backward priorities and they’re perfectly encapsulate everything that is wrong with the way Washington works, serving interests of big corporations and special interests at the expense of working people,” she added.
Rep. Deborah Ross, D-N.C., who represents a Raleigh-area district, said data-center developers in her area have bought land without disclosing their intentions, a practice she said allows companies to avoid public scrutiny before projects move forward.
“They’ve sought to bypass local citizens’ right to provide input on putting a data center in their towns and cities,” Ross said.
Ross also said the rapid buildout of data centers is putting pressure on local electricity and water systems even as developers collect federal and state tax breaks.
“It’s Americans struggling to get by, not big tech who need tax breaks,” Ross said.
Rep. Chris Pappas, D-N.H., said data center development is driving up costs for his constituents by adding strain to electricity and water resources. He argued that local communities need more say over whether and where facilities are built.
“Our cities and towns shouldn’t have these data centers shoved down their throats without any recourse,” Pappas said. “They deserve the right to decide what’s appropriate for their community.”
The legislation comes as the Trump administration works to speed up data center construction and streamline permitting, framing the buildout as central to U.S. competitiveness in artificial intelligence. The bill’s introduction signals a growing rift between that push and lawmakers in states and districts, including North Carolina, Michigan, California and New Hampshire, where residents have raised concerns about the industry’s local footprint.
