AI: The Data Center Debate, Part Two

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0:22It's all over the news. The backlash against AI data centers is growing. These protesters behind me have been out here since 9 a.m. We talk about AI as if it lives in the cloud, but the cloud has a physical address. Data centers. Protesters showed up in 125 cities across the country on a single Saturday last month. Here's what one told WTKR News in Virginia. We are begging the politicians to listen to us and not the big money. Are the politicians listening? New polling suggests party leaders and voters may not be in sync on this issue, especially within the Democratic Party. Reporting shows data centers are bringing voters from both parties together in some states.

1:05We'll get into all of it today. It's part two of our data center deep dive here on 1A. And this time we're talking politics. Why have data centers become a political flashpoint so quickly? Who stands where on the issue and why? And who's actually calling the shot at the local, state, and federal levels? I'm Jen White. We'll be back with more after this short break. Stay with us.

1:31This message comes from Workday, the enterprise AI platform with a deep understanding of your organization's context and guardrails, so every AI action is permission-aware, giving you the ability to get work done right. It's a new Workday. This message comes from Betterment. You know when you sell a stock or any investing asset and start to feel the dread of getting a surprise tax bill? Betterment's Tax Impact Preview Tool shows you the estimated tax impact of the sale so you can make informed, tax-smart investing decisions. Get started today at Betterment.com. Investing involves risk, performance not guaranteed.

2:09Betterment is not a tax advisor, nor should any information herein be considered tax advice. Please consult a qualified tax professional. Zendaya and Tom Holland are back in Spider-Man Brand New Day, and the movie has a more grounded tone than we've seen from the franchise. But does it strike the right balance of fun and darkness? We'll talk about it on NPR's Pop Culture Happy Hour. Listen via the NPR app or wherever you get your podcasts. Welcome back to the 1A podcast. We're discussing data centers and why they've become such a political flashpoint. Joining us are two reporters who've been covering the growing furor.

2:46Robinson Meyer is calling in from New York. He's the executive editor of the climate change news organization, Heatmap. Rob, welcome back. Thanks so much for having me. It's great to be here. And Amy Harder is national energy correspondent for Axios. She joins us from Seattle. Amy, welcome back. Hello. Great to be here. Later in the show, we hear from Democratic member of Congress representing Silicon Valley, Representative Sam Liccardo. Now, the data center fight has been moving incredibly quickly from these local zoning disputes to a national political movement in just a few years. Rob, what's driving the energy around this issue?

3:20Absolutely. Well, I think, first of all, this is just a massive infrastructure build-out. You know, there's going to be a trillion dollars of spending on new infrastructure across the country this year and next year. And what that means is a massive transformation of the landscape. There's just a huge amount of physical buildings that are being constructed, of electricity infrastructure, of new generation capacity that needs to be brought online. I think one thing about the AI boom that's happening is it's quite a physical transformation. And that is happening across the country. And it is actually changing the landscape of the country.

3:59And it is driving, I think, a very large response. Now, you've done public opinion polling on data centers. Broadly speaking, what are you learning about where the public is leaning on this issue? Yeah, absolutely. Well, the public has changed its mind on this issue, or at least found a new view on this issue extremely quickly. I think public polling on data centers has actually changed far more quickly than I thought the American public could change its mind about anything. So Heatmap News is a decarbonization climate and energy outlet, and we poll the American public, about 4 ,000 Americans, several times a year on a number of energy-related questions.

4:37And last summer, we started asking Americans, would you support or oppose a local data center being built in your area? It was very neutral language, just trying to get a sense of where people were coming out. And last summer, so last August, exactly a year ago, about 40 % of Americans said they would oppose, about 40 % said they would support, and the rest of Americans didn't know we were somewhere in between. Since then, we've pulled the question two more times, most recently in May, and we have seen a huge shift. So last August, again, 40 to 40 support oppose. In May of this year, 70 % of Americans, actually more than 70 % of Americans said they would oppose.

5:16And only 15 to 20 % of Americans said they would support. And so the sea change here has been enormous in public opinion. And are you able to glean why that massive shift happened so quickly? It's such an interesting question. I mean, I think partially it is just, you know, there have been more projects in the past few months. So they're more visible. Yeah, this went from being a kind of hypothetical issue to being something that maybe was happening in people's neighborhoods and that they did develop an opinion about. I think we can get into some of the other polling, but I think one of the big questions I have is, is this about AI?

5:55And we have some polling that indicates it is and that Americans are increasingly nervous or not sure how to think about AI. And data centers are the physical manifestation of AI. And so that's part of what's happening here. And then I think also there's just been a lot more messaging and social media activity and public discourse about data centers since last August. And people who maybe didn't have a view on them are now developing a view. Well, let's talk about some of that messaging. Data centers are starting to feature in political ads around the country. Let's listen to a few. Here's progressive congressional candidate Will Lawrence in Michigan, Republican Florida gubernatorial candidate Paul Renner, and Democratic Florida gubernatorial candidate David Jolly.

6:35I'm Will Lawrence, and tech billionaires want to turn this whole field into a massive data center that'll jack up our energy bills and ruin our home value. I'm running for U.S. Congress because I've never been afraid to stand up to corporate power. When I become governor in January of 2027, we're going to bring in the legislature next year and put a full halt to the construction of these hyperscale data centers, which will raise our electric rates, damage our water supply, and hurt our environment. Not on my watch. As governor on day one, I will issue a moratorium on data centers in the state of Florida until we have the environmental protections and the economic impact studies that actually could support their use in Florida.

7:18Now, Robinson laid out some of the shift in public opinion we've seen over the last year or so. But Amy, some politicians who were pro-Data Center are backtracking now. Illinois Governor J.B. Pritzker, a Democrat, recruited data center investment for his state. Now he's proposing a pause on the state's data center tax incentives. Texas Governor Greg Abbott, a Republican, positioned his state as a tech-friendly alternative to California. On Monday, he put a new data center approval on hold, all new data center approvals on hold, until that state can evaluate the impact on the grid. So we've got the public opinion shifting, but why is the political ground shifting so quickly?

7:55The political ground is shifting because of the groundswell of opposition around the country. I think this is a classic example of general opposition, both parties, all parties in the United States being opposed to something that is coming at them very fast and very big. I think one of the common arguments you hear from people who really support the data center industry and the AI sector and who are inside it is the argument that if we go too slow, that China will beat us. Well, talking with people who are directly affected by or who live near data centers, that argument doesn't hold any water.

8:35No pun intended, because water is in fact one of the biggest concerns that people have when it comes to data centers. And so it's almost refreshing just from a perspective of the politicians responding to their electorate that people are getting upset and politicians are changing their views in real time in response to that. I think the most stark one is Governor Abbott just yesterday, as you said, changing course. And I don't think there's any coincidence that this is all happening now, just a few months before the midterm elections. I wouldn't be surprised if some of these delays last through that time period.

9:14Well, that's the next question then. Is this a durable change or is this about getting to and through the midterms? I think it's a bit of both. I don't think, for example, this move by the Texas governor is going to be permanent by any means. Texas will remain, generally speaking, bullish on data centers. but the governor wants to make sure that these data center developers are following some of the requirements they've put in place around things like transparency and energy and water use. And the midterms are just injecting a level of political urgency into these very real concerns. I think other states, perhaps New York, it may be more enduring in terms of the time, a whole year, for example.

10:01Governor Abbott didn't put a time label on his pause. But I think this is a sign that it's not a political issue. Excuse me, it's a political issue. It's not a partisan issue. And that's pretty rare. Well, to that point, we got this message from Bob in Birmingham, Alabama, about our data center show last week. That was sort of the data center 101. And he's responding to this idea that resistance to data centers is one of the few things bringing left wing and right wing voters together. He disagrees. I feel like people's interest in holding people the likes of Jeffrey Epstein accountable, affordability, responsiveness of government, lower corruption in government, specifically around financial stuff.

10:43And I think there's quite a bit that we agree on. In a Gallup poll earlier this year, seven in 10 Americans polled opposed data center construction in their local areas. A majority of Democrats, independents and Republicans all opposed data centers locally. But we hear from our caller there that there are other issues that unite people regardless of their party. Amy, I mean, especially in the current political landscape, how—I don't want to use the word normal— how common is it to see this type of unity over an issue? Well, to the caller's comments about some other issues, affordability and the Epstein files, Yes, there's broad agreement that pedophilia is bad and everybody wants to afford their things in their lives that they need to buy.

11:30But when you go down a little bit deeper, there's actually a lot of disagreement about both of those things and also how to solve them. With data centers, there's for now, I will say, this is a fast moving story, so it could change, it will change in the next few months. But for now, there is a remarkable amount of bipartisan agreement that, hey, we need to slow this down and take just a review of what's happening with all these data centers being developed. And as Rob said, I think that one of the many notable things about this infrastructure buildout is just the sheer pace and scale of it, which dwarfs anything we've seen in modern history.

12:13And those two things together are creating this unusual bipartisan opposition. Up next, how are officials at every level of government thinking about regulating the booming data center industry? That's just ahead.

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13:48Still at it. Listen to Fresh Air on the NPR app or wherever you get podcasts. Let's get back into the conversation. We're talking about the politics of data centers, the rapid shift in public opinion, and the way lawmakers and officials are responding. Amy Harder is still with us. She covers data centers and energy for Axios. And Robinson Meyer is executive editor of Heatmap. That's a climate news organization. And we're hearing from you. Here's IBEW union member Frias in Leesburg, Virginia. The data centers provide us work, good income for our families, plenty of jobs in the trades. We also got this message from Bob in Withville, Virginia.

14:31Bob says, quote, we're currently fighting with our county supervisor board. They spoke with a company for a year under an NDA and have negotiated and signed for a data center without any input from the public. We were told about it after it was really too late. And now there's a second started in that county. The county has no zoning, so they were able to do that. When we talk about how this conversation and debate over data centers first began to come to public knowledge, Robison, part of the discussion was about the lack of transparency about them being built in communities, that there were community boards that signed NDAs.

15:07How do you think that lack of transparency at the outset has shaped the conversation we're having today? Well, I think that there's a couple big things that have happened over the past few years, of this issue significantly and filter through this transparency question. The first, I was thinking back to the question you asked about like why have people changed their minds? And I think there have been a number of projects that were very large that were uniquely bad actors or at least distinctively bad actors, bad actors in such a way that they changed the national politics of this issue. And for that, in that category, I would hold up, for instance, the two XAI Colossus data centers near Memphis.

15:47They were big projects. they didn't have access to utility-scale power. And so at least Colossus 1, the first one, brought in basically temporary gas generation power plants on the back of trucks, the kind of thing that are supposed to run at construction sites, and then ran a full data center off them, which just sent pollution into the neighborhoods nearby. And I think that was such a... They were not really permitted, as far as we can tell. They violated EPA rules, and that was such a bad project. It totally changed, I think, the national politics of this issue. One thing we see at the local level is that there is some, you know, signing NDAs or entering some agreements with a county.

16:32That can happen in some forms of local economic development. It's that because data centers have become such an explosive issue, what would have been maybe not standard operating procedure, but something that counties would have felt a little bit more comfortable doing a few years ago is now becoming extremely explosive and not really working out in those counties' benefits. I think the big example there is in Utah, the state senate president or the longtime state senate president signed off on a data center that was sponsored in some way or invested in by Kevin O 'Leary from Shark Tank or Mr.

17:11Wonderful. And he approved a permit for this data center. He later changed his mind about the data center, but he actually lost a primary election because he had endorsed this massive data center. And I think that shows how what once would have been kind of normal economic development policymaking from local officials has suddenly become a real danger to their political lives, you know, livelihoods because of how fast public opinion has changed on this issue. Well, Amy, and we also heard from Frias who talked about jobs and income. How is this conversation about data centers intersecting with other hot issues right now, like affordability?

17:53The jobs question here is a really interesting one. Number one, yes, data centers, like all infrastructure projects, do create jobs, particularly in the construction phase. At the same time, they don't create that many jobs once they're fully built. I've even had some data center developers argue to me and in town halls where these are being built that some people like data centers because they bring economic development but without more people. And more people means traffic and crowded schools. And to me, that's an interesting argument to try to make that data centers can bring economic development without more people.

18:36Well, and how are they defining economic development? And is it just about the work generated by construction, or are they pointing to something that's related to just the existence of the data center in that place? The additional taxes, like property taxes that they pay, go into supporting schools and hospitals and things like that. But they don't create crowded streets. And to me, that's a sign that I don't want to use the word desperate, but some people might say a desperate argument on behalf of the data center industry to try to argue that people actually don't want jobs. They just want economic development.

19:10I think most of the time people do want jobs. I think here the unique challenge is that you're dealing with both the physical manifestation within data centers, but also the existential threat that AI poses to jobs of all kinds. And that argument so far really cuts against more jobs for people. Now, we could all be, many people could be proven wrong on that front. There's also arguments that AI could create more jobs. But for now, there's this existential angst layered on top of the real concerns about these massive infrastructure projects. Well, you mentioned the word desperation, and we know that municipal budgets are stretched incredibly, incredibly thin.

19:54And so as you're talking to, you know, county board supervisors and council members and even state lawmakers who are trying to figure out ways to bring more money into their states and their communities, What are they saying about that economic development argument tech is making right now? The way this is manifesting is really in the debate over the tax credits that a lot of data center developers get. And you're seeing many states pausing those tax credits, at least for the time being, while they reevaluate how these data centers should be built. Now, from my perspective as an energy reporter who's since started covering data centers, it's really quite astounding that these projects get tax incentives at all.

20:42These deep-pocketed companies really want to build these data centers. They probably don't even need these tax credits. And I think that's where politicians are starting to realize, like, hey, these people want to come into our communities already. ready, let's not give them even more incentive than they already have, because that's taking away from their county and local budgets. Robert, Tim, what are you hearing in your reporting? Yeah, I think in this context, it's helpful to think, it's helpful to like, think about how data centers almost as a piece of infrastructure have changed over the past few years.

21:15And so for a long time, I totally agree with Amy, like that we are seeing a huge change in like the tax status of these things. For a long time, I think data centers, well, for a long time, when we talked about data centers, we were talking about what we would now call cloud data centers, which are relatively, they didn't always have a massive footprint. They didn't have massive energy needs. These were the kinds of data centers that do things like serve Netflix or Gmail or Google. These, or your bank, you know? And I should say that data centers like cloud data centers are kind of all over the country.

21:52We don't really notice them. I've heard, for instance, that Netflix has three data centers, cloud data centers in New York City, basically so that everyone can watch Netflix faster because it's faster when you have a Netflix server closer to the place where people are watching. And those were relatively safe investments that were going to be in a community for a long time. And so I think a number of communities pass tax incentives for those kinds of facilities because they figured, look, we'll give them five years off their taxes or 10 years off their taxes, then they'll stick around for 30 years, and they'll be this long-term source of reliable tax revenue in our county or municipality.

22:30With data centers, because there's kind of a speculative aspect to the boom, and because these are much larger facilities, and because AI, unlike cloud, you know, cloud, kind of old school computing, let's call it for a lack of a better term, when you add users, you don't increase the amount of energy it uses. But AI, generally, as you add every additional user, the amount of energy required, because it's actually doing live computing for that user, increases linearly to really generalize here. And so these facilities require massive amounts of power, which then, of course, puts demands on the local grid, which requires all this backup infrastructure.

23:09And they're being invested in a much more speculative way. And I think that's driven the shift from towns where they go, these facilities are going to be here for a long time. They don't need to pay as much taxes in the beginning because they're going to pay taxes for a long time. We actually need these things to pay more than they would pay in taxes and to give us extra payments because it's kind of risky to accept these things. Well, last month, New York Governor Kathy Hochul signed an executive order. It temporarily banned the construction of new hyperscale. Those are the very large data centers for a year, while the state comes up with a framework for regulating them.

23:44And it's the first ban of its kind in the U.S. She insists the pause is temporary. Here she's speaking at a roundtable with local officials last Wednesday. What I can promise you is a very thoughtful product in less than a year now that is going to really set the bar for the nation, help everybody get it right, whether you have a lot of ability to negotiate like some counties do or you're a tiny little community that does not. And Governor Hochul isn't the only one who supports moratoriums on new construction. Here's Senator Bernie Sanders speaking in December. I will be pushing for a moratorium on the construction of data centers that are powering this unregulated sprint to develop and deploy AI.

24:30This moratorium will give democracy a chance to catch up with the transformative changes that we are witnessing and make sure that the benefits of these technologies work for all of us, not just the wealthiest people on earth. Senator Sanders and Democratic Representative Alexandria Ocasio-Cortez introduced bills in the House and Senate in March. Rob, what do you make of this move by New York to put a pause on the development of data centers in that state and potentially create a roadmap for other states to follow suit? Yeah, well, I would first say that New York isn't alone. It's the first state that's passed a moratorium on data centers.

25:16But at Heatmap, we track kind of the local regulatory environment for energy and data centers across the country. And what we found is that 530 different counties or municipalities or local governments of some kind have passed either a moratorium or a very restrictive law, a law that essentially works akin to a moratorium across the country on data centers that are active right now. And actually, 190 of those moratoriums have been passed just since June 1st. And if you include New York in the mix here, which we didn't in that count, but if you include New York, at this point, about 8 % of the counties in the United States basically block all data center construction.