Democratic and Republican senators are proposing a tax incentive for businesses that set up water recycling infrastructure—the latest in a series of moves to tackle data-center water worries.

The bill introduced Wednesday by Sens. Ben Ray Luján (D., N.M.) and Katie Britt (R., Ala.), would offer a 30% investment tax credit for data centers, manufacturers and other water-intensive industrial companies if they build water-reuse infrastructure. The move comes as drought conditions consume much of the U.S. following record-breaking temperatures.

The Advancing Water Reuse Act seeks to lessen the local impacts of water-guzzling operations such as data centers, which have sparked pushback across the country amid a mass build-out to power the artificial intelligence boom.

The senators said the country’s aging water infrastructure isn’t able to meet increased demands for freshwater—and updating those water systems won’t be cheap. The credit would be awarded to businesses that install or upgrade their own on-site water-recycling systems, as well as to those that build or expand municipal systems.

The bill follows companion legislation that was introduced in the House of Representatives over one year ago—essentially a push to get the effort moving. It is backed by a mix of businesses and trade groups including the U.S. Chamber of Commerce and PepsiCo.

Luján said boosting investment in water-reuse infrastructure “will help conserve freshwater, support local communities, and provide businesses the certainty they need to grow and create jobs.”

Britt said water-reuse projects will help secure safe drinking water, reinforce corporate investment in communities and ensure that “farmers have the water they need to grow our food.”

Environmental and residential groups are hoping to scrap plans for data centers in their communities altogether, however. Large data centers can guzzle up to 5 million gallons of water daily, which is equivalent to the daily usage of a town with about 10,000 to 50,000 residents, according to a study on the Environmental and Energy Study Institute’s website. Data centers use so much water to cool electrical equipment.

Meanwhile, the U.S. has a water problem: About 60% of the country is enduring drought conditions, including Luján’s arid New Mexico and Britt’s farm-heavy Alabama.

Some businesses are trying to calm fears about the environmental impact of data centers. Tech company Oracle in April said it changed plans for a data center in New Mexico after community concerns, scrapping its intention to set up a natural gas plant to power the center and instead partnering with fuel-cell maker Bloom Energy to generate on-site electricity in Doña Ana County. The change will “dramatically reduce water use,” Oracle said.

The Environmental Protection Agency last month said it wants to help businesses reuse water, partly in an effort to assist data centers. The EPA said that in addition to data-center cooling, its new initiative focuses on water needed for microchip and battery, automobile, and food and beverage manufacturing, as well as agriculture production.

Worries about corporate water practices aren’t new, but the issue has become a lightning rod as the data-center build-out gathers speed.

“Businesses need local, reliable and cost-effective strategies” to protect water resources in the communities where they operate, said Bruno Pigott, executive director of WateReuse Association, a trade group.

The impacts of water stress can be devastating. The Union of Concerned Scientists said in a post on its website last week that current drought conditions in the country “could reduce crop yields and force ranchers to cull more of their cattle.”

By: DocMemory
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