Microsoft backing measure protecting consumers over data center water usage costs

Microsoft is throwing its support behind legislation that would prevent data centers from passing along water usage costs to consumers, as tech companies seek to allay community concerns about the AI infrastructure.

The Water Cost Accountability Act would direct states to block public water systems from recovering costs associated with connecting data centers from anyone other than their developers or owners.

“This legislation represents an important step toward building the infrastructure needed for America’s future while strengthening trust with the communities that host it,” said Fred Humphries, corporate vice president of U.S. government affairs at Microsoft, in a statement.

“It also reinforces the principle that companies must responsibly show up in communities across the country, engaging as long-term partners and listening to local voices,” he continued.

Local communities have increasingly pushed back on new data center projects over concerns about the impact on water usage and electricity costs, as well as potential noise and environmental pollution.

The server warehouses used about 66 billion liters of water in 2023, according to Lawrence Berkeley National Laboratory. As of 2015, the U.S. used about 322 billion gallons per day, or more than 400 trillion liters per year, with power plants and irrigation accounting for the greatest usage.

AI companies and data center developers have argued the concerns over water usage are overblown and have pointed to technology that can reduce their reliance on water for cooling in newer construction.

Commerce Secretary Howard Lutnick also pushed back on the issue Wednesday, suggesting it is “propaganda by our adversaries to try to slow us down.”

“One of my favorite things is when people talk about data centers using water. The No. 1 product in America that uses water is cattle,” he told CNBC, adding, “I mean, data centers don’t use water.”

However, Republican lawmakers appear keen to alleviate their constituents’ concerns as data centers become a key issue in the upcoming midterm elections.

“They [data centers] are major drivers of investment, economic growth, job creation, the development of our nation’s digital infrastructure,” said Rep. Gary Palmer (R-Ala.), who chairs the House Energy and Commerce Subcommittee on Environment, at a hearing Thursday.

“However, those benefits should not come at the expense of families and small businesses through higher water rates,” he added.