Councilmembers are weighing charging new data centers higher energy rates to shield other ratepayers.
Amid a rising national tide of negative sentiment against big tech’s push to expand its artificial intelligence (AI) offerings, the Seattle City Council is discussing new legislation to regulate large-scale data centers.
In April, The Seattle Times broke the news that four companies were seeking to build five mega data centers within Seattle City Light’s service area. While the Seattle area already plays host to around 30 data centers, the new facilities under discussion would be built on a much larger scale and use a great deal more electricity than anything that exists in the area today.
Two of those companies have since withdrawn their plans for two of the new data centers, but the remaining two companies – Equinix and Prologis – are still considering three projects, two located in the SoDo neighborhood in Seattle and one in Tukwila.
Since last fall, three community organizations – climate justice group 350 Seattle, Troublemakers, and the Seattle chapter of the Democratic Socialists of America (Seattle DSA) – began running community panels and discussions about AI in Seattle while supporting communities around Washington state that were fighting against large data centers.
When the news of the new massive data centers in the Seattle area broke in April, the three groups banded together to create a call to action to send emails to Seattle Mayor Katie Wilson and the Seattle City Council.
As of Wednesday afternoon, Ben Jones, the Communications and Digital Director of 350 Seattle, said 93,270 emails had been sent to City leaders to object to the new data centers.
A few days after the call to action had been sent out, Wilson put out a statement suggesting the possibility of a moratorium on siting new data centers..
“It is important to know that the City of Seattle has not authorized nor permitted any new data centers,” Wilson’s statement read. “However, the prospect of massive new data centers being built in Seattle has raised understandably intense public alarm.”
Soon thereafter, Seattle City Councilmembers Eddie Lin and Debora Juarez, along with Council President Joy Hollingsworth, began spearheading both a one-year data center moratorium and a resolution stating the City’s intent to develop policies around data centers, including having Seattle City Light consider a new rate class for large load data center customers. Councilmembers framed the moratorium as a chance to take some time to develop appropriate policy in a space that has been changing quickly and is largely unregulated.
“We’re looking at a month until the full moratorium goes into effect,” Jones told The Urbanist. “That's pretty responsive for City Council, and we've heard over and over again that the reason that they're motivated is because of the quantity of community input.”
While generally supportive of the idea of a pause on new large data center construction, some councilmembers have been quick to say they aren’t anti-AI.
“I'm guessing that this city council wouldn't want business to think that we are not interested in AI, and that we would not want to have some type of leadership in this technology and innovation,” Juarez said at the first Council discussion of the possible legislation.
The scope of community concerns
After several years of hype building about AI products, including large language models (LLMs), a backlash against the touted inevitability of the technology and its negative consequences, which proponents tend to gloss over, has been sweeping the country. Increasingly, people are flocking to support grassroots efforts to fight against the siting of massive data centers in their communities. The Wall Street Journal reported that local opposition blocked or delayed at least 48 data center projects last year alone.
“One of the things that I think is significant about the resistance to data centers and AI is that it's very much cross-partisan,” Evan Sutton, who runs the popular Instagram account @evanyellsatclouds and organizes with Troublemakers, told The Urbanist. “I think that there's a real potential for some meaningful partisan realignment out of all of this.”
A Gallup poll conducted in the first half of March found that seven in 10 Americans oppose constructing data centers for AI in their communities. In a May Economist/YouGov poll, 71% of respondents thought AI is “moving too fast” and 63% thought AI was either slightly or very unlikely to create economic gains that benefit everyone.
“Overwhelmingly, people feel like these are just a gift for the rich and don't see any benefit for themselves,” said Jones. “They just hear ‘data centers’ and they think, great, this will only hurt me.”
Sutton thinks the proposed moratorium on data centers in Seattle is a good idea.
“My personal preference would be that we shut down the hyper scalers all together everywhere, but I also live in the real world, and I think if City Council can hit the pause button and come up with really strong, high-road standards, then I will take that as a significant win,” Sutton said.
Even in a big tech hub like Seattle, anger about large-scale data centers abounds. At two city council committee meetings last Wednesday, community members showed up in force to support the moratorium and speak about their concerns.
At the Parks and City Light committee meeting, Chair Juarez gave a rundown of some of the concerns she’d encountered in her team’s research.
“In our research, we have found that these data centers have the potential to significantly burden our community and impact the electrical grid by: #1, forcing substantial capital improvements; $2, consuming large quantities of water resources; #3, occupying large amounts of commercial and industrial space; #4, impacting jobs in the economy through a boom and bust employment automation; #5, the effect of public health by producing noise, light, water, air pollution,” Juarez said. “And that doesn't even go into the whole issue of what it does to mental health, it doesn't go into what it does to labor, people losing their jobs, and all the other things that we've all been reading about that we're still learning about in real time.”
Top of mind for public commenters was the strain on the electricity supply that large-scale data centers would cause, especially during a climate crisis when local governments are trying to electrify and move away from using fossil fuels.
“A phrase often uttered within the tech industry is, "Move fast and break things.” We must not let them move fast and break our critical energy infrastructure. Our power grid is not prepared to handle large-load data centers,” said Audrey Wang Gosselin, an electrical engineer specializing in power and renewable energy.
The additional demand for electricity caused by these large data centers would likely result in higher utility prices in the midst of an affordability crisis and an uncertain economy. In April, energy prices year-to-year had gone up 17.9%, with the consumer price index overall up 3.8%.
Commenters were also concerned by data center water usage. In April, the Washington Department of Ecology declared a statewide drought emergency, with droughts being declared in at least part of the state for seven of the last 10 years.
Rebecca Young brought up concerns about equity in terms of where such massive data centers would be sited.
“New data centers would likely be placed in the South Seattle and Tukwila communities, which have historically borne the brunt of industrial development and pollution,” Young said. “These communities should not be treated as sacrifice zones for data center expansion without a comprehensive evaluation of potential harms and benefits.”
Neil Patel, a board member of the Georgetown Business Association and longtime tech worker, said that large data centers don’t create new jobs.
“Data centers do not actually create jobs. They have never been designed to,” Patel said. “A well-designed data center is highly efficient, it's fault-tolerant, and self-sufficient enough to be maintained either remotely or by a visiting team. To be clear, this means every property that becomes a data center no longer creates jobs.”
Finally, Jones spoke about the lack of transparency that led to the public finding out about the five proposed large-scale data centers through reporting from The Seattle Times. Because of nondisclosure agreements between Seattle City Light and the interested companies, the public still doesn’t know the specifics of the proposed data center locations.
The devil’s in the details
One clear shortcoming of the council’s approach is the limited scope of a land use moratorium of large data centers. Such a moratorium in Seattle wouldn’t preclude the development of these facilities in nearby cities, which could still impact local water usage and the availability of electricity across the grid. Jones said 350 Seattle is interested in the possibility of a county-wide ordinance, which would offer somewhat better protections.
Even stronger might be statewide legislation. Earlier this year, Olympia Representative Beth Doglio’s House Bill 2515, which would have protected rate payers from higher utility costs and required transparency about the environmental impacts of data centers, failed to make it to a vote on the Senate floor.
Advocates are hoping for another data center regulation bill during the next legislative session, only perhaps with more teeth. Due to the bipartisan anger about large data centers, state lawmakers might view such a bill as an easy political win.
But the tech industry is likely to lobby hard against such legislation, and Governor Bob Ferguson has signaled he wants to balance energy consumption and environmental concerns with worries around economic output and stunting tax revenue and tech industry growth, convening a workgroup to explore that balance in February. In April, Ferguson signed a Senate bill sponsored by Senator Noel Frame (D-Seattle, 36th LD) that repealed some tax incentives for data centers, but he may be hesitant to sign more sweeping legislation.
Josh Levi, president of the Data Center Coalition, the national lobbying arm of the industry, urged the governor to veto the bill, claiming data centers generated $1.8 billion in state and local tax revenue in 2023 -- revenue which he argued could be jeopardized by fewer tax incentives.
Beyond political lobbying, the data center industry could explore legal challenges, with the prospect of being charged higher energy prices likely to be a development they want to nip in the bud.
Even with the limitations of a construction moratorium, the status of Seattle City Light as a community-owned not-for-profit utility presents additional opportunities. The Council’s proposed resolution states the Council’s intention to institute a new rate class for large load data center customers, which would also apply to City Light customers outside the city limits.
The Council’s work plan for the one-year moratorium includes a stakeholder process, although Jones said there could be a better plan laid out for how the Council intends to incorporate the feedback they receive.
The work plan also includes consideration of a framework for voluntary data center community benefit agreements. In practice, such agreements can come with pitfalls. The benefits to be provided by the private companies need to be clearly specified and come with robust enforcement mechanisms, but issues around transparency and the thoroughness of community engagement can make reaching equitable agreements challenging.
“That's part of the national data center playbook, is promising voluntary community benefit agreements in lieu of tax or in lieu of the normal structures of enforcement, and often you'll see these facilities getting giant tax breaks, which somehow pencils out on paper to being a benefit for a community,” Jones said.
Instead, Jones said that 350 Seattle is interested in being ambitious in terms of what large data center facilities would have to contribute in order to result in a net benefit for the surrounding communities.
Meanwhile, some are beginning to question how long the AI economic boom will last – and how big of a bubble it might be. The U.S. war with Iran has contributed to a global shortage of helium, a key component for manufacturing the advanced semiconductors that power data centers, which has ratcheted up the pressure even further; ongoing helium supply issues could raise prices for data center construction, as well as reduce MRI scan capacity and raise the prices for consumer electronics products.
On top of rising construction costs, local resistance to large-scale data centers continues to build, further complicating expansion plans.
“We should all be against the billionaire-controlled AI that exists exclusively to surveil us, manipulate our decisions, and control us,” Sutton said.
The Seattle City Council’s Land Use and Sustainability and the Parks and City Light committees plan to vote on the moratorium and resolution on Tuesday, June 2. A final Council vote could happen as early as June 9.
