Data Centers and the Future of AI Infrastructure: Federal, Local, and Industry Perspectives

[00:00:00] Speaker ?: *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* *music* Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. [00:06:48] Speaker 1: Thank you. We are here today to discuss an issue that is fundamentally at the intersection of global strategic competition and local community planning. If we look back at World War II, we see that the United States victory in that conflict not only occurred on the battlefield, perhaps more fundamentally, the United States won in the steel mills of Pennsylvania and on the factory floors of Detroit. It was our physical, we were able to build the United States. has slipped into the United States has slipped into the United States, and I would quibble with that, and I think this event quibbles with that, because for all of the radical technological changes we've seen, and they've been incredible, the underlying reality is the same. physical capacity, the actuality is the same. And the data center is the same. It's the same. And the computational capability, it's the same. of AI, those algorithms have the same. So that brings us to our geopolitical competition. We'll outpace us in training AI models. And so we cannot remain competitive in AI if we lose this physical infrastructure race. And so quite simply, if the US is outpaced in AI, then other nations such as the PRC are going to set the rules of the road for the rest of the 21st century in terms of the global economy and ultimately the security apparatus. And so we have to provide context. And so we're going to provide context. [00:12:13] Speaker ?: And so we're going to provide context. [00:12:13] Speaker 1: And so we're going to provide context. And so we took it for granted that the U.S. tech industry could outpace our competitors and adversaries by building new data centers. And that's precisely what they did. Roughly half of data centers globally are located in the United States. And so that private sector model of building it out and having tech companies do it has been very successful. But more recently, today's data centers have raised local concerns regarding issues such as power, electricity bills, quality of life, land. And so this means that our national imperative to lead in AI directly intersects with local realities. So as data center infrastructure scales, it is entirely reasonable. And part of the reason we're here today is it's entirely reasonable that local communities and state and local governments have concerns about resource allocation and have a voice in decisions that are made about data centers in their communities. So that brings us to our core challenge, which is that we have a dual mandate and we simply can't fail at either part of that mandate. On the one hand, we must ensure that the U.S. builds at the speed our national security demands. At the same time, we need government, industry, think tanks, everyone, all of these stakeholders to be responsible, collaborative partners to local communities that are hosting data center infrastructure. We can't afford to let permitting bottlenecks to slow our strategic momentum in this space. But at the same time, we can't neglect to work with state and local policymakers. And even more importantly, their constituents whose backyards host this infrastructure. So the goal of today's event is to explore how we successfully execute on both sides of that equation. And we have an incredible array of experts, government, non-government, industry, people who have been on the ground doing this to actually create some insights that then we can use and perhaps create a model and a way of approaching these issues that allows us to meet that dual mandate that, as I said, I don't think that we can fail to achieve either of those things. So to begin untangling these really complex issues, the first panel is going to have federal and local perspectives. So it's my pleasure to welcome to the floor, Lauren Williams, who will be moderating that opening discussion. So thank you. [00:14:45] Speaker ?: Thank you. [00:14:45] Speaker 1: Thank you. Thank you. [00:14:47] Speaker ?: Thank you. Thank you. Thank you. Thank you. Thank you. The floor to be on and I'll choose this one. All right. So diving right in from, I think, a great scene setting, context setting framework that Matt just laid out for us. [00:15:01] Speaker 2: around the convergence, the importance of federal policymaking, of local policymaking, and local policymaking. [00:15:08] Speaker ?: of local government agencies, of local economic development, and data center construction on the ground. We have a fantastic panel ahead of us. [00:15:14] Speaker 2: So I'm going to flip the script and introduce each of you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. All right. So diving right in from, I think, a great scene setting, context setting framework that Matt just laid out for us around the convergence, the importance of federal policymaking, of local government agencies, of local economic development, and data center construction on the ground. We have a fantastic panel ahead of us. So I'm going to flip the script and introduce each of you first, and then give a few short comments framing our discussion, and then dive right in to questions with our panelists. So to the far end, we have Mr. Buddy Reiser, who is the executive director for economic development in Loudoun County, Virginia. And I would be remiss to not note that Loudoun County is often called the epicenter of U.S. and global data center development. And Buddy, of course, himself is very well known for attracting billions of dollars in investments in the Northern Virginia region, the world's largest data center cluster. And then immediately next to him, we have Mr. Charles McCarthy, president for mission critical with Suffolk Construction, which is on the front lines of building data centers across the United States. He has offices both, of course, in Massachusetts, but here in Virginia as well and across the country. And Charles has been in this business for decades and very much brings a wealth of experience to this topic and thinking about these issues from the local to the policy level. And last but not least, immediately next to me, we have Ms. Maureen Russell, who is the deputy associate administrator for the Office of Policy and International Affairs at the National Telecommunications and Information Agency, NTIA, which sits within the Department of Commerce. And Marina is, of course, a federal policy leader in this space, and she's driving national policy on data centers and physical AI infrastructure, along with many other important elements of our digital infrastructure, including subsea cables and global networks. So we've got a great panel to dive into some questions. So just a little bit of scene setting before we do that, which is to say that, you know, as the demand for compute accelerates globally, as we just discussed, so too does the importance of how and where the infrastructure that we're talking about is built. And as this audience knows, data centers are not any longer just a technical or a commercial issue. They're a policy issue, and that's from the hyperlocal level to the federal and the geopolitical level, as we just discussed. And we're seeing debates play out locally, as well as among federal policymakers and state and local policymakers about how data centers can be seen potentially as forms of critical infrastructure. And, of course, how they have national and strategic implications. And these are not only local issues, of course, they're global issues as well. As we discussed, the availability of compute is emerging as a central topic of AI geopolitical competition. And the question isn't whether the United States can lead, but whether it can build, it can power, and sustain the infrastructure that this leadership requires. So now we're going to dive into conversation. And the way we're going to kind of frame this is starting from kind of the national, the federal level, frame these discussions around data centers. From that perspective, we'll talk about how federal and local policy really does intersect and coincide. And then we'll kind of zoom out for a bigger picture perspective before we head into the second panel. So, all right, let's dive in with Maureen. So, a help scene set for us from the federal level that conversations are happening around data centers. And they're being increasingly described as U.S. critical infrastructure. That's kind of a policy question that we hear these days. So, from your perspective and where you sit, do you agree with that framing? And what does it mean practically for how NTIA thinks about data centers' importance? All right. [00:19:10] Speaker 3: Well, thank you. And thank you so much for the kind introduction and for having NTIA participate in this today. You know, it wasn't just about two years ago we were here launching our request for comment in September of 2024 when we just thought, we'll have a nice conversation. Now, two years later, it's a different kind of conversation, hopefully still nice. But, to go back to the question, of course, as a national security professional, when I hear the term critical infrastructure, it means something different at the federal level. You know, do we mean the specific type of sector that, you know, is identified by our colleagues in the Department of Homeland Security, where there's oversight and there are specific cyber and personnel and physical security requirements. So, at the federal level that's what we hear, or most of the time we hear at the national security side, right? Critical infrastructure, it's this thing that has these requirements and these regulations. When you're talking about critical to economic security, we hear, you know, we take that hat off and we put on, at NTIA we're also in charge of the broadband development in the country, too. We hear this is critical to ensuring that the money spent in broadband development works. And we get there because data centers are so critical to the internet networking system, too. So, that's a friction that we're feeling here at the federal level, having, you know, not really partaken in data center policy conversations since a lot of the departments and agencies switched to cloud services. So, I think it's been an interesting couple years of re-educating, of getting into the right rooms and talking to the right people about where, what is a data center, what isn't a data center, how important they are, what's the difference between a co-location data center that is servicing your Netflix account versus a specific AI research and development data center. So, those are sort of the higher level conversations we're having. So, with NTIA, fortunately, we're able to address the federal level, but also because of our broadband programs, we have the state and local experience, too. So, we've been just trying to make sure everyone is using the same terms, understanding how important everything is, looking for ways to reduce barriers to strategic investment into the, you know, US data centers, and how to work with our international partners to make sure we have the right supply chains for the larger ecosystem globally. So, it's all very important to us, but if everything's important, nothing's important. So, we have to pick and choose where we play in the right role there. [00:21:59] Speaker 2: You know, I think that that's a really helpful kind of disambiguation around the terms, or how we think about infrastructure in very formal ways within the federal government. And I think it's exactly right, because there have been these questions, and people are talking about data centers as critical infrastructure. But as you said, we have 16 formally designated DHS sectors, but the economic security angle that you bring in, I think, is really helpful. Yeah, definitely. [00:22:23] Speaker 3: And some data centers that perhaps host federal government servers or support different types of commercial operations with partnership with the government are already technically critical infrastructure. And we, in our request for comment, we heard some feedback about not wanting to lump all types of data center activity under that same banner. Because with that comes all of the requirements I already listed and compliance costs and things like that. [00:22:55] Speaker 2: Absolutely. So, to stay at the national level for one more question, the Trump administration's AI action plan released last summer identified quite a few policy actions and really did specify the importance from a kind of USAI leadership perspective of data center build out. So, for kind of where NTIA sits, what do you see? And you touched on it already a little bit. What do you see as the kind of most important roles for your agency going forward to advance those goals? [00:23:25] Speaker 3: You know, so NTIA is a small but mighty institution within the Department of Commerce. We've been around since President Carter plucked us from the executive office of the president and placed us kindly in the Department of Commerce. We are the foremost experts in telecommunications and information law and policy. So, with that comes interesting conversations not only how to build out broadband for the last 2% of the country not connected yet to disseminating and allocating federal use of spectrum, which is critical to the internet to keep working, research and development support with our lab out in Colorado. And then, of course, you know, working through the supply chain issues for the IT and telecom infrastructure. So, that's, you know, the little, not little, the vast area of policy topics we touch on. Within artificial intelligence, you know, NTIA has been in the conversation since 2023 with our AI accountability report. We also launched a report in '24 about open weight, open model uses of AI. Now, building upon that at a faster pace with more resources and more demands, we are able to take that and figure out where we can apply those skill sets. So, through the President's Action Plan, we have a handful of assignments. One of them is to help small and medium businesses or other entities adopt the use of open source models of AI. We're still working on that. And then, we had an interesting side assignment to start looking at the manufacturing challenges for US production of advanced robotics and for drones. So, again, part of the IT and telecom infrastructure. So, we -- and then, of course, this data center project is sort of building upon all of those things, too. So, we're looking forward to continue conversations at this federal level, bringing our expertise from the last 40-some years of understanding state and local, understanding federal implementation, and policy and regulation going forward. No, thanks very much. [00:25:39] Speaker 2: That's a great lay of the land to build on. So, let's turn to the local level and turn to Buddy. And, of course, we're just talking about the White House's ambitious goals for US-led AI innovation and growth. And, of course, as mentioned earlier, closer to home, Loudoun County really is the epicenter globally of US data center growth upon which all of those national goals that Maureen just talked about are built upon. And, of course, holds a global -- a significant percentage of global capacity. So, from your vantage point, maybe two questions for you. The first one is, do you -- how do you think about how the US at the national level or federal policymakers appreciate how concentrated physically data center infrastructure is, including in your county? And, in addition, how do you engage and communicate with federal leaders? [00:26:32] Speaker 4: First of all, I want to thank CSIS for having me back. I was here a couple of years ago. You know, we made a strategic decision 20 years ago to go after data centers because we had an Internet Exchange Point, we had AOL, we had a lot of assets. But, for us, it was not a -- you know, it wasn't a critical infrastructure goal. It wasn't -- it was -- we needed tax revenue. And nobody delivers tax revenue like data centers. For the best part of the last 20 years, not many people were paying attention. We were just doing what we were doing, and we were building, you know, really amazing infrastructure that not only is important on a federal level, but is important on an economic level. And, you know, I always cringe a little bit when we call it mission critical because that's a scary term, and people think, oh, my, what's really going on there? But, at the end of the day, it -- listen, it has plenty of implications for all the federal things that we're talking about. But it is also how you chat with each other on text or how you engage in Instagram, and, you know, so all of those things are part of this. You know, we do have the largest concentration of data centers, and we've worked with the Department of Homeland Security on threat assessments. We work regularly with the FBI to make sure that we're doing the things we need to do to protect. We work with DOE. We work with a lot of agencies. But I believe that as we have evolved, I'm less concerned about the concentration in one place as I would have been maybe 10 years ago, because the Internet has become a much more distributed model. Now we see, you know, at one point, you know, Visa's data center in Loudoun County was really a choke point. Like, if it didn't get processed there, we didn't know where it would get processed. But now it has backed up in multiple places, and that's important because, you know, at that Visa data center in Loudoun County, there's 30,000 swipes a second that are processed there, you know? And so that's important that we have backup and resilience. And I think that the industry, you know, has been able to do that. I do think that there's two different roles. I believe that the federal government should take a role, especially in the energy part, because I think that that is really one of the biggest limitations we have. And trying to understand what that energy strategy, I mean, China is going to put out 10 nuclear reactors this year. We do one every decade or whatever we do, right? It's not much. And energy is an amazing choke point, and energy shortages have changed the dynamics of data center. It used to be used to be you chased fiber. You chased the availability of latency. Now the number one site selection criteria is power. So you chase the power. What I wouldn't like to see as a local government employee and as a representative of a local government is some sort of mandate, because I don't think those ever work out well. You know, it's no different than the federal government pointing to roadways or, you know, other really big federal infrastructure. But it's still permitted and regulated and implemented on a local level. And I think that's the way that it works. So, you know, I worry about push down. And I think that communities have to have the right to make sure that it is right for them, implemented well for them. You know, I mean, certainly right now one of the biggest topics is data centers. I mean, people can't even agree whether it's data center or data center, much less whether one should be there, right? So we have to come to, you know, a conclusion, a general understanding of it's not a matter of if data centers. I mean, that question went away a long time ago. We need data centers. It's where and it's how that we need to focus on. [00:31:10] Speaker 2: You know, I think that there's so much there to pull on. And maybe I'll turn to Charles to respond to any of that. But also just to broadly ask, you know, how do you as a data center builder who has also been doing this for decades from Suffolk construction, how do you think about both the national policy context? We're talking about local policy context already now as it pertains to the work of meeting the both U.S. and then also probably global demand for compute nationally. [00:31:40] Speaker 5: First of all, I'd like to say thank you for having me here to CSIS. It's an honor and a privilege to be asked to join this committee. I think, you know, as we look at what, you know, I like to think of ourselves as kind of the pointy end of the spear where we have to kind of move our what we do, you know, day to day. We have to operate in different environments. We have to follow the federal regulations. We have to, you know, keep track of all the local and state regulations so that we're in compliance when we're building. I think, you know, from a federal perspective, I think, you know, one of the most important things for us, I agree with Buddy, energy policy is certainly, I think, a great place for the federal government to get involved. But I also think in one of our challenges is workforce development. We struggle that with retraining, not having enough folks to build these facilities. That's something that's often overlooked. And I think that that's a role where the federal government come in and help us navigate workforce training programs, work with the states to do that. I think that's certainly an avenue where, you know, we could use a lot of help with labor as a big constraint for us. You know, at the local level, there's a lot of communities. It's kind of a mixed bag. There are some, you know, very pro data center communities that we operate in that are very easy, you know, Loudoun County being one of them. It's easy to navigate there. They're planning for it. And we go into some communities where they're not as familiar with us, and it's a little bit of a struggle. Not so much, you know, from the policy side and the, you know, there's the NIMBY arguments. But we get into are these small locales, are they equipped to handle the design reviews? These are massive buildings. And a lot of the, you know, the planning departments and the building departments are used to doing maybe a school is a big project for them every 10 years. And we come in and we bring in these multi-billion-dollar facilities and millions of square feet. And they're, quite frankly, they're overwhelmed. The small towns are overwhelmed. They do not have the ability to inspect the buildings, the electrical. And, you know, so some of these small places we go, they have one inspector, and that person does mechanical, electrical, you know, everything. So I think we put a burden on some of the small towns. So I think we have to, you know, help some of these small communities. I think that's where some of the -- some pushback comes because they do put a burden on some small communities. And I think we don't always recognize that. So I think that's something where I think the federal government could help, too. So I think the federal government could help, too. [00:34:16] Speaker ?: And I think the federal government could help. [00:34:16] Speaker 2: So I think the federal government could help. So I think the federal government could help. And I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. So I think the federal government could help. And in 2016, Politico did a pretty comprehensive poll, national poll, of citizens' interests and concerns around data centers. And they found that electricity prices kind of in the in the abstract are the biggest concern that constituents note among among their list. So how do let me be starting with you, buddy. You know, how do you have conversations with constituents, with hyperscalers around energy and kind of the human impacts of a digital infrastructure? As we've already started talking about. [00:35:03] Speaker 4: Yeah, I mean, the data center pushback has kind of become whack-a-mole. You know, you solve one issue or you answer one issue and then there's another one. But energy is at the top of the list. And we take that very seriously. And we have spent a great deal of time at the local level and at the Commonwealth level in Virginia making sure that that is not going to be a challenge for our residents. You know, to date and, you know, the studies bear this out. There is no evidence that local rates have gone up because of data centers. But the General Assembly working with the SCC has done an amazing job of putting regulations in place with the latest rate case to ensure that to be the case going forward. And I think that it is a model for other states to look at because it's important that the costs do not get pushed back. Now, listen, there's plenty of people that are going to argue with me that, hey, my rates have gone up and, you know, data centers are being built. But causation and correlation aren't always the same thing. The main reason that the energy rates have gone up is because of fuel prices. You know, and the last time you filled up your car, it's down some now, but it was, you know, really high there for a little while. And that is part of your energy bill as well. I think the other thing is, is that the United States really didn't invest in the grid for more than 20 years. And because energy electric use was flat, so they didn't see the need. So now we have archaic grid properties that have to be upgraded and everyone benefits from that. So everyone will have to pay their share of that. But, you know, it's not driven just by one thing. It's the fact that, you know, we put that off for a very long time and now we have to do it. But, you know, trying to make sure that we're answering proactively the concerns of citizens. I mean, that's my number one job. And that is, I think, the job of all of us when we're out there trying to talk about the realities of what this infrastructure means. Absolutely. [00:37:22] Speaker 2: And I think to your point, one of the things that I often hear from state level officials is that, I mean, I'm no energy expert, but just regional grids have their own unique combination of factors that are impacting them. And depending on where you look, so there's not a kind of one-to-one comparison across different regional grids. So maybe turning to speaking, keeping on the topic of citizen and external perspectives. Maureen, you mentioned the request for comment that NTIA put out a couple of years ago. And you held listening sessions in the last couple of years on data center growth and resilience and security. So can you say a little bit more about what you heard, including on the topics that we've already been discussing, and also maybe where those responses indicated opportunities for federal policy to catch up with the pace of growth? [00:38:13] Speaker 3: Yeah, definitely. Thank you for that question. And I just wanted to say, and my team will roll their eyes, but my story is always -- well, I'm from Northwest Ohio. I grew up in the '90s there. I saw a lot of factories leave. Not a lot of investment in critical infrastructure, power grid, water supply, et cetera. And then a hyperscaler is setting up a data center just 10 miles north of it. It's the biggest thing to be added to the grid since the port of Toledo, perhaps. And, you know, it's causing these frustrations, too. So just hearing from my own high school friends and my family back there, it's trying to measure that response with seeing everything from the 50,000-foot here at the federal government. So going into the comments that we received in '24, they were quite fortuitous. They noted a lot of things like electrical grid updates are going to -- are needed. They take a long time. It has its own regulatory processes that don't fall in line often with a big tech company's purview of -- like understanding of timelines. Non-disclosure agreements are something that many state and local offices and officials have -- don't have a lot of experience with. So how do you explain through that? So there was some of that in the -- in our comments. There was a lot of concern about not having the critical components ready for the data center builds, the printed circuit boards, fiber optic cabling, transformers, generators. And even a few commenters noted there's not enough of the right kind of cement to build data centers. And you don't think about cement when you think about artificial intelligence. So where are those -- where are those boundaries? They -- you know, where can we put more? How can you get more workforce? Workforce was another large part of our -- feedback from commenters. However, not -- in 2024, not a lot have -- not many movements had come to -- you know, have come up at that point. So there was -- so again, like Buddy was saying, opportunities for workforce development there too at the federal level. And then finally, the timeline of permitting, which is something we hear about all the time at NTIA, because broadband internet requires permitting processes as well. You know, could we have more small nuclear reactors in this country? It takes about five to seven years for that process to pan out. We're seeing some starting in the last year and a half. You know, it's interesting. It'll be really exciting to see how the Idaho National Labs SMR comes to pass and see where those lessons can be applied elsewhere in the country. And then there is also this, like, being able to build redundant fiber routes, having the right permitting on -- and the basic telecom side too. Not getting too caught up in who can do what where. A couple years ago, I attended a meeting with some national security officials and some energy companies, noting the right of ways and the different way the grid falls in different -- along the eastern seaboard. And how some of that is just pacing from the 1860s. You know, it's like we haven't updated zoning and permitting laws in some states since the end of the Civil War. So how are you supposed to have, like, the most direct lines connecting each other if you're still trying to understand what a decision was made in, like, 1868? So there's some updating there. Maybe some framework development the federal government could explore without getting in the way of these developments. [00:42:06] Speaker 2: Wow. I didn't know we were dealing with 1868. And cement. Yeah. Yes. As our constraints. And obviously, you've already hit on kind of how current policy tools are on permitting reform, incentives and infrastructure funding are, you know, keeping pace -- or attempting to keep pace with competition globally. So that's really helpful. So we've talked about issues including coming out of the RFP process that I think hit on a, you know, a builder's perspective for Charles to bring you in here in terms of kind of what the hardest challenges are from your perspective in delivering data centers on time, on schedule, and with the constraints that we just talked about. Yeah. [00:42:46] Speaker 5: You know, I think the biggest challenge is the speed. I grew up in the Top Gun era, and Tom Cruise famously said, "I feel the need for speed," right? So we -- speed is something that schedule, schedule, schedule, kind of like real estate location, location, location. It's schedule, schedule, schedule for us. So that's where we spend a lot of energy. And so you look at what impacts schedule. Permitting certainly has impacts on schedule. The supply chain when there's ebbs and flows in the supply chain, you have a lot of issues. So you have to really manage that supply chain. And then also labor, getting labor to the right place, getting -- where we're building or where people live are sometimes not the same. So we have to get people there, and there's some lag there. There's also policy lag that we deal with as people get more sophisticated. About data centers and building in the town starts to incorporate new policies and new codes. There's some lag there to get those policies implemented and in. So we deal with all of that. But, you know, one of the things that we think the approach that we take at Suffolk is through tech is going to help us get through that. Making our processes more efficient. Managing those supply chains. Managing the resources that we have. Making the people that we do have, and sometimes if they're limited, making them more efficient. So we utilize a lot of AI. We -- you know, 10 years ago, we spent a lot of money to create a clean data lake. And that's been instrumental and a game changer for us. Because we're able to use that data to monitor what we're doing, monitor every facet of the construction that we do, and really change on the fly. And make informed decisions about when we need to re-sequence things or change things up. Or, you know, just informing owners of the government entities. So we're able to look at the -- you know, all the data that we have and monitor and make adjustments. And I think that's really -- so I would say, you know, schedule is probably the most important thing. And speed is the thing that we deal with in the industry itself. [00:44:45] Speaker ?: No, that's valuable. [00:44:46] Speaker 2: And kind of zooming -- we'll stay on this topic and zoom out a little bit. Because we're -- I think we're talking right now more or less about the constraints that we see kind of in the present moment. Not least, you know, where the demand for compute and for data center infrastructure will go in the future. So staying on Charles, you know, how do you think about looking out into the future and whether the construction sector is able to -- will be able to keep pace with the speed of demand? Or are we -- those constraints that we're talking about that we see today going to have an impact out into the future? Yeah, I think we will. [00:45:21] Speaker 5: You know, it's interesting. I've been in the construction industry a while. Since I got out of the Navy, you know, 25 years ago. And it's -- it's -- it's -- for many years, it was very stagnant. It was -- that we were doing the same things over and over and over again. There wasn't a lot of innovation, a lot of development. That's starting to change. So we're really starting to change. We're one of the most inefficient industries in the United States, unfortunately. I'm sure the Department of Commerce could -- could back that up. But we've made a lot of progress here that we're really focused on -- on productivity, you know, workforce productivity, how we do things, changing the way we do things. And I think that's really, you know, instrumental in -- in us being prepared to, you know, the -- you know, to meet the challenge of demand. That's not going away. We have to change our processes. And I think that there's been a lot of innovation in the construction industry with not only materials, but the processes that we do. How we manage this -- an unbelievable amount of information on a construction project, especially a complicated project like a data center. And you have -- you know, managing that information, all the softwares that we use. You know, we have an incubator where we have a lot of -- you know, we bring in a lot of new companies. And we test -- you know, we have hundreds of projects throughout the country. You know, that we're able to use as a test bed for some of these new technologies. Some of them are new materials. Some of them are new processes. You know, softwares and those sorts of things. So we're able to assess how we do that. And a lot of those -- as we test those technologies, we're able to find that some of them are really good. They do increase our productivity. And we -- again, with our data, we're constantly measuring that productivity. So we're able to look at -- make thoughtful investments of things that really increase our productivity and not waste time with things that don't -- you know, we invest in technology that's going to help us improve, not just for technology's sake, so. [00:47:14] Speaker 4: Do you want to comment on this, buddy? Yeah, I just -- and I think with Charles' point about speed, the second part of that is predictability. It's predictability of process and trying to understand what that process is going to be. You know, one of the most common words in the data center industry right now is moratorium. Because, you know, everybody's kind of trying to figure out what that process looks like. And another point Charles had was that expertise on a community level. And where do you find that? I mean, we built that expertise 20 years ago. But, you know, if you come to Loudoun County now, you have 20 years of experience. The Economic Development Department, you know, we have 32 people in our Economic Development Department. We have multiple layers of review and inspection. You know, you go to a lot of these other communities. And as Charles said, you know, there's an economic developer who is part-time also managing parks and rec. And then there's, you know, one inspector doing all of that without understanding it. And it's going to be really overwhelming for communities. And so that's why when I talk to communities around the world, I say you have to be able to control your own destiny and define your own opportunity. And a lot of that comes with capacity. How do you make sure you have the capacity to deal with the size and the complexity of the projects that we're seeing today? [00:48:46] Speaker 2: No, I think that is a really critical point. And it's good to hear and not surprising to hear that you are sharing lessons learned, not only here in the United States, but around the world. Again, because what is in some ways the local is also the geopolitical. And so to your point, maybe even 32 people might not be enough, but at least that many to be able to tackle these challenges. So again, getting back to the geopolitical point, turning back to you, Maureen, USAI infrastructure leadership is a big challenge. Obviously, we are the leaders today, but what does that look like over time? How do we get the policy and the implementation right? And maybe what are the risks potentially if we don't? [00:49:33] Speaker 3: That's a great question. I believe we're working right now with the assumption the U.S. is dominating in this technology, in this innovation. And I think that energy along with the policy decisions made in the last year and a half with the Trump administration is going to drive us pretty far ahead. But of course, honestly, there are other entities that are catching up and we want to make sure that we continue to be in that lead. And so what a good policy looks like are ones that promote an increased demand for American AI, whether that's software or hardware. We'll see hopefully some more manufacturing here in the United States of these key components within this IT and AI ecosystem. We'll see that. We'll see jobs. We'll see universities and colleges start innovating, doing more research and development, seeking out more partnerships with the private sector and the federal government to do all these things. You know, we'll see an improvement under our own cybersecurity. We'll see national security improvements. And then, of course, with all that comes a stable and reliable economic security. We at NTIA always say national security is economic security. And economic security is needed for national security. It's not a new phrase for us, but we'd like to take it and run with it. And so that's just how we are going to push forward. We're at NTIA working with our international partners through multilateral organizations to develop those strong connections with like-minded countries, with other international companies, figuring these things out and setting the pathway now. So it's just routine as we go along. Now, what does a bad policy look like is lumped up, clogged policy pockets throughout our own country and throughout the world, where some models are used some places and have certain restrictions and others don't. It just causes consternation and the unpredictability that is needed in this timeline right now. That then trickles down to harming our own domestic innovation, harming schools, harming farmers, harming telehealth, things like that. So that's what we don't want to see. But we all have to agree on a way forward first. So I know this administration, we've seen all of the executive orders and we're seeing different draft pieces of legislation from the Congress. Like we're, you know, the branches of government are committed at the federal level to getting us to a good policy. We just have to get there. Right. [00:52:27] Speaker 2: Right. And to that point, Marina, obviously there just is a lot of activity and there's a lot of, a lot of efforts and a lot of attempts within the executive branch to wrap our, and Congress as well, to wrap our arms around the scale of this challenge. So maybe one last question for this group of questions, then we're going to go to a kind of a lightning round for our panelists. And this is back to Buddy. In terms of getting policy right, of course, we've already talked about, you know, misconceptions and different kind of views around data centers that are definitely going to shape and should shape policy processes. So, so what do you see as the biggest misperceptions or what do you think, wish that people knew about data centers, including policymakers as they're charting out the next path? [00:53:11] Speaker 4: Yeah. And, you know, I think it's important to note that I work in policy, but I don't work in politics. And I think we're seeing the, the issue becoming more driven by politics than, than reality and policy. And I think that that, that's a dangerous place to be. I think that it's really important to, you know, really start from a fact-based discussion rather than a fear-based discussion. And if you can find a way to those facts and, you know, the biggest thing we're, one of the big things we're hearing about right now is water. And water is, is a challenge in a lot of communities and it's something that, that we have to be able to address. But some of the numbers that you hear are, are, are not accurate. For example, you know, as we said, largest concentration in the world. All of the data centers in our community take less than 10% of our potable water supply. So it, it, water use is an engineering choice and trying to determine which is the best way to move forward with that should be very specific to the community you're in. And so, uh, there can't be a one size fits all policy. Um, and, and that's why I think that communities have to be in the lead on policy because what is working here doesn't necessarily work in Idaho or New Mexico or Arizona and other places. So, um, trying to understand what the needs are, compare that with what the assets are in the local community and try to have that at the intersection of good policy. And, and that's not always easy to do, but, but that's really the need, right? Trying to make sure that there is policy alignment with the community that is, can be crafted in a way that makes industry still possible and isn't prohibitive. Absolutely. [00:55:19] Speaker 2: No, a really important key takeaway, I think from this conversation as a whole. Um, so a couple, just a couple of questions that I'm going to pitch to, to all of you as we round out the, at least this first, uh, segment of the conversation today. Because I think, as you know, and I think as all, all of you are demonstrating, there really is a need for conversations across, uh, sectors and regionally and globally as well. Uh, given, you know, kind of the consistent challenges, but also the, the unique, uh, characteristics of localities where data centers are going to be built and their implications, um, at a policy level. So just a couple of questions, uh, to round us out and maybe we'll start with, with you, Charles. What do you consider to be the most underestimated risk or maybe even opportunity, um, in the current AI and data center boom? [00:56:06] Speaker 5: You know, I think, um, one of the things that's most important is we, you know, we spoke about it earlier. We touched on it was labor, um, and, and that's not only at the, um, the construction site. I think that's obvious, but where we really depend on the labors in that supply chain. Um, you know, the, the, the, the labor issues that we're dealing with on the construction sites, the lack of, of, of labor. I think the supply chain is feeling that too. And you need both that supply chain and the construction arm to be, um, you know, operating at, to operate at its full potential that, that it needs to be an infusion of labor. So I think, you know, there has to be some, some retraining. We have some obligation as, as, as contractors on, on, on our side to change our processes, to, to reduce that burden on, on labor. But, um, I think as we move into a kind of a reindustrialization, I think that supply chain in order for us to keep up our supply chains, not quite where it needs to be. So I think that it really needs to be a, a, a focus on kind of reindustrializing. We've sent a lot of stuff overseas. Um, and I think that's very important to, to not only focus on the construction sites, but also on, on that supply chain. Because it's so important to building these things at the volume and the pace that we want to build them at. [00:57:21] Speaker 2: Absolutely. Uh, Maureen, what about you? [00:57:24] Speaker 3: And just to build on that, just a little bit before my answer, just all of those sectors you just listed have jobs alongside them. And the, the myth that there are only a few jobs at data centers. We have to continue to combat that because it's, sure, data centers maybe don't need 150, 200 people after they're built. But then you're talking about how it trickles down to the supply chain. We just met at NTIA with an amazing company from the Dakotas that are taking what were once like energy, uh, power huts. And they're re, you know, fabricating them and putting small data, modular data centers in there. Uh, they have AC systems. They can have a couple of gigawatts of power. They're very small. And you just put them next to your power station. Like, that kind of innovation is really cool. But it's not just the construction of that hut. It's the research and innovation it took to get there. It's the components needed. It trickles down. But how do you measure that? Um, the federal government perhaps could try to do that. Um, and I think it's an opportunity we see at NTIA, um, to really look at the data collected and help bolster investment by having federal government data. So, uh, out supporting state and local municipalities. But I wouldn't be from NTIA if I didn't talk about the network a little bit. Um, so I, in my belief is that an underestimated thing other than cement, um, and of course all the really critical components we just talked about is interconnection. And if we stop or ban data center development, uh, we'll see slower internet, we'll see fewer telehealth or remote job opportunities because the AI companies will likely buy up all of the compute power preventing, you know, and that trickles down and you're, you know, you're talking about slow internet. Like, can't watch a clip on your phone internet if we're not careful and working together about making sure there is this data center growth and making sure we understand what, whose compute is what and where and the needs there. Um, you know, it's, it's a small, it's not small, it's a very large part of the telecom internet network, but it isn't sexy. You don't see like an HBO show bait, like based in the really fascinating interconnection hub of Omaha, Nebraska, uh, as they support, you know, Omaha insurance going forward. That'd be really cool, but you don't see it. So we just need to remember what the internet really is, how the architecture of it, and how can we continue to support and fortify it. So that's, that's a risk we see, but there's also that opportunity in there. Thank you. [01:00:06] Speaker 2: Absolutely. Buddy, your thoughts on an under, underestimated risk or opportunity? [01:00:10] Speaker 4: Yeah. And I think, uh, both of, um, the other panelists here came up with really good ones. I think there's a danger of conflating AI with data centers. And, you know, those are really two different conversations that need to be had. Um, you know, we've seen bills come, you know, or proposals out of the federal government that are trying to ban IA or AI while, you know, really targeting data centers. Data centers are not the end product. Data centers are the infrastructure that enables the product. You know, people sit on, uh, their phones or take notes or take pictures or whatever. You know, that all is critical for, for data centers. Our community is not going to be an AI training data center market. It just doesn't make any sense. We'll have AI inference. And that's important. Um, but I think having the, the distinctions of what this really is, uh, can be a real challenge. I think the other thing, um, is the, uh, instead of seeing industry and government and community come together, I think we're starting to see it pull apart even more. And I think that's really dangerous because industry is out there trying to defend, define where they want to go. And they're making, I think choices without thinking about what those communities need or want. And so I would like to see more collaboration on site identification. And that has to come down to the industry, the utilities and the community together. Um, and, and that provides, I think the biggest opportunity for wins for everybody along the line. [01:01:56] Speaker 2: Um, absolutely. And let, let's end on, on that note, but I want to bring, uh, Charles and, and Marina in this as well, which is, I think to follow on this, this conversation about how we can work in across our, our sectors, the federal, the local, the community levels, uh, to one, grow understanding of data centers as physical infrastructure that all of the uses of AI that we all know and don't know, um, are built on. How can we do that and their, their importance as critical elements, you know, of global infrastructure, um, but also make sure that, you know, we are listening and in hearing from, from those who are impacted. Uh, so if you Charles, your, your thoughts on that, and then we'll go to Marine and round it out. [01:02:35] Speaker 5: You know, I think it's very important for industry and government to get together to, uh, to kind of solve this challenge. Um, you know, it's a, it's, it's, you know, very important to our national security and our, you know, the, you know, the, you know, the global community. The global economy that we live in, we have to cooperate. And I think that the way that we do that is through, you know, something we do on all of our project. You know, how we call it helps hurts. It's, you know, how can we help you? How can we hurt you? What, what, what, what do I do? That's going to hurt you. What, what, what do I do? That's going to help you. And we go around the room and do that. And I think we really need to, you know, obviously a little more sophisticated version of that, but, but I think we really need to spend some time understanding. What are the, what are the local governments, what are their needs, what are their concerns? And, and what are our concerns or what are the federal government's concerns? And we, I don't think we spend enough time together talking about those and really understanding how we impact each other. And I think, um, if we're going to solve this, this is a big, big issue, a challenge that we have to, you know, we have to come together. And so I think the way to do that is to, is, is to have a lot more collaboration. So I think, I think it's very important that the, the, the local governments, federal governments, and the industry collaborate a lot more and communicate and just understand each other a little better. Absolutely. [01:03:50] Speaker 2: And Marie, in the last word. Wow. [01:03:52] Speaker ?: Pressure. No. [01:03:54] Speaker 3: Uh, so I think, you know, we've heard from day one of this project that there is a gap in communications among the, the stakeholders. Um, we learned with our request for comment, we thought we had enough advertising for it. Turns out data center companies, um, and stakeholders are far more fluent in like requests for information or requests for proposals and not maybe a regulatory request for comment or a rule making procedure. Um, NTIA doesn't do rule making, but we do comments. And, uh, trying to find the right audience has, it was a challenge at first. And now I think we're all in the right rooms now talking to each other and that's one step forward for the federal government. Um, but it is that demystification of what a data center is and is not is something that federal government can, you know, take the lead on providing easy to understand, easy to find information, talking points, studies for these state and local leaders. So when there is a concern about water usage, you know, someone can be like, oh, we'll just go to blank.gov and you'll be able to find the right information, easy to understand, maybe an infographic, who knows. And that's easier to understand at the, you know, at the local level. And my friend who's, you know, married to the mayor of a small, you know, town outside of another smaller city will be able to figure out where something.gov is perhaps than trying to find something in like 15 different locations. So like a centralized, um, works, a centralized information hub or something like that would be really helpful. I think, you know, again just to re-emphasize, there are more jobs than just, and I don't mean this to sound at all diminishing, but not just the folks inside the data center once it's operational. It is a supply chain, it is an ecosystem, so the federal government will continue to promote made in the United States, manufactured in the United States, and as that supply chain catches up with those policy goals, we'll see more jobs and see how you can, you'll be able to measure that in a easier and faster and provide those talking points to your community as well. You know, we, you know, telecom is national, is also state and local, and we figured it out for phones and we figured it out for the internet. Let's just, you know, we all just have to commit that we're going to figure it out for artificial intelligence, which just is going to, you know, in my easy to understand purview is just a layer on top of phones, the internet, AI. So if we can figure all that out before, we can do it now. So we just need to be ready and willing to work together. [01:06:51] Speaker 2: No, thanks for that, Maureen. I think really, for all of you, very, I hope, optimistic note, which is that we need to open the conversation from where all of us sit and in local communities around these issues. And for that reason, I definitely very much want to thank Maureen, Charles and Buddy for coming out and for having this fantastic discussion. And I gather from all of you, you're open and interested in engagement. And, of course, you have, you know, busy work days and these issues, of course, are very top of mind nationally, which I imagine only adds to your schedule. So thanks so much for shedding light on these issues. And we appreciate you joining. And with that, I will turn it over to -- back over to Matt Pearl to lead a discussion that takes us into how kind of the policy meets the ground level perspective. And we will also just take a moment to add another chair to the table. So join me in thanking. Thank you. [01:07:46] Speaker 3: Thank you, CSIS. Thank you. [01:07:48] Speaker 2: Our audience. [01:08:11] Speaker ?: Thank you. Thank you. Thank you. [01:09:41] Speaker 1: welcome welcome back everyone um you know as as you saw um on the uh on the first panel we had um some really interesting federal and local perspectives on these issues we also have an embarrassment of riches on this panel because we have two folks from industry who are at the bleeding edge of that dual mandate that we were talking about uh in terms of building out data centers quickly in the u.s and abroad as well as working with local communities and then we also have um two think tank scholars who have done um really incredible research on these issues um so i'll briefly introduce them um kevin gunderson um is um head of uh public affairs at digital reality which operates more than digital realty um and um they operate more than 300 data centers globally so he has a perspective both in the u.s uh as well as abroad uh rebecca darling who's immediately next to me um is um head of um or director of community affairs and engagement um at core weave which is a company that those of you who aren't familiar with um has really pioneered a new model for financing and building data centers um uh known as neo cloud and so she'll provide a really interesting perspective from that part of the ecosystem uh and then in terms of our think tank scholars we have um joseph my cut who is director of the energy security and climate change program uh here at csis and he's done a lot of there was some discussion of uh energy on the last panel that was really interesting he's really dug into these issues on energy um and how it's going to affect international competitiveness in a way that that will be really interesting i think for the audience uh and then um finally we have uh bill wyman uh who's um a principal at um tech dynamics llc and also a senior associate here at csis he's a tech industry veteran who knows about a lot of areas but is a particularly an expert on data centers and cloud globally he's done some research um i would go to our web page on um the geopolitics of data centers um and digital sovereignty recently that i would encourage everyone to read it's it's very interesting um so this should be should be a great panel in terms of getting all those perspectives i think um to start out it it'd be helpful to talk to um a couple of the um industry uh current industry former industry um essentially about you know is this time different in terms of the ai build out i think we know the answer to that question but then sort of how is it different so so i'll start with bill um because you know he he was around and experienced the cloud build out and um you know what makes in terms of investor behavior business models other things we're seeing what makes this ai infrastructure um roll out different than than what we've seen in the past bill great [01:13:11] Speaker 6: thank you matt and thank you to csis for bringing together uh so many smart uh perspectives on the on this issue um in my view the ai shift uh is the biggest change in tech since the internet bigger than social bigger than mobile even greater than cloud uh it's fundamentally a different technical architecture that we haven't seen in in decades um it's massively compute and capital intensive in a way that prior technologies uh were not and it goes from everything from networking to storage to cooling uh like silly example right uh data center operators used to do everything they could to get every drop of water out of a data hall because you have tons of high voltage equipment that's worth billions of dollars now we're bringing liquid cooling directly into the rack to the black plane against a semiconductor so just a small example of how radical the technology architecture is and the second big thing and equally important is the economics are fundamentally different and what i mean by that is in traditional uh compute based on cpus the marginal cost of compute was next was was very limited i won't call it zero huge fixed cost very little variable cost that's not true with uh ai not only do we have these massive fixed capital costs up front but the operating costs in terms of gpus and power as we've been hearing are very material and hence are infecting decisions and behavior that consumers make that businesses make that the industry makes and of course government is trying to help position great that's really helpful i'd also be [01:15:07] Speaker 1: interested in rebecca's perspective on this because in the case of your company rebecca this is an entirely new business model like what does that tell us about how this ai build out is sort of fundamentally different than than what we've seen before [01:15:22] Speaker 7: well i think what i'd like to answer is what is it we the industry and and core weave specifically but the industry should do to meet this moment of this explosion um and i've been thinking about this a lot because communities ask me this all the time and it's incredibly personal to them they're the anger the anxiety the emotion it's all very real they're not making that up so i'd like to double click on a couple of things from the last panel but i think there are three things the industry needs to do to meet this moment and one is we we know the expression integrity is doing the right thing when no one's looking at the moment and this is changing in real time but at the moment we're relatively unregulated industry and so doing the right thing when there isn't that regulation that's what we need to do right we need to show up transparently and work with communities not show up and tell them what we want to do but ask them what fits right does this fit in your community this is the size and shape and megawatts and water and noise and then we need to to understand that their fear and anxiety is real even though we're excited about the innovation we have to show up and speak with them we have to address those big things closed loop coolant systems that should be the norm across the industry and if it's not a community should say why not why wouldn't you use that here when we google data centers it says that they're allowed tell me how you're going to engineer that solution we need reliable power that is efficient we're going to pay for those grid upgrades we are not passing that on to the rate payer that's doing the right thing even though we're not being made to do it the second thing we need to do these in there are over 300 bills in legislatures across the nation right now aimed at data centers regulation is coming and in the in 12 to 18 months we're going to have a different conversation but right now while policy makers are listening to constituents who are afraid or worried or excited and local municipalities are putting into in ordinances the industry needs to show up at that table if we just say no we don't want regulation we're going to fight regulation that is not a winning strategy we have to show up and have the conversations that that bring the best players and the best performance to the table and then to help shape that regulation that enables this industry in a responsible way and the third thing is on labor that was brought up several times there is a ubiquitous unease around ai humans don't like change you know what we hate even more the unknown and if we don't know something we will fill it in with what the worst case scenario so we can steal ourselves against it so what can we do people the most that they're worried about with ai is my livelihood am i going to lose my job can i put food on my table and raise my kids and keep them safe will my kids have jobs the way to help address that is workforce development not just for our workforce but skilled trade and labor but also skills and capabilities for whatever is coming with ai how can people be resilient and meet that moment so we need to contribute to that those are the three things i think we need to do as an industry to meet this moment yeah no that's really well said [01:18:43] Speaker 1: and i'm curious about your thoughts obviously you know companies individually need to deal with local communities and address all of those things but is there something more broadly that the industry needs to do between companies as a coalition in order to sort of standardize some of the things you're talking about so that we don't end up with a situation where there are companies that are doing the right thing and companies that are doing the wrong thing and then everyone gets painted with a [01:19:09] Speaker 7: broad brush in that situation yeah absolutely we are as an industry we are measured by the poorest performers in that industry and i come from 20 years of mining and i thought you know this isn't hard enough i want to go do data centers so that'll be great um it's working out for me just so you know but um just because we're in the same industry doesn't mean we get along right we're competitors in some situations we're partners in other situations and so and some are enormous and some are quite small and so when there is the data center coalition and they're doing great work technet is doing great work individual state coalitions are doing great work but at the end of the day they're member driven organizations and what what the big kids want and what the little guys want and what you know the new ones want and you know it it's hard to wrangle the cats to our detriment if we don't get our act together and connect the dots for people about how you know i've had community members say i don't use ai as they're organizing opposition on facebook and i'm like you're welcome because all that goes through a data center so so we need to connect the dots about how we're using it not just for netflix and ai or amazon but also medical agriculture safety national security we have to explain to the people why this is so important and then also what do you get out of having us in your backyard and then demand that of us so i think we need to work better together and if we don't because we can't find those alignments it will be to the industry's detriment yeah that's super helpful [01:20:37] Speaker 1: i i'd love to bring kevin in because kevin your company has the perspective of both the u.s and abroad or are the issues the fundamentally the same and and how should they be addressed in in both cases [01:20:48] Speaker 8: thanks for having me uh thanks for having me uh i appreciate the comments that were just made i just want to point out that this idea that we're not regulated as an industry and you know that we don't follow laws i mean this is a 25 year old industry which is actually quite new but we're governed at the federal level at the state level at the local level we've been doing this for 25 years we follow all laws air laws water laws so i don't want anybody to come away thinking that you know we're against regulation as an industry we are at the table across the whole state across the whole country at the state and local level i've spent the last nine months traveling across the country meeting with local government officials i spent the previous 10 years in the chemical industry so mining chemicals you know out of the frying pan and into the fire but this this what i would say is that the data center industry is unknown okay elected officials local zoning officials have never had a data center in their community for the most part buddy riser is the king of data centers from a local governance perspective there's nobody in the world literally the entire world that knows more than buddy about local governance around data centers and when we talk about well what do you get when you have a data center in your community well go drive around loudon county it's 20 miles away it's one of the richest counties in america they have a massive budget surplus property taxes are low schools are brand new the roads are brand new the parks are brand new it is a beautiful place that people have moved into over the last 20 25 years not solely because of data centers but the dougie environment that our industry created there and we've been created there and we've been there for 20 years is a really great thing to have in your community that is something we want to scale across the country as an industry and there's no question it's happening at a fast pace there's a lot of local government officials that have never had a data center you know when you sit across from a zoning board official in a city or town anywhere in america they've probably done a commercial office building they've done a residential office building they've done a walmart they've done a supermarket you know data centers are a real estate asset class people don't really think about it that but historically i mean that that's what it is it's real estate so there there's a a muscle memory on how to do this in a place like northern virginia but in other states and local localities across the country they've just never seen it before we come to the table we try to educate we have to be transparent open and really educate and explain why you would want a data center in your community and not every community will end up wanting one we've seen that across the country one of the great things about america is local property rights local zoning you can go have those conversations at a local level and if it doesn't work there are other communities around the country that really want these i mean the news stories every day are obviously very negative about our industry it's happening very quickly and there are legitimate issues that people have i've sat across from them i acknowledge them i'm happy to talk to them about it but there are dozens and hundreds of localities that want these assets in their communities previous speaker talked about northwest ohio you think about kind of post cold war outsourcing of manufacturing in america and what that has done to our politics over the last 25 years it's now coming back the investment that's happening in america right now you know we asked is it real 750 billion dollars of capex by the biggest companies in the world is about as real as it gets and for 25 30 years we've talked about how the investment went abroad well now it's back and that is a great thing when you you know get through all the bad news and all the negativity it's a wonderful thing for this country it's a great thing for communities our industry has to tell that story in a better way no question about it i think it's coming we're a part of it i think you're going to see a lot more of that messaging in the next 6 to 12 18 24 months yeah i think those are really good points i think and [01:25:02] Speaker 1: not that we should use this term but if you look at the case of loudoun county economists would point to the agglomeration effects essentially which is you had data centers you had technology you had fiber it all built on each other and then if you're going to locate a new tech company somewhere you know in this part of the country it's going to be in loudoun county right um and so explaining that story is a real [01:25:23] Speaker 8: challenge but we need to find a way to do it yeah and there's also i mean there's data centers in urban areas there's data centers in dc there's data centers in manhattan they're all across the country they're in office buildings we it's the cloud right every time we look at our phone you're looking at a data center you just we never really had to think about it up until you know ai and now we're thinking [01:25:44] Speaker 1: about it talking about it um so now let's turn to joseph because there's been discussion um just in a in a kind of broad way about the role of industry the role of regulation joseph you've done a lot of work on the concerns around energy so what do you think are which is obviously a highly regulated industry but what do you think is both the role of what industry should do as well as what new regulation we may need to consider in order to address some of the local concerns of course yeah thank you for [01:26:11] Speaker 9: having me and and thank you to my co-panelists it's not that bad yet because we don't have any veterans of the tobacco wars on the set like that's when it's really you know um i want to make an opening comment i think you know we're all learning together this is like this is a massive new technology class not the data centers themselves but the sort of the ai and the incumbent computing needs that come along with it in the in the sense that it's growing really really fast and it is you're moving from a world where data centers were um they were they were big and they were expensive but they you know we didn't talk about them as at the gigawatt scale which is immediately the you know the largest electricity single electricity draw on the american grid and like amongst the largest in the world right this is this is turning from like what i would call tech and digital infrastructure into industrial infrastructure in terms of scale and role in the economy and that is like just a it's a slightly different scenario for all of us to navigate together for a long time we looked at the size of this build out and said oh my gosh can we power that right a year ago we wrote a paper here at csis the sort of electricity bottleneck to american ai dominance and there's a lot of reasons why we can get into them the electricity system in the u.s was sort of unprepared for this space and scale of growth there's a lot industry has done to introduce flexibility to help pay for the infrastructure build out that they need we've got two companies on here that are doing interesting projects in that context there's a lot of consternation about ratepayer affordability and the effect that these very large loads are going to have on the grid again you can kind of talk about that in a detailed and interesting way i would i would also say that a lot of the concerns that people have are very clearly not about electricity right like they're about the role of ai in the economy they're about noise parking you know there's a litany of complaints that people are leveraging now um and and so i would i think you know it seems to me we're moving from a world where electricity is seen as a primary bottleneck to a world where social license is going to start becoming a principal bottleneck to individual projects and that's like that that move you move from the sort of a one where a world where strict policy solutions apply we might figure those out like we could actually get the electricity right [01:28:34] Speaker 1: and miss out on the social license piece yeah and i think i'd turn to rebecca first for that which is that you have this litany of concerns when you approach a local community you know how do you address that in a way that um maybe in the case of some concerns that are um less legitimate or are based on misunderstandings versus other concerns that you need to address in order to have everyone feel comfortable and move forward with a project yeah i think that the first thing is to listen more than [01:29:03] Speaker 7: you speak right we feel like we show up with all the answers we have all the engineers and all the things and we're so excited about the innovation and the tech and and sometimes miss the part that i started with which is this is incredibly personal when you bring this into a into a community and even if they're excited about the tax base that's going to come and the however many jobs it is all of that there's still concerns and so if we if we don't listen and are not sensitive to that that starts off on the wrong foot the other thing i think as a real estate historically approached as a real estate business there was a lot of um i'm going to say lack of transparency there was just commercially sensitive things it was done under ndas and it wasn't that big of a deal because it was a commercial real estate building and it just got built and it was just another project in the community this is different from that and so we need to acknowledge that it is different and so listening i think transparency and then when you listen you understand what people are concerned about and i'll say most of the time it is four issues it's still energy some communities care about clean energy some less so that's just what's important to them power sorry noise and water and then what's in it for us right and whether that's taxes or a community benefit agreement but what's in it for us if you if we listen that's often what's coming up if we can address those and demonstrate it not just with words but really how are we going to do this differently or in a way that addresses your fears i think that goes a long way to the whack-a-mole that buddy was talking about right if you can address those at the forefront after you've listened that social license starts to emerge and then i think it's relationship building this it can't just be transactional and i'll say this is something the mining industry has gotten wrong for generations and and the more the companies that get it right you can tell because the communities are partners and so when we listen when we address fears when we partner with instead of due to a community that's when i think all of that comes together and we earn that social license by the way you don't earn it and then like put it on a shelf that is a daily thing that you have to continue to earn or you will lose it [01:31:09] Speaker 1: yeah kevin any thoughts from you about um both sort of how you build the trust but then as rebecca [01:31:14] Speaker 8: says how do you maintain it over time with the community so you build the trust by sitting across the table and listening and you know luckily a company like digital realty has a 25 year track record of being in communities so we we have a great story to tell which is when we invest in a community we're not leaving if we're going to spend five two five eight billion dollars in a certain geography we're going to be there for a very very long time it gets to your point about industrial assets oil refineries chemical refineries mining that they don't leave they stay and so we have a track record of doing that and so in these new communities that a lot of these companies are going into it really is about sitting across the table in person listening and hearing people and you have to meet people where they are and there are legitimate concerns on a lot of these things electricity you know big tech people we all have kind of concerns about big tech i have three children and what do we argue about you know my 13 year old daughter doesn't have a phone okay i've held out and you know of course that makes me unpopular but that's a real issue and so the idea i'm going to give her a phone and now you know she's going to have all these apps in her hand those are real anxieties that people have and that manifests itself in the construction of a data center i've had those conversations now what i would say to that is we also have 911 services and we also have banks and hospitals and you know state localities state governments water utilities all of societal infrastructure functions inside of a data center every single time your finger touches your phone you are touching a data center so while we you know the news of the last two years and this huge capex explosion is about ai models the cloud is is essentially part of our life every moment of every day i mean a quarter of the people in the room right now are looking at their phone so you know the cloud still has massive run rate massive exponential growth ahead of us you start you know you think about somebody use ways okay think about the fact that we can get into our car and have real-time traffic that is enabled by a data center driverless cars are probably in our future at some point do you want to have the data center 2 000 miles away for your driverless car or do you want to have it somewhere nearby where you're actually being driven around by the car those are latency issues those are technical issues that that our industry figures out for customers but you have to meet people where they are you have to talk to them and you have to debug a lot of the lies out there there's a lot of misinformation and look you're not going to convince everybody at the end of the day there is a opposition industry in the united states okay that exists it actually is very well funded and you're not going to convince everybody and so you the only way you're going to convince the right people is to sit across with them build trust have a track record of success and trust and transparency and you will win the day it may not happen overnight may not happen in a week or two but you got to you got to stay at it you got to keep going [01:34:29] Speaker 1: yeah so rebecca just to double click on on sort of best practices and what works obviously there's working with local policy makers right and constituents but you know there's a role for partnerships you know workforce educational institutions utilities um you know what is the role of that in terms of making this work in in different communities yeah i think a couple of things one [01:34:53] Speaker 7: to to double down on what we've both said is understanding where a community is at and most communities across the country have comprehensive plans and i never go into a community until i've read that comprehensive plan because that is the vision they have set for themselves and the road map on how they want to get to that vision so when i show up in a community and say i've read your comprehensive plan and you know your chamber of commerce webpage and your community webpage when i show up with that they're like really that's step one right i care enough to do my homework before i show up before you and when again right now in the u.s the things that that come up in many many places is around workforce development education investments and small enterprise so the reason for that in my mind in my you know super expert opinion on this is when people are worried about their livelihoods they want to know that they're going to if they lose their job they can retrench to something else and who's going to help me do that we have infrastructure workforce development boards and things like that so are those successful and well-funded and well-resourced if they're not you can see in the comprehensive plan that they're working better towards that education investments i have done this work all over the world and never ever have i been anywhere from papa new guinea to mongolia to surinam to nevada where education investments are not a winner for everyone when you invest in the youth everybody is happy so education investments are really important now they have to be strategic like is it in stem and sort of the that capability building for tomorrow yes and then the last one is that small enterprise development as americans we are very emotionally tied to if you have a dream and some grit you can start a business and make it work and so how are we enabling that because again if i lose my livelihood can i start a business and put food on the table and raise my family and so those are the kinds of investments those are things that i know are my go-to but i always ground truth it by the doing that homework early and then showing up and listening yeah no that's an excellent point and [01:36:51] Speaker 1: it really draws a connection right because this event is about how we need this build out in order to be economically competitive internationally competitive but that helps to actually make the connection if it allows someone to establish a business or advance their career right can i jump in [01:37:07] Speaker 9: and make a point on energy because i think this actually resonates with what you're saying you know so much of what we're seeing out of the industry right now they're i mean they're acting out of self-interest right like we need to get power we want to get data centers online if you're the first to build a large new compute facility there's a lot of advantage in that right but what's happening is companies are like restarting nuclear plants we're pulling new technology that was kind of like imagined like enhanced geothermal onto the grid using these data centers as as principal loads and like we'll see some of that's going to work some of it will fail that's okay but if you think about the five to eight to ten year horizon what you're going to have is large computing facilities bringing new infrastructure into communities that then gets there's like lots of spillovers associated with that suddenly it's like hey we've got a lot of electricity near this computing load maybe we should think about building that aluminum smelter maybe we would like to uh like lower retail rates for our houses around here right there's like there's a lot of things i think become available when you're building at this scale and and with the creativity that is being like forced out of out of the speed to power [01:38:19] Speaker 8: challenge yeah i just want to add to both of their comments with respect to jobs okay i think the leaders of the tech industry did a very bad thing when they came out and told everybody they were going to lose their job when they introduced these tools okay they've all kind of backtracked acknowledged that perhaps that was a little much at the beginning it's probably not how you you know introduce your new tool that conversation is a real one okay but it's also a conversation that happens in places like dc and it's about white collar jobs the blue collar jobs that are being created at construction sites all across this country because of this is a very real thing and if you want to see it drive out to ashburn just drive around because there's thousands of people coming from all over the region that wear hard hats every day so we talk about job displacement i'm not diminishing it it's a real thing but this country has also tried to spend the last 30 years figuring out how do we create more blue collar jobs well guess what we need 250 000 electricians right now and those jobs pay 150 200 000 a year we need welders steel workers previous speaker talked about concrete when you build a data center you need a lot of concrete well what happens when there's 750 billion dollars of capex into data centers concrete factories start popping up generators chillers caterpillar i mean look at the valuations of all these companies they've doubled why because the demand is happening there's job creation there that's occurring that has got lost in the conversation talk about the grid and clean energy if you look at the last 25 years of clean energy in the united states and you've certainly been a leader and expert on this it has generally been government driven okay it's tax credits it's mandates at the state level solar wind a great new deal ira whatever you know pick your ccus the big the greatest thing that has ever happened to clean energy is the data center build-up why because there's a demand for power a battery didn't make sense five years ago now all of a sudden the the battery factories that we're going to build them for evs six seven years ago are retooling their manufacturing to meet data center battery demand that is a great thing for clean energy so that i would argue is the difference between you know a government tax incentive funded push into new forms of energy and the biggest companies in the world using their private capital to drive demand for these electrons whether they're natural gas solar wind it's a great thing for clean energy because there's demand for electricity for the first time in the quarter century it's not just a great thing for clean energy [01:41:17] Speaker 9: it's a great thing for economic productivity yes right it's like you know we we are advantaged in the u.s in that our energy prices tend to be pretty low but we haven't built enough of it that we can capitalize that for re-industrialization for supporting the defense industrial base like whatever you want to build now we are in a position where we've got just oodles of capital flowing into the system willing to help build this stuff and suddenly i mean at every particular level community issues do need to be addressed but even at the federal level people are like somehow scared of this and you go no no no no no no wait this is actually like the biggest opportunity we've had in a century it's amazing [01:41:54] Speaker 6: if i could dive in and connect some of these points one of the things that makes this challenge so hard is that i deeply believe there's an overlap of interest there are solutions here that will work but they're not easy and the reason why is let's be honest not everyone's interest is fully aligned right or they have different primary interests so the businesses here this is a huge commercial opportunity time is money data centers are a gating factor all the cloud companies have publicly said our revenues would have been higher but we were short in capacity for the national government it's about economic competitiveness it's about national security it's about competing with china and others for local government it's about tax revenue it's about traffic uh it's about jobs it's about congestion and for the local communities right the benefits are disproportionately global national and regional but the costs are local right they feel it every day and so i i love the way the panelists have all kind of um highlighted these and i also i think it's really important about transparency about earning trust about showing up and about uh once you've earned it doing it because i think there's a window of alignment to get this to work but this is not going to be an easy problem there's no silver bullet and it's going to take a lot of effort to get those circles of interest to overlap yeah i just want [01:43:27] Speaker 8: to add there are some costs but there's massive benefits that are also born locally let's not forget that right absolutely the cost make headlines yeah the benefits are long term and permanent yeah [01:43:38] Speaker 1: and i i think we've done a great job of of laying out the benefits i think the challenge is on making the case and and and really um meeting the public where they are um in terms of explaining and and and persuading them of those benefits so um so that's on the side of sort of what industry can do um but rebecca earlier you know mentioned regulation right and it's a situation where on one end of the spectrum we could end up with no additional regulation i think rebecca has said essentially that's not going to happen this is coming on the other end of the spectrum we've seen very in some sense serious proposals to have moratorium or prohibitions on data centers which i think we would all agree would be um it'd be an understatement to say it'd be detrimental to our economic competitiveness and national security so i think between those two things what is the role of regulation now that we now that we and i opened this up to uh all the panelists now that we see that it's coming how can we shape it in a way that's actually constructive [01:44:42] Speaker 8: uh first of all regulation is always going to play a role okay we're a big industry we have assets all around the world we are already regulated um sound regulation is something that everybody wants nobody's against regulation in fact if you look at particularly loudon county you know buddy talked about this for 20 years they had buy right and then you know after things got really built up they changed the way that they govern the approval of data centers it now requires a board of supervisors vote there's nothing wrong with that you got to go before the board you have to get approval you didn't have to do that for 20 years the industry will adapt will adapt i think you're going to start to see that modeled across the country now to go a little bit further upstream from the data center the utility industry is probably the most regulated industry in the country and they are governed by state corporation commissions all across the country so the idea that they're not regulated i mean that they are the most regulated entity perhaps in the country you're starting to see uh corporation commission state legislatures create new rate classes for data centers to ensure that we pay for the infrastructure that we're going to use nobody's against that nobody's been against the repair protection plan the big tech companies signed it the co-location data center companies support it there was a bill yesterday in in the in the house that was marked up so i think we're all going through this journey together both the private sector and the public sector these are new issues there's a learning curve that's happening for everybody it's happening very fast i would say these are growth pains right these are these are this is what happens when you have a massive industrial build-up and look i have a ton of confidence in our system like we're at our 250th year this country didn't survive this long without a great system of government that can deal with these types of issues i have confidence in local government officials i have confidence in state government officials that are honest brokers and want to see investment happen and that's just you know get a seat at the table have these conversations it's an [01:47:01] Speaker 9: opportunity i was going to say this this republic survived on repeated economic miracles and it was able to cease seize the opportunity to capture um let me you know there's a i can speak on the climate side of things right there's a lot of consternation that data centers and the the necessary power is going to somehow disrupt our progress on climate change and that's one of the motivating factors for you you see calls to to uh create moratoria on data centers you know that's that's that's a very challenging thing to do it's a i think it's an irresponsible call but what's but what's under what's on when it lies it well we're concerned that this is going to somehow challenge that progress so the right role of regulation is to regulate the electricity system right we we've had we have regulations in the united states governing greenhouse gas emissions still on the books they're being loosened heavily by the trump administration but like the the approach when you're worried about the effect on climate change is to set clear rules for that likewise for noise likewise for um water use right they they the you know taking throwing the baby out with the bath water is the wrong approach and if policy makers want to like create certainty for this industry then let's stack up the four or five biggest issues that people are concerned about and let's treat those with regulation and not take it [01:48:19] Speaker 8: out on this particular infrastructure class yeah i will say just on the moratorium question a national moratorium i mean i don't think that's gonna happen but i don't the idea that we're just gonna stop this now some moratoriums at the state local level have been temporary i i just wonder you know do you wake up in 10 years and there's a temporary moratorium that lasted 10 years and states miss out on the investment those are decisions that will get made at the state and local level and you know there's an opportunity that they're gonna miss out on by just saying no versus having conversations and engaging [01:48:56] Speaker 1: and learning more yeah so we've touched on some of the issues with regulation like energy but rebecca i'd be interested in your views what are what are some ways in which some of these bills could actually be productive or helpful or provide assurance to local communities and besides a moratorium what are you most worried about in terms of what you're seeing that could be detrimental [01:49:18] Speaker 7: uh let me start with the first part and then i'll get to the second part what keeps me up at night um i think it's not so much what i wouldn't list out but i think what's important is that policy makers are are also listening right they listen to their constituents they listen to special interest groups across the board they listen to industry you know a good bill is when everybody walks away a little unhappy right it's about compromise and finding the best possible scenario but everybody's got to give a little and they can't get to that unless they do that listening and like understanding and because this is all relatively new yes data centers have been around for a long time but this size scale volume pace that is new and so again there's that fear and then in some communities in particular they shut down at the state level we're seeing reactive legislation draft legislation so what we're doing we have a core we have a state level government affairs team that is very active in the state houses across the country talking about that responsible what is a responsible data center development industry look like and we're at that table and listening and sharing what our experience is and what we think the best path forward is that still enables the industry at the local level the ordinator that when local levels and municipalities are either updating their ordinances or developing new on specific either to specifically address data centers or have specific data center ordinances back to what was said earlier a lot of these communities are like you know volunteer mayors and councils they got one person who does yeah they're mowing the lawn in the morning and then taking calls about a data center in the afternoon and this is a lot to ask of them and so you know if maureen was still in the room i would say please make sure that these folks get the support they need to make decisions not from fear not from anxiety not from pressure but from an informed place get them the resources and the support they need so when they're we it doesn't do us as industry any good when the person sitting across from us is afraid because they feel like we have more power more money more influence we want them to be equal partners and they need to be prepared for that so when when a moratorium comes across the the community does it make me happy no but when the when that council or that mayor or that economic development person calls me and says we put that in place so we can get our house together we are not closed for business but we want to do it right we want to do right by our community we want to do right by the business like can you help us figure this out and we will absolutely sit down at the table and help with them help them with that so i think that's important the part that that really keeps me up at night is the and i want to be careful with my words i am incredibly sensitive to the opposition and the fear and the anxiety for data centers but when it is built on miss and disinformation and and a swirling and a spinning up instead of this is what i'm worried about can you address it can you build trust with me so that i can believe what you're saying that isn't on the table in some places the opposition are just out there to be against it and and so that misinformation that disinformation that lack of dialogue and the lack of civility i have been in rooms in the last month where people are are so disrespectful and you know threatening violence keyboard warriors threatening violence in on facebook's and you know these volunteer mayors that are trying to do the right thing by their community and and their businesses are being attacked their families are being attacked verbally like this is not the way we do things so that's the part that bothers me the most is when we can't have that dialogue [01:52:50] Speaker 1: and try to work together yeah that's a really good point so i think we've done a an excellent job in discussing some of the regulation particularly in the u.s but bill you've done some work internationally on the importance of data center build out both in the united states and elsewhere and how that can build sort of the economies of scale that we need in order to compete with the prc i'm wondering about your perspective on we need local regulation we need we need this to work in individual communities but both in the united states and elsewhere but it shouldn't be done in a way that prevents you know having interoperability having companies be able to build data centers that have those economies of scale so what are your thoughts about how to navigate that and make it work so that you don't have tech companies that are having to build more expensive data centers in different parts of the world because of how they're regulated [01:53:42] Speaker 6: yeah it's it's a great point um these conversations are happening locally at the state level nationally everywhere all over the world right and one of the things i've heard as i've traveled traveled all over the world one of the common denominators is everyone wants voice right you don't have to be a data scientist to get that these technologies are going to impact all of our lives and at a minimum people want a voice in how they get implemented that doesn't mean they get everything that they want right but they want voice uh so the conversations are playing out globally and that they become harder because this national security competition the economic competition adds yet another goal that we're all trying to kind of maximize and how do you meet you know all these needs how do you meet the energy needs the commercial needs uh the practical real estate need the labor needs um so uh this is going to be a big thing that we we fight out i think you're going to see trade battles so for example the eu has just introduced something called the cloud and data act um and in practical effective terms it would effectively limit u.s headquartered cloud companies from providing uh ai and cloud services for sensitive workloads and of course sensitive has to be defined but we really risk fragmenting the market we risk splintering the cloud and aim i market and if that happens i think it's a lose-lose situation uh you drive up costs you reduce resiliency uh you limit the ability to uh learn globally from cyber security uh in practical terms right you can't load balance you can't shift workloads around the world and take advantage of where energy is cheap for example so i think the global dimension is going to play out just what the panelists have been saying and it adds just another dimension and i think the tip of the spear will be around uh trade and around cyber security yeah no those are really good points i mean i i think [01:56:00] Speaker 1: that this is pointed out and we've come up with some really great solutions and best practices but this is such in terms of meeting that dual mandate of building out data centers while satisfying all the local concerns both in the u.s as well as elsewhere places like the eu this is such a multi-dimensional problem right um and so i'm going to close and i'm going to thank thank our panelists in the audience but um i would really encourage everyone to think about what is the role in dc both an additional role for the federal government for think tanks obviously these are things that need to be solved locally um but essentially you know in addition to putting out our research to sort of capture some of these insights what is the constructive role that we can all play in solving this problem because we have a bunch of really great ideas today but we also have some real challenges we're going to have to deal with um so i'd really thank our panelists as well as the audience and um hope you all have a wonderful day so thank you thank you