[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
EMPOWERING RURAL AMERICA THROUGH
INVESTMENT IN INNOVATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON RURAL
DEVELOPMENT, ENERGY, AND SUPPLY
CHAINS
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
JANUARY 21, 2026
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 119-028
Available via the GPO Website: www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
62-603 WASHINGTON : 2026
-----------------------------------------------------------------------------------
HOUSE COMMITTEE ON SMALL BUSINESS
ROGER WILLIAMS, Texas, Chairman
PETE STAUBER, Minnesota
DAN MEUSER, Pennsylvania
BETH VAN DUYNE, Texas
JAKE ELLZEY, Texas
MARK ALFORD, Missouri
NICK LALOTA, New York
BRAD FINSTAD, Minnesota
TONY WIED, Wisconsin
ROB BRESNAHAN, Pennsylvania
BRIAN JACK, Georgia
TROY DOWNING, Montana
KIMBERLYN KING-HINDS, Northern Marina Islands
DEREK SCHMIDT, Kansas
JIMMY PATRONIS, Florida
NYDIA VELAZQUEZ, New York, Ranking Member
MORGAN MCGARVEY, Kentucky
HILLARY SCHOLTEN, Michigan
LAMONICA MCIVER, New Jersey
GIL CISNEROS, California
KELLY MORRISON, Minnesota
GEORGE LATIMER, New York
DEREK TRAN, California
LATEEFAH SIMON, California
JOHNNY OLSZEWSKI, Maryland
HERB CONAWAY, New Jersey
MAGGIE GOODLANDER, New Hampshire
Lauren Holmes, Majority Staff Director
Melissa Jung, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Jake Ellzey................................................. 1
Hon. Kelly Morrison.............................................. 2
WITNESSES
Mr. Chris Crosby, Chief Executive Officer, Compass Datacenters,
Dallas, TX..................................................... 6
Mr. Kirk Offel, Founder and Chief Executive Officer, Overwatch
Mission Critical, Austin, TX................................... 8
Dr. Nicol Turner Lee, Senior Fellow, Governance Studies and
Director, Center for Technology Innovation, Brookings
Institution, Washington, DC.................................... 10
APPENDIX
Prepared Statements:
Mr. Chris Crosby, Chief Executive Officer, Compass
Datacenters, Dallas, TX.................................... 31
Mr. Kirk Offel, Founder and Chief Executive Officer,
Overwatch Mission Critical, Austin, TX..................... 36
Dr. Nicol Turner Lee, Senior Fellow, Governance Studies and
Director, Center for Technology Innovation, Brookings
Institution, Washington, DC................................ 41
Questions and Answers for the Record:
Questions from Hon. Morrison to Dr. Nicol Turner Lee with
attachments................................................ 61
Additional Material for the Record:
Fiber Broadband Association (FBA) Letter..................... 124
Lazard LCOE (Levelized Cost of Energy) Letter................ 127
NextEra Energy Letter........................................ 175
Loudoun County Letter........................................ 206
Food & Water Watch Letter.................................... 210
Mike Turner Letter #1........................................ 217
Mike Turner Letter #2........................................ 258
American Sustainable Business Network (ASBN) Letter.......... 259
EMPOWERING RURAL AMERICA THROUGH INVESTMENT IN INNOVATION
----------
WEDNESDAY, JANUARY 21, 2026
House of Representatives,
Committee on Small Business,
Subcommittee on Rural Development,
Energy, and Supply Chains,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:03 a.m., in
Room 2360, Rayburn House Office Building, Hon. Jake Ellzey
[chairman of the Subcommittee] presiding.
Present: Representatives Ellzey, Finstad, Wied, Schmidt,
Williams, Morrison, Scholten, Olszewski, and Goodlander.
Chairman ELLZEY. Good morning. Welcome to the Committee on
Small Business, Subcommittee on Rural Development, Energy, and
Supply Chains.
I would like to recognize Chairman Roger Williams for the
prayer and the pledge.
Mr. WILLIAMS. Please stand.
I pledge allegiance to the Flag of the United States of
America and to the Republic for which it stands, one nation,
under God, indivisible, with liberty and justice for all.
Would you please bow your head?
Heavenly Father, God of all people, thank you for allowing
us to be here today to share wonderful ideas for the future of
this great country and the people that care about it so much.
We also care about you, and that is why we strive every day
to walk in your light and not in your shadow--in our shadow.
In your name we pray. Amen.
Chairman ELLZEY. Good morning. I will now call the
Subcommittee on Rural Development, Energy, and Supply Chains to
order.
Without objection, the Chair is authorized to declare a
recess of the Committee at any time.
I now recognize myself for my opening statement.
So welcome to today's hearing, ``Empowering Rural America
Through Investment in Innovation.''
I want to say thanks to our witnesses for showing up today,
traveling here at their own expense to spend some time with us,
and your expertise.
So, as the demand for AI accelerates, America's digital
infrastructure is rapidly expanding into rural communities.
This infrastructure consists of data centers being built far
beyond traditional tech hubs, with many investments being made
in rural areas, including in my district, in Ellis County. Our
rural communities and small businesses are at the center of
America's AI-driven growth.
Texas is leading the charge in data-center development
because of our pro-growth, pro-energy, and low-regulatory
environment that has minimized the hindrance of red tape. We
have placed a strong focus on developing the workforce for
high-paying, new-collar jobs, and data companies have
recognized those benefits.
The economic ripple effect from data centers can
reinvigorate rural communities like mine by creating high-
paying trade careers and supporting long-term economic activity
in rural small businesses. For every direct job created at a
data center, up to seven jobs are supported in the surrounding
community.
Small businesses are supplying, maintaining, and supporting
these facilities. From construction to infrastructure upgrades,
data centers open doors for main street entrepreneurs and trade
workers to be a part of the next generation of technical
advances.
Meeting the workforce needs of data centers across the
country will take a whole-of-community approach to attract and
train the skilled workers needed to succeed. Many of our
military veterans who return to civilian life already possess
the skills required for this industry.
As a vet myself, I was proud to co-lead the bill that made
the Boots to Business training program permanent, alongside
Chairman Williams and Representatives McGarvey and Schneider.
Through this effort, our returning service members can be
trained to fully utilize their military skills in
entrepreneurship opportunities, including those offered by the
data-center industry. This bill was passed in the fiscal year
2025 NDAA and will continue to be a vital tool in meeting our
workforce needs.
Building out this workforce is a crucial step in securing
America's energy dominance and supporting our national
security. At the same time, industry leaders, local partners,
and educational institutions are already stepping up with
investments in advanced energy solutions that not only
strengthen local infrastructure but keep us competitive with
the AI race with China.
I look forward to hearing from today's witnesses about how
data centers can support local communities, strengthen the
small-business ecosystem, and help build a new middle class in
rural areas across the country.
And, with that, I now recognize the Ranking Member,
Representative Morrison, for her opening remarks.
Ms. MORRISON. Thank you, Mr. Chairman.
And thank you to the witnesses for being here.
Emerging technologies like AI and blockchains are
redefining how people around the world live and work. These
technologies are run on computers, but most computers don't
have the processing power or compute needed to run them quickly
enough for mainstream use. For advanced AI models to be
developed or operated at a suitable speed, they must be hosted
by a massive group of computers that collectively pool their
compute, found only in data centers.
The growth of AI, both in use and in development, has
spurred an explosion in data-center construction, which has
caused a huge rise in demand for the electricity they need to
function as well as for water used by some data centers' liquid
cooling systems.
New data centers can bring benefits, like tax revenue and
investment, to rural areas that sorely need them. But, as we
point out in most hearings, it is important to think about the
whole picture--the benefits, the costs, who receives those
benefits, and who bears those costs.
The recent data-center boom presents numerous challenges.
First, data centers are causing residential customers'
electric bills to rise by increasing electricity demand and
straining the electric grid.
Second, data centers draw on supplies of clean, drinkable
freshwater, stressing local water systems, sometimes in areas
with already-limited water availability and infrastructure.
Third, computer-part-makers, responding to AI developers'
vast capital, are shifting production from consumer parts to AI
products, making computers and smartphones more expensive.
And last but not least, new data centers are directly and
indirectly increasing pollution and carbon emissions, posing
significant environmental health risks.
With all that said, these outcomes aren't foregone
conclusions. It is possible to build more data centers in a way
that doesn't hamper innovation but also benefits the
communities that surround them. We should be thoughtful and
purposeful about the way we are building data centers.
During the previous administration, Democratic
congressional majorities enacted landmark laws to lower costs
for consumers and small businesses. The Inflation Reduction Act
created tax incentives to make energy cheaper and cleaner. The
Bipartisan Infrastructure Law invested hundreds of billions of
dollars in our clean water and broadband internet. And the
CHIPS Act funds and incentivizes domestic computer
manufacturing, stabilizing and lowering computer prices.
H.R. 1 slashed those IRA tax credits, and the Trump
administration is doing everything in its power to halt the
permitting of clean-energy products--the cheapest and fastest
forms of energy to build. He has also diverted billions in
broadband funding to Elon Musk's company Starlink for
unreliable satellite connections in rural areas. And he
proposed cutting rural water and wastewater grants by $154
million this year and repealing the CHIPS Act.
All together, President Trump is enabling data centers to
make America's affordability crisis far worse.
Still, we can salvage the situation. We can follow through
on the farsighted investments made by the previous
administration and put in place commonsense guardrails that
shield American consumers and small businesses from the
excesses of the data-center boom.
I hope to have a clear-eyed and productive discussion about
how communities, especially rural ones, can maximize the
benefits and minimize the costs of the data-center projects
popping up across the nation. Affordability for Americans
depends on it.
With that, Mr. Chairman, I request unanimous consent to
insert into the record the written statement of the Loudoun
County Virginia Board of Supervisors Vice Chair, Mike Turner.
And I thank the witnesses for being here.
And I yield back.
Chairman ELLZEY. Without objection.
And I will now introduce our witnesses--hmm? Is she here?
I am going to pay for this later at the baseball field.
Thank you. I now recognize the Chairman of the full
Committee, Chairman Williams, for an opening statement.
Mr. WILLIAMS. That is a good recovery, Chairman. Thank you.
Chairman ELLZEY. Thank you, sir.
Mr. WILLIAMS. Thank you, Chairman Ellzey, for holding this
very timely hearing.
And thank you to all the witnesses for being here today and
joining us with this discussion on the impact of the data-
center industry on rural communities and small businesses.
The data-center industry is growing rapidly, and Texas is
right in the center of the action. We are witnessing the
economic and industrial revival, with these businesses driving
high demand for tradeskill workers, and technical and trades
jobs will be the backbone of the renewed American middle class.
As Chairman Ellzey has explained, veterans come ready with
many high-demand skills that the data-center industry needs. By
making the SBA's Boots to Business program permanent last
Congress, Chairman Ellzey, myself, and other colleagues on both
sides of the aisle are arming our veterans with the
entrepreneurial skills and knowledge necessary to step into
critical roles and leadership, not only in the data-center
industry but across any industry.
One of my highest priorities is to encourage more young
people to pursue a career in technical education, also known as
CTE. And in pursuit of that goal, I have introduced two
bipartisan bills in Congress--H.R. 1641, the Student Debt
Alternative and CTE Awareness Act; and H.R. 1642, the
Connecting Small Businesses with Career and Technical Education
Graduates Act of 2025. These bills promote CTE programs and
help graduates of these programs to find jobs with small
businesses.
Now, career and technical education is critical to meeting
the growing demand for tradeskills professionals and building
the future of the American workforce. Ambitious and
entrepreneurial electricians, HVAC technicians, and plumbers
are finding an industry overflowing with opportunity in rural
America. Data centers cannot operate without small businesses
to build and maintain them.
And, of course, every opportunity comes with certain
challenges. We look forward to discussing them with our
witnesses today, as we continue exploring the impact of data
centers across our communities.
I want to thank again our witnesses again for joining us
today and for your investment in the rural communities of
Texas.
With that, I yield back.
Chairman ELLZEY. Thank you, Mr. Chairman. Please, no wind
sprints come March.
And I would like to add before we delve into our witnesses
that, as we talk about our veterans--thanks for the kind words,
Mr. Chairman--that our veterans have the discipline to be
trained to do anything, and they have the drive to do
everything. So they are going to be an essential part of this.
Our first witness today is Mr. Chris Crosby, the chief
executive officer of Compass Datacenters in Dallas, Texas.
Mr. Crosby founded the company in 2011 after years of
working at the intersection of technology and real estate
development, focusing on delivering scalable, customizable, and
sustainable data-center infrastructure.
Since founding Compass, Mr. Crosby has led the company's
growth, from completing its first 1.2-megawatt data center in
2012 to developing campus-scale facilities serving hyperscale
customers worldwide.
Under his leadership, Compass has earned recognition as one
of the fastest-growing companies in the country and has become
a leader in sustainability and long-term infrastructure
development within the data-center industry.
Mr. Crosby holds a Bachelor of Science in computer science
from UTA--UT Austin, for those not in the Sixth District.
Thank you for joining us.
Our next witness is Mr. Kirk Offel. Mr. Offel is founder
and chief executive officer of Overwatch Mission Critical, a
strategic data-center consulting firm based in Austin, Texas.
Mr. Offel has had two decades of industry experience,
having worked in executive roles with Fortune 1,000 companies
and major data-center providers worldwide. His career includes
work with Medtronic, Eaton Corporation, Hewlett-Packard's
Technology Services Consulting practice, and others.
In addition to his executive pursuits, Mr. Offel is the
founder of the Data Center Austin Conference and the host of
the ``Data Center Revolution Podcast.''
He is a U.S. Navy veteran, having served aboard a nuclear
fast-attack submarine, and was recognized as a Member of the
class of 2010 ``Military Top 40 Under 40.''
And, if I might add, if you are on a fast-attack submarine,
you have gone to Nuclear Power School and you are smarter than
everybody else in the room.
And, clearly, because of that hair, you are a submariner,
not a pilot.
I am looking forward to hearing your testimony.
I now recognize Ranking Member Morrison to briefly
introduce our last witness.
Ms. MORRISON. Thank you, Mr. Chairman.
Dr. Nicol Turner Lee is a senior fellow in governance
studies at the Brookings Institution and the director of its
Center for Technology Innovation.
She is an accomplished tech-policy expert, focusing on
equitable access to and impacts of technology, with three
decades of experience in research and advocacy. Her recent work
includes a 2024 book titled ``Digitally Invisible: How the
Internet is Creating the New Underclass'' and a chapter in
``The Oxford Handbook of AI Governance.''
Before her time at Brookings, Dr. Turner Lee was the chief
research and policy officer at the Multicultural Media,
Telecom, and Internet Council and the director of the Media and
Technology Institute at the Joint Center for Political and
Economic Studies.
She has also served on federal advisory commissions, such
as the Commodity Futures Trading Commission's Technology
Advisory Committee, the Department of Homeland Security's AI
Safety Board, and the Federal Communications Commission's
Communications Equity and Diversity Council.
Dr. Turner Lee holds a B.A. from Colgate University and an
M.A. and Ph.D. from Northwestern University.
She might compete on the smart front here.
Welcome, Dr. Turner Lee.
Chairman ELLZEY. Thank you all for being here.
Before recognizing the witnesses, I want to remind you that
you have 5 minutes. If you go over 5 minutes, I start tapping,
and then I start screaming after that.
I now recognize Mr. Crosby for his 5-minute opening
remarks.
STATEMENTS OF CHRIS CROSBY, CHIEF EXECUTIVE OFFICER, COMPASS
DATACENTERS; KIRK OFFEL, FOUNDER AND CHIEF EXECUTIVE OFFICER,
OVERWATCH MISSION CRITICAL; AND NICOL TURNER LEE, PH.D., SENIOR
FELLOW IN GOVERNANCE STUDIES AND DIRECTOR OF THE CENTER FOR
TECHNOLOGY INNOVATION, BROOKINGS INSTITUTION
STATEMENT OF CHRIS CROSBY
Mr. CROSBY. Thank you, Chairman Ellzey. Thank you, Ranking
Member Morrison and Chairman Williams and distinguished Members
of the Subcommittee. Thank you for inviting me today to testify
on how investments in digital infrastructure is revitalizing
rural America.
My name is Chris Crosby, and I am the founder and CEO of
Compass Datacenters. After 25 years of working at the
intersection of technology and real estate development, I
founded Compass in 2011. We design, build, and operate the
customizable, scalable, and sustainable foundations of the
global hyperscale market.
It is vital to distinguish our work from crypto farms or
transient AI factories. We build hyperscale campuses, enduring
civic infrastructure that supports the banking, cloud-
computing, AI, and social connectivity services Americans use
every day.
We are in the middle of the most significant economic
transformation since electrification. Data centers are the
21st-century equivalent of the railroads coming. They are now
moving beyond traditional tech corridors into rural
communities. They are bringing substantial capital, jobs, and
infrastructure investment.
There is an outdated myth that data centers only provide
temporary construction jobs. In reality, our campuses are 100-
year assets. They are part of the communities that they sit in,
and they are in a state of constant evolution.
In Red Oak, Texas, the Chairman's district, our investment
has triggered a significant butterfly effect. We provide stable
work for roughly 1,500 construction workers during the decade-
long build-out and anticipate over 400 permanent, high-paying
jobs--operations, maintenance careers, technology careers--on
the campus.
We anchored a new industrial hub by partnering with
Schneider Electric to build a 105,000-square-foot manufacturing
facility on our campus, in the middle of our campus, creating
an additional 350 jobs on the campus.
Before our 2021 investment in Red Oak, new sales tax
business permits in the municipality grew at a meager 12
percent annually, which for north Texas is not doing very good.
Since we began construction, that growth rate has surged to 43
percent, compounding.
Data-center campuses function as sustained economic
engines, creating a butterfly effect of new restaurants,
retail, housing, and other developments within the communities.
And if you have driven through Red Oak, Texas, you see the
bridges and the construction, the new schools, and everything
else that is coming along with it.
On energy, large data centers serve as anchor tenants for
the grid. Our national grid averages just about 50-percent
utilization throughout the year, so by utilizing this underused
capacity, we help take those fixed costs across more
electricity sales and actually do put pressure down on the
rates for families and not small--and small businesses to pay
less.
Let me be very clear on this point: Data centers pay more
so that families and small businesses can pay less. There are
scenarios where we are regulated to not be able to do that, but
that is not for want.
At Compass, we go even further with our ``co-serve'' model.
To quote John Knight, the assistant director of economic
development in Red Oak, Texas, ``Compass builds redundancy into
our grid, supports our infrastructure. I love what data centers
are doing to improve our community's qualify of life,'' end
quote.
We fund transmission lines, substations, and interconnects
through up-front contributions in aid of construction, also
known as CIAC payments, strengthening the local grid for
everybody.
However, outdated regulations still limit our ability to
contribute even more.
We need emissions standards that distinguish the cleaner
hydrotreated vegetable oil, or HVO, that we use--we pay more
for than diesel--from traditional diesel so that we can
stabilize the grid during emergencies without penalty. We don't
want black soot going in the air for our communities.
We need the EPA to formally classify mandatory grid
curtailments as emergencies, allowing us to support the grid,
be grid resources during extreme weather events like this
coming week, without risking compliance violations.
And we need regulatory flexibility to allow more proactive
private funding for long-term grid infrastructure--that is,
private funding for grid infrastructure.
Compass is built to last, which is why we invest deeply in
our people and our communities. We partner with Texas State
Technical College to create a scholarship pathway into high-
tech, high-paying roles that don't require 4-year degrees. The
program is now scaling nationally. We are in our second cohort.
We also work with veteran-focused organizations like
Overwatch and Salute to place skilled military talent in data-
center careers close to home.
Environmentally, we preserve local resources by mandating
water-free cooling since 2012 to protect our agricultural water
supplies.
In conclusion, Compass does not seek a free ride. We come
with a multigenerational commitment to prosperity in each of
our communities, ensuring that the AI revolution empowers every
corner of our nation.
I thank the Committee for the opportunity to testify and
for your leadership on this important topic, and I look forward
to answering your questions.
Chairman ELLZEY. Thank you, Chris.
Now I recognize Mr. Offel for his 5-minute opening remarks.
STATEMENT OF KIRK OFFEL
Mr. OFFEL. Good morning, Mr. Chairman. Thank you. Ranking
Member, Members of the Committee, thank you for the opportunity
to testify today.
As an industry, we did not communicate early enough or
often enough about our data-center plans, and that created
avoidable concerns. We didn't clearly explain what we were
building, why it mattered, or how communities would benefit,
and we relied on the trust we hadn't yet earned.
We are fixing it by increasing transparency, tightening our
outreach, and making sure every community and stakeholder
understands the mission, the safeguards, and the benefits. We
know trust is earned, and you will see that reflected in how we
engage moving forward.
My name is Kirk Offel. I am the CEO of Overwatch, and I am
proud to be a Service-Disabled, Veterans-Owned Small Business
(SDVOSB). Before I ever set foot in a data center, I spent five
(5) years in the U.S. Navy, serving aboard the nuclear fast-
attack submarine USS Memphis.
That experience taught me something simple: You don't
accomplish big missions with big slogans; you accomplish them
with small, highly capable teams who know how to execute.
And that is exactly what is happening in the AI boom today.
Let me be blunt: Small businesses are the backbone of this
entire industry. I am saying the AI boom does not happen
without us, period.
Today, more than 75 percent of the whole AI infrastructure
ecosystem is driven by small businesses. We are the ones
building the AI factories. We are the ones pulling fiber,
erecting steel, trenching conduit, fabricating components,
hauling equipment, running logistics, and delivering
professional services that keep projects moving.
As our grid gets pushed harder than ever before, it won't
be a big company flying in from out of State fixing that. It
will be a local electrician, local line crews, local
engineering firms, and local contractors--small businesses that
actually understand the communities that they serve.
We are going to see new small businesses pop up in
manufacturing--equipment rental, transportation, environmental
services, permitting, legal, security, cleaning, maintenance,
you name it. And all the indirect jobs--housing, food, retail,
childcare--all grow because of this work.
And we have seen this before. Every major leap in American
infrastructure has had the same outcome: Small businesses
become the biggest winners. They grew with the railroad era.
They scaled during the electrification of America. They
expanded through the construction of the interstate system. And
they absolutely exploded during the automobile revolution. Each
of those moments didn't just change the country; they created
millions of small businesses that reshaped the American
workforce.
And, today, we are living through what I believe is the
fifth industrial revolution--a revolution powered by data,
intelligence, and people who build and sustain the
infrastructure behind it. AI factories are no different. They
are simply the 21st-century version of those earlier
transformations, and they will become the next great engine of
American small-business growth.
Let me put some numbers behind that. For every $100 billion
we invest in building digital infrastructure, we get $800
million in local tax revenue; 500,000 new jobs; $40 billion in
labor income; and that is a $140 billion boost to the U.S. GDP.
Now I want to address the concerns we all hear: energy,
water, environmental impact, and job creation--all valid
concerns. They deserve our attention, and they are beginning to
get monitored very closely. But the answer is not to hit the
brakes. The answer is the same answer we used when we built the
railroads, electricity, cars, and the roads: We govern it, we
guide it, and we build it more responsibly.
People forget this, but the first cars were horribly
inefficient, wildly polluting, incredibly dangerous, and brutal
on city infrastructure. So, what did we do? We built smarter,
we built safer, we set standards, and we improved efficiency.
Progress doesn't happen because we avoid the challenge; it
happens because we take it head-on. That is the American way.
Today, we have 5,400 data centers in the U.S. That is the
most in the world. Hyperscale capacity has doubled in the last
5 years, and we are staring down the barrel of $5 trillion in
construction over the next 5 years. The industry is on track to
triple by the end of the decade.
And for the first time ever, we have the ability to
retrofit the past, to take older facilities and make them just
as efficient as the new data centers we build today. AI
factories are the most transformational infrastructure America
has ever attempted to build.
Henry Ford enabled the movement of people and goods. AI
factories enable the movement of data, intelligence, and
services. And once again they are going to create millions of
small-business opportunities, just like cars did, just like the
railroads did, just like electricity did.
But here is the part that matters the most, and this is
where my Navy background speaks up: If we don't build this
infrastructure here, if we don't scale it and if we don't
support it with American labor and American small businesses,
those jobs and that technology are going overseas. And they
will go to countries who have worse environmental standards,
less transparency, and strategic interests directly opposing
our own. This is not just an economic issue; this is a national
security issue.
So, to the Committee, I will leave you with a piece of
history. Energy has never been a reason for us to stop; it is a
reason for America to lead. Growth isn't a threat; it is an
opportunity. And small businesses, they are not just part of
the story; we are the story. Empower us, and we will build the
next generation of American infrastructure. Fail to empower
small businesses, and we will fall behind nations that would
love nothing more than to take our place.
Thank you, and I look forward to your questions.
Chairman ELLZEY. Thank you, Kirk.
Now I recognize Dr. Turner Lee for her 5-minute statement.
STATEMENT OF NICOL TURNER LEE, PH.D.
Ms. TURNER LEE. Chairman Ellzey, Ranking Member Morrison,
and distinguished Members of the Subcommittee, thank you for
the invitation to testify today.
AI is changing the way we work, how we learn, get well, and
interact online, as well as emboldening other transformative
cases, like speeding up the development of scientific
discoveries and better evaluating climate impacts.
But not all consumers have full access to AI, especially
those with limited internet access or who lack the digital
skills to utilize it in their lives.
Rural communities, especially small businesses and farms,
have been historically left behind when it comes to
technological innovation and can benefit from what AI offers.
With vast topography, rural areas tend to have the land needed
to support physical data centers. Technology can create avenues
for economic development in rural areas that have experienced
declines in population and farming assets as well as
insufficient access to high-speed broadband.
Data centers have gotten increased visibility as economic
drivers, but this will only be the case if they are built in
ways that are additive to the local community and bring limited
harm to residents and local businesses.
In my testimony, I want to discuss the increasing explosion
of data centers but talk about how they require a national
framework for resources, security, permitting, and community
benefit.
State and local leaders, business owners, employees, and
residents should participate in planning and implementation
together with technology companies, big or small.
Communities must be actively involved at the onset of data-
center development and have transparency to assess the impacts
of electricity, water, noise and light pollution, jobs, land
use, tax revenues--all of which I detail in my written
statement.
With the various types of facilities, including enterprise,
hyperscale, co-location, and edge, technology companies are
investing in larger facilities for greater computing power.
More compute requires more space, equipment, electricity, and
water, resulting in a set of unknown environmental hazards that
we have yet to realize.
Some tech companies are greatly benefiting from the
explicit support of the President right now, whose favorable
stance towards more data centers to compete with China has
expedited permitting and bypassed environmental remediations as
part of the tenets of the AI Action Plan.
However, the current administration has also threatened to
rescind federal funding to States if they stand in the way of
AI deployments. And just in December, the White House issued an
order making States ineligible for BEAD non-deployment funds if
they threaten such.
Threats to States through moratoriums and lawsuits are
counterintuitive to the ultimate goal for having data centers
in the first place, leaving communities without agency in
conversations involving not just data centers but broadband in
their community.
More importantly, we must listen to communities. Data
centers have been the central focus of some gubernatorial and
state legislature campaigns during recent elections in New
Jersey, in Virginia, and other places, where consumers saw
rising electricity rates coincide with unprecedented demand for
new data centers.
A middle ground must be met to balance the needs of
advanced technologies with the demands of residents who just
seek clarity, buy-in, and oversight in these data centers that
are being built in their backyard.
Further, communities should not feel the drain of data
centers on their natural and generated resources. And with the
environmental impact still largely unknown, we need to make
sure that the rollbacks that we made in the Biden-Harris
administration in terms of clean and renewable energy sources
do not have disproportional impacts in the future.
What I will also say about job creation: Though we know
that the rate of jobs is temporary and, in some cases, will not
scale to the size of the data center itself, it is important
for the rural workforce to be involved.
Right now, rural workers are lacking in areas of trade as
well as construction. These challenges offer opportunities for
government agencies, businesses, and local governments to
collaborate on solving those workforce shortages and rooting
training in ways that those people stay in the community and
become the pipeline for rural communities going forward.
Data centers cannot be selective, as well, when it comes to
who works within the facility itself. Small businesses should
have the opportunity to bid on contracts for food services,
security, and maintenance.
And if these jobs are primarily remote, we need to ensure
that broadband is available so that people who live in rural
communities do not have to go to, as I found in my book, local
hotels and 50 miles away to just access their jobs.
There must be some foresight, my friends, about the long-
term impact on surrounding communities, the environment, and
overall resilience.
This is especially important as fears over a potential AI
bubble escalate and feed the possibility of stranded assets in
communities that essentially have given the green light to data
centers along with millions of dollars in tax incentives.
Communities should be asking about the plans for stranded
or deserted buildings, how they can be repurposed and better
integrated into the community, or else we are going to find
ourselves, like China, with a lot of idle buildings.
I envelope my remarks around this idea that data centers
should be responsibly and ethically designed and built, and I
leave this Committee with my closing thoughts:
Ensure early collaboration among all the utilities--energy,
water, and telecom, and even real estate.
Develop community benefit agreements that resolve and make
major public concerns around data centers transparent.
Focus on job creation.
Consider smaller data centers when appropriate. They don't
need to be big.
Create safeguards for communities and allow communities the
opportunity to say no when they want to say no, and they do not
feel that they are involved.
Thank you again to the Members of the Subcommittee, and I
look forward to your questions.
Chairman ELLZEY. Thank you, Doctor.
We will now move to the Member questions under the 5-minute
rule. I will recognize myself for 5 minutes.
Chris, Texas has emerged as a leading State for data-center
development because it has affordable land, it has plenty of
energy, and it has an understandable and relatively easy
regulatory climate.
What else makes Texas attractive to data centers?
Mr. CROSBY. The growable workforce that comes with it. You
know, as we continue to bring new people into the data-center
space, we call it the new-collar workforce.
The ability to attract employment in Texas is fantastic.
And when we launched our vocational school in conjunction with
Texas State Technical College--I went through the first cohort.
You know, immediately the first class is all hired. The second
class is already pre-hired. That is going on right now. We
just--we have a workforce where we have youth, we have new
people coming in.
And in these communities like Red Oak, the commitment and
the partnership with the local community really helps with that
front. You know, that can-do attitude in Texas has been
fantastic.
Chairman ELLZEY. Well, if it is predictable, does that
reduce uncertainty for you long-term for these data centers and
their success?
Mr. CROSBY. That is a great question.
We look at things as--we don't exit. There is a big
difference if you build to exit versus build to last. You make
a lot better decisions, just like if you are going to remodel
your home and you build it to flip it--or, you remodel to flip
it versus you remodel to stay in that home. And that is where a
lot of great sustainability decisions get made.
And we view ourselves as 100-year campuses. These
facilities will have multiple refreshes over that timeframe,
both from an IT/technology as well as from a mechanical and
electrical plan, and they are going to be long-term parts of
those communities. They are living, breathing, active machines
in those communities.
So it is that--when you have certainty and you know that
you can have that, you can make the multibillion-dollar type of
investments that we make and look at it in the 40-plus-year
horizons that we look at it from an investment perspective.
Chairman ELLZEY. And you mentioned John Knight. So you
built this data center with the encouragement and the
cooperation and the oversight of the local government, correct?
Mr. CROSBY. That is correct.
Chairman ELLZEY. So they are fully on board with everything
you are doing. This didn't need to come from Congress; this
didn't need to come from Austin. They did it themselves, and
they know you are going to be an integral part of the community
already, right?
Mr. CROSBY. That is a huge part of our selection criteria.
We want to go to the places where people are.
I can't speak for all developers. There is Class A
development, and there is not. But when you are doing the right
thing, you want to put long-term--you don't want to have people
picketing a site that you are planning to try to get somebody
to stay in for 30 years. Who wants to go work in a community
like that? We go to the places where they welcome the
investment, they welcome the transformation of their
communities.
And, like I said, I think it is akin to having--you know,
the railroad was probably pretty loud back in the 1800s, and,
you know, the communities that passed on that, it didn't work
out so well for them. Those that passed on the Federal Highway
System, those that passed on the international airports in the
1970s, you know, it did not work out long-term for those
communities.
And data centers are that now. We are--AI is like
electricity. We don't know all the applications that it is
going to be used for. It is a foundational tool, and it is
going to continue to create opportunities.
Chairman ELLZEY. Speaking of opportunities, Kirk, tell me
about how veterans meet the threshold for what you are looking
for in these data centers.
Mr. OFFEL. I appreciate the question, Mr. Chairman.
You know, we talk about data centers because it is measured
in mission-critical. Mission-critical means that you could
quantify the downtime in dollars or death behind one (1) second
of lost infrastructure. I would argue that everyone that has
put on the uniform and took the oath has once entered into a
mission-critical environment that isn't measured in downtime,
but it is measured in their own mortality.
The State of Texas and what Chris was saying and why it is
such a robust State--the sky for the cloud is northern
Virginia, but the home for AI will be Texas. It has more than
200 high-educational [https://ballotpedia.org/Higher--
education--in--Texas--1993-2016] platforms, 15 military bases,
and 4 of the most populous cities in the United States, not to
mention it has more natural resources than any other State in
the Union, including Alaska and Montana.
So, we have the best access to the biggest workforce. There
is a massive amount of veterans coming out of the military that
have been exposed to the most advanced weapons, machines, and
technology ever built, and the military is best known for being
one of the largest leadership incubators ever built.
So, we are not only--this industry does not--it is not
lacking genius or intelligence. It does lack leadership. It
lacks courage. And veterans are trained and conditioned and
pressure-tested in all three.
So, I think that veterans have the highest likelihood--I
have three kids that are in college right now, and I tell them
that that college degree is about as useful as a taxi medallion
in a few years. Because you could spend four (4) years in the
military and find yourself with a higher demand of opportunity
that has the highest overall total earning potential versus
something that you could find today going to college.
Chairman ELLZEY. Nailed it. Nailed it.
Mr. OFFEL. Thank you.
Chairman ELLZEY. Okay.
I now recognize Dr. Morrison for 5 minutes of questions.
Ms. MORRISON. Thank you, Mr. Chairman.
Dr. Turner Lee, are data centers being constructed to meet
current demand or anticipated demand? And if the tech bubble
does pop, will these data centers still be necessary?
Ms. TURNER LEE. Thank you for that question, Ranking
Member.
I do think that data centers are necessary. I mean, the
current compute demand of AI is out of the box, right, in terms
of everything that we are doing in everyday as well as what we
are trying to do with future scientific discovery.
I also think that it is still unclear whether we are going
to be able to grow these functions in the future into the
current data-center assets that we are building in the present.
I think we need to have the type of assessments that are
done to sort of have some predictability in the marketplace of
how we are going to foresee that growth. But I also think that,
you know, there are other types of data centers that can be
built to accommodate what we are talking about with AI.
Ms. MORRISON. Thank you for that.
And what would happen to these data centers and the
associated jobs if the tech bubble does pop?
Ms. TURNER LEE. One of my fears and we have written about
this at the Brookings Institution, myself and Darrell West, my
colleague--is that we do need to have programs that leave
workforce opportunities within rural communities after the life
of the data center.
So it is particularly important that we have programs that
sustain themselves, where those carpenters and electricians and
welders are receiving training as well as recertification,
using AI, and they are able to bring that asset back into their
communities post--the life of this one infrastructure asset.
Ms. MORRISON. Thank you.
The Environmental Protection Agency has announced that it
will no longer consider the health benefits of reducing air
pollution in regulations--it is still shocking to say those
words--cutting human health protections in favor of the fossil-
fuel industry.
I am a physician by trade, and I am deeply concerned about
the health impacts of air pollution. Given these rollbacks, how
could air pollution from fossil fuels and backup diesel
generators, spurred by data centers, affect public health in
rural areas?
Ms. TURNER LEE. I definitely think the use of the word
``public health'' is meaningful in this conversation, I think,
given the community response to environmental concerns.
With that being the case, as you have mentioned, the
rollback on the $11 billion of Biden-Harris investment towards
clean and renewable energies is a setback, and we want to make
sure that we are not setting back the progress. Because I think
most tech companies, including my colleagues here, want as much
electricity as possible and want it to happen to every
electron.
With that being the case, when workers are sick in rural
communities because of these environmental impacts, small
businesses suffer. When young people are sick due to asthma and
other related environmental illnesses, they don't go to school.
And so, we want to make sure that we are not having a bigger
impact, I think, on the community, given the fact that we know
very little about the environmental impacts.
Ms. MORRISON. Thank you for that.
How much electricity and water does the smallest hyperscale
data center consume?
Ms. TURNER LEE. Well, I will say this because I am not a
scientist by trade; I am a sociologist. But we do know
hyperscalers exceed and my colleagues can correct me if I am
wrong about 100 megawatts, in terms of electricity.
We also have to consider the offsite electricity used. Some
tech companies are being responsible--we have seen that with
Microsoft in terms of trying to figure out ways to build
substations or take advantage of other electricity outlets.
But, again, it is not just the building where the electricity
is being consumed; it could be other buildings across the
community that have to power and generate the same amount of
power generate and consume the same amount of energy.
Ms. MORRISON. And what about water? How much water is used?
Ms. TURNER LEE. Yeah, the water issue is tricky as well.
Based on the data center's size, we still see continuous water
flow. Again, given the fact that there have been advancements
in science when it comes to closed loop systems or using
recycled water, I am excited about these opportunities.
Again, water consumption is critical. Data centers must be
cooled. And if they are not cooled, it takes the whole
investment and throws it out in the wayside.
Ms. MORRISON. I am glad you referenced that. So, depending
on what cooling systems a data centers uses--because they use
different ones--it may consume even more water or more
electricity.
Can you just briefly walk us through the tradeoffs of each
type of cooling system?
Ms. TURNER LEE. Well, we already know that we have an
outdated and archaic national water and irrigation system, so
that is a cause of concern.
I also think what is interesting, too, is that we probably
need to use, Ranking Member, more AI to help us to monitor the
type of water that is going into these units, as well as ways
in which we can save residential households money, you know, by
the consumption.
Communities adjacent to data centers are not getting the
best of AI when it comes to these water and energy consumption
measures.
Ms. MORRISON. Thank you very much.
And I yield back, Mr. Chair.
Chairman ELLZEY. Thank you, Doctor.
I now recognize Mr. Finstad from Minnesota for 5 minutes.
Mr. FINSTAD. Thank you, Chairman Ellzey. Thanks for holding
this important hearing today.
And thank you to our witnesses for being here.
As the Representative from the First District of Minnesota,
a district that is founded on farming, healthcare,
manufacturing, and small businesses which have helped sustain
our rural areas, innovation is more than just a slogan to us;
it is a way of life.
With the rising demand for artificial intelligence, data
centers are moving to rural areas, like the ones I represent in
southern Minnesota, because of the availability of land, our
climate--we are nice and cold, especially right now in
Minnesota--and our access to power.
For my district, data centers can be economic anchors in
their regions, improving local supply chains and providing job
opportunities for skilled tradespeople.
At the same time, I want to acknowledge the concerns that I
am hearing from my constituents regarding energy and water
consumption, affordability, grid reliability, particularly from
farmers and small-business owners and families. People want
assurances that new, energy-intensive developments won't
increase their utility bills or put a strain on local power and
water systems.
This hearing today is about ensuring that rural districts
like mine are ready to take advantage of innovation while
solving real problems like labor shortages and energy security.
I look forward to the discussion today and learning more about
ways we can empower rural America to lead on this next wave of
innovation.
So, with that, just a couple questions.
Mr. Crosby, many of my constituents in southern Minnesota
are concerned, have questions, maybe just don't know for sure,
in regards to--I guess the question I hear is really, you know,
the big, energy-intensive facilities like data centers, they
are new to us. They may increase electricity prices or put
stress on our local grids. We just heard a little bit about the
water discussion.
You have made the case that data centers can serve as an
anchor tenant that reduces costs by spreading out fixed
infrastructure costs and making up-front grid upgrade payments
through contributions in aid of construction.
So what is your company doing to ensure that data centers
and development in rural areas does not increase energy costs
for community members and small businesses?
Mr. CROSBY. Thank you for your question.
We do not go to these environments and look for the
environments to pay us on these. So we build infrastructure. We
have bought land and transferred it to the utility company for
easements. We have bought--we pay for transmission. We have
paid for switching stations, substations, and the like. That is
our infrastructure that we are utilizing.
Almost every single time, that involves additional
infrastructure, such as in Red Oak, that other parts of the
community can use that we pay for in order to bring it there--
so additional switches on a switching station, as a for-
example.
The other aspect to this is that we are trying to work, as
well, with the regulatory bodies on trying to get data centers
to become grid resources.
So we are going through this cold snap right now. During
Storm Uri, if data centers had been allowed by law, and not
threatened with criminal penalties, to operate, 12 people would
not have died during Storm Uri in the State of Texas.
We can be stabilizing, distributed, islanded bodies. I will
tell you, not 100 percent of my colleagues would say the same
thing, but all of the Class A folks will absolutely look at
that as, ``We can be the stabilizing factor for the grid.''
When we do that, we utilize infrastructure that is not
being used right now, because it is, you know, 50-percent
utilization when it is not during those peak timeframes.
So you have a very small amount of hours per year where, if
we could be utilized by grid operators, we could actually
reduce down-costs for consumers and stabilize the grid, with it
being our nickel.
Mr. FINSTAD. Thank you for that.
Mr. Offel, in your opening comments, I think you hit the
nail on the head when you talked about, we probably haven't
done a good enough job explaining what the opportunities are,
what the real economics look like, what the risk and reward is
in this new emerging industry.
I like to say, around the halls in this town, you know, you
start talking about data centers, AI, cryptocurrency,
cybersecurity, and you get a glazed look over a lot of people's
eyes. And these are policymakers that are hopefully in a
position to educate themselves and make decisions on the very
issue that we are talking about.
So, if we have a problem here in the halls of Congress
understanding some of the details of what we are trying to do
in this next generation of opportunities, it is easy to assume
that our neighbors are having that same issue of understanding.
So maybe do you have some thoughts about how we as
policymakers but how the industry is taking strides to make
sure that we can talk to our neighbors about what does this
mean in our backyard in regards to energy and water and the
value that it adds to communities?
Mr. OFFEL. Yeah. Thank you, sir. And I appreciate the
question.
I think this is a great opportunity for us to reshape the
mindset and the way that we view this. So, I would ask you, as
this Committee, to flip the binoculars around and open up the
aperture and let us revisit this.
I think this is something that people tend to be very
scared of, because some of these things that they have been
introduced to, like some of the technologies you talked about,
are very faddish, where what we are talking about today is a
data center which will have--it is a transformational
infrastructure that will have a greater impact on humanity
since we have seen in powered flight. This is something that is
coming, and it is coming to stay.
So, I think that if we can pause, I think that we can help
people become more educated, and as we do that, they are going
to become less fearful of what these data centers are.
And we shouldn't see them as a building. Data centers
aren't a building. Look at them as a career field and an
opportunity to build back the middle class with high-paying
jobs that don't require college degrees.
Thank you for your question.
Mr. FINSTAD. Yeah. Thank you.
And, Mr. Chair, I yield back.
Chairman ELLZEY. Thank you.
I now recognize Ms. Goodlander from New Hampshire for 5
minutes.
Ms. GOODLANDER. Thank you, Mr. Chairman, thank you, Ranking
Member Morrison, for convening this important hearing.
To our witnesses, thank you so much for being here today.
We are on a really good streak with this Committee, because
yesterday we passed two commonsense, bipartisan bills that go
to the core issues around small businesses and artificial
intelligence.
And I couldn't agree more with my colleague from Minnesota;
the Congress should be spending way--as much time as possible
on this important issue. This is a transformational issue. We
have never seen a revolution quite like this AI revolution.
You know, when we talk about data centers and other
innovation-driven investments in rural areas--and I represent
the most beautiful district in the nation, a very rural
district, where I hear every day about the pain people are
feeling from high costs across the board--my priority is to
make sure that these projects, that these innovations, aren't
going to shift new burdens and new unbearable costs onto
hardworking people who are already feeling a whole lot of pain
right now.
When we talk about energy costs and data centers, you know,
I start from the premise that New Hampshire has some of the
highest energy costs in our country. You know, this week, we
are on track to have some of the coldest days of winter to
date, and the people I represent cannot bear higher electricity
bills, higher energy costs.
I appreciate the testimony of our witnesses so far.
Dr. Turner Lee, I wanted to ask you how you would advise
Congress to think about the real ways in which data centers--
what actions we can take to make sure that no costs are shifted
in an inappropriate way onto people who just cannot bear the
pain of higher costs right now.
Ms. TURNER LEE. Thank you very much for that,
Representative. And I agree, affordability is a huge concern
for many consumers that are resisting data centers to date.
It is important for Congress to continue to have the
dialogues that we are having around updating and modernizing
the energy grid. Clearly, this is a conversation of 20, 25
years ago, and we are putting on top of an outdated energy grid
more resources that I think will continue to strain those
communities.
It is important for public utility commissions to be at the
table in these conversations because they set the rates for
ratepayers.
And it is also important for tech companies, who are coming
in and draining some of those assets, to talk with PUCs, local
governments, and consumers, to figure out ways in which they
can set clear standards and rates for what electricity should
look like.
I mentioned earlier what Microsoft has done, for example,
recently in their announcement about a community AI first, is
to have set in certain rates that they pay, whether or not
there is a variable increase or decrease in energy consumption.
And we need to see more of that so that they are footing the
bill as opposed to everyday Americans.
Ms. GOODLANDER. Well, I want to ask also about water
security and water costs. Because when we look at utility bills
in New Hampshire, what we have seen in so many of the towns I
represent, particularly in the southern part of my State, big,
foreign corporations have come into New Hampshire, polluted our
water, eliminated our wells. The costs of clean water have
never been higher in our State.
In your testimony, Dr. Turner Lee, you speak about water
impacts as one that are--as impacts that aren't often fully
understood until after a project has become underway. I hope
you might be able to speak a little bit more about that, to
your really important point that we need to be clear about the
costs up front.
What can and should Congress be doing to make sure that we
have clarity and that we are putting all of our tools to use to
make sure that these important developments don't actually
undermine a core function of government, which is to make sure
we have clean water for our citizens?
Ms. TURNER LEE. I appreciate that question.
And as I have said in my oral statement as well as written,
it is important that Congress support States and allow them to
be part of the negotiating table. You know, when we put
barriers for State leaders to actively think about how these
data centers are positioned in their community, we burden them,
as well, and we remove them from the table.
I think Congress should really move away from moratoriums
and restrictions on the States to be actually involved.
I think community benefit agreements might be another way
for us to negotiate these speculative opportunities that are
being promoted to communities. Lancaster, Pennsylvania, for
example, just did a $20 million community benefits agreement
that also includes quality-of-life factors--air quality, water
consumption, other educational assets, jobs.
We need to see Congress promote and support States actually
engaging in those community benefit agreements, because I think
it will get to the broader question that you are asking,
Representative, which is, how do you just put everything in the
bucket and make sure communities come out safe when this is all
said and done?
Ms. GOODLANDER. Well, thank you so much.
I yield back, Mr. Chairman.
Chairman ELLZEY. Thank you.
I now recognize Chairman Williams for 5 minutes.
Mr. WILLIAMS. Thank you, Chairman.
Thanks again to the group for being here today.
Mr. Crosby, the data-center boom has led to some growing
pains, especially in meeting the workforce demand. However, the
industry is already taking steps to address this challenge.
Now, what steps have Compass Datacenters taken to build
partnerships, including public-private partnerships, in career
and technical education programs to address workforce needs?
Mr. CROSBY. Thank you for your question.
The Texas State Technical College and ourselves--we were
looking for a partner to start a school. We scholarship the
school. And then we brought in all of our partners, all of our
suppliers, our customers, and our competitors that now all
sponsor this program. It is called MEI. It is based in Red Oak.
We are now also donating a facility, a little later this
year, on the campus to allow the students to have a place to
practice it, in which our--not only our client but also our
equipment suppliers are donating equipment for them to be able
to work on it.
We plan to replicate this model in multiple markets where
we have these levels of investment. These are, you know--when
``all-in''-type investments are north of $20 billion, you need
a long-term workforce.
This is something that we work very closely with--we have
had great work with Ellis County, and Red Oak officials have
been super-supportive of it as well. I think the private-public
partnership is a very easy way to do this.
Mr. WILLIAMS. Okay.
How do you interact with local communities before beginning
to build data centers to ensure they are an equal partner and
valued stakeholder?
We have talked about communications. You can't have any--
you can never be too short on communications. So----
Mr. CROSBY. That is right. The challenges that have been
brought up by the doctor are not--I would say they are not very
common today, but they are still--I mean, they still come up.
And when you do not engage with these communities properly--so,
for example, when we walk into a community, a lot of people
have a myth that these are going to use a lot of water. It is
not true. We don't use water at our facilities for those
purposes.
So we will end up in these meetings. We engage with the
community. We sit in the meetings with the hearings, the public
hearings, answer their questions. Our most recent one we had in
Statesville, North Carolina, we had people that had ``No''
stickers that took their ``No'' stickers off at the end of it
as they learned more facts.
The key is education, and the key is doing the right thing
for that community. That means you have to be built to last.
You cannot be built to exit in this business.
Mr. WILLIAMS. Yeah. Sometimes you get one crack at it, and
you have to get it right.
Mr. CROSBY. Yes, sir.
Mr. WILLIAMS. Mr. Offel, the growth of the data-center
industry has brought massive demand for tradeskills. We have
been talking about that all day here. However, the demand for
electricians, HVAC technicians, and plumbers has outpaced
supply. And I know, in Texas, we are short of welders; we
always are short of welders.
Now, your business, Overwatch Mission Critical, is actively
working to address this problem. What methods have you found
most effective in developing the necessary workforce to grow
this economy and your industry?
Mr. OFFEL. Thank you for the question, Mr. Chairman.
It is simple. We have tried to approach this from multiple
dimensions.
One was with a bunch of Band-Aids. We tried to figure out
how we can transfer people that were in adjacent verticals of
industry into this industry. And we realized that the adoption
rate of emerging technology, specifically driven because of the
surge of AI, has allowed us to discover that that strategy is
no longer tenable.
I am at a point right now where we need to create another
apprentice program. This is the fifth utility. This is the
fifth utility. We need to have an apprenticeship and journeyman
program associated just to this. We needed our own, dedicated
apprenticeship program.
And we have partnered with a group, a small business--
veteran-owned small business in Dallas, Texas, and we have
partnered with them to create an incubator that could put 1,200
people through that program a year that will be certified in
data centers. They could join the workforce immediately and be
a data-center apprentice.
Mr. WILLIAMS. There are 10,000 kids a year dropping out
of--or, 100,000 kids a year dropping out of school in Texas in
the ninth grade. They are losing hope. And we have to be able
to show them that it is not about being architects,
businesspeople, whatever. Plumbers, welders, carpenters,
technicians. It is important you do this because we can save a
lot of kids who are now dropping out of school and we are
losing them.
So thank you for----
Mr. OFFEL. The largest demand for labor is in this
vertical. This industry grows faster than every other industry
on this planet because of the growth of every other industry on
this planet.
And there is no sense sending our kids to college for data
centers. Whatever they would be exposed to or learn their
freshman year would be obsolete by the time they graduated.
There are 6-week, 12-week, and 18-week programs that are
designed for high-school kids, as well as the 17,000 people
leaving the military on Active Duty every month. There is a
large, massive workforce of trained people coming out of
military that we are looking to adopt. And those people will
help us lay out a roadmap to where we could support people
transitioning right out of high school.
They just don't know the industry yet. And, right now,
everybody is telling them that they need to be scared about it.
We need to fix it.
Mr. WILLIAMS. Well, in the time remaining, take it to them.
Because there are these 100,000 kids who need to have an
opportunity, and they will hire their friend too.
Mr. OFFEL. Yes, sir.
Mr. WILLIAMS. Mr. Chairman, I yield back.
Chairman ELLZEY. Thank you.
I now recognize Mr. Olszewski from Maryland for 5 minutes.
Mr. OLSZEWSKI. Thank you very much, Chairman Ellzey, to
Ranking Member Morrison, and to all of our witnesses today. I
appreciate your time and your presence.
My district in Maryland is home to many beautiful rural
communities in both Baltimore and Carroll Counties, which
affords our State flourishing farmland and engaged small
businesses.
Agricultural preservation is a top priority for our
district. Since 1980, Carroll County alone has preserved nearly
81,000 acres, with over $200 million invested. Prior to coming
to Congress, as Baltimore County executive, I helped push our
number to over 71,000 acres of farmland preserved.
In Maryland, our farms account for billions of dollars of
economic activity. They are a critical part of our history and
our economy.
Although we do not currently have a data center in
Maryland, there are plans to have one under development in
Frederick County, and others are being considered across our
State.
For more than a year now, Baltimore, Frederick, and Carroll
Counties have been contending--frankly, fighting--a proposed
67-mile high-voltage transmission line, known as the Maryland
Piedmont Reliability Project, or MPRP, needed to fuel power in
data centers in northern Virginia--power that we worry,
frankly, is simply being transferred from Peach Bottom,
Pennsylvania, to northern Virginia.
Sadly, our questions to clarify this have gone completely
unanswered, both by PJM and by the project's developer. Worse,
eminent domain has been proposed. So, unfortunately, that
``reliability'' doesn't seem to cover the Maryland rural
communities who are facing the project's burden.
Even worse, to Ms. Goodlander's point, the cost of this
project, $424 million, would fall on Maryland ratepayers--
ratepayers who are already crushed under a cost-of-living
crisis and increasingly high utility costs in our State.
I understand that transmission lines play a role in
modernizing the electrical grid. However, my constituents and I
have been very vocal in expressing these concerns.
Our communities have worked for decades, with millions of
local and State dollars invested, to conserve this land for
future generations, to preserve the economic activity on these
lands. Now they are being told it must be sacrificed and their
livelihoods disrupted for a transmission line that won't even
offer them benefits, and yet these constituents are being asked
to pay for it.
I guess I would just open with a question for all: Is that
fair? Does that make sense?
Ms. TURNER LEE. Well, I will start, Representative. And I
want to also say to you, Maryland does have beautiful farmland.
I spend a lot of time in Garrett County, Maryland, as part of
my book with farmers as well as small businesses,
entrepreneurs, and residents.
The transmission line project I do write about in my
written statement, and I think it is one of those examples
where we do see a lack of coordination between all the actors
and--I do agree with my colleagues--a lack of transparency when
it comes to information about what is being done and what is
being built.
The revenue should come on the side of the companies, not
the taxpayers.
Mr. OLSZEWSKI. Yep.
Ms. TURNER LEE. Because the revenue that comes from the
companies can take those communities, even though they don't
have a data center--but they can possibly build, you know, a
better school, a better firehouse, better broadband for that
matter.
I do say to you, I do not think it is fair that the
community is left in the dark and is going through several
challenges to understand why, when, how this project is going
to pan out for them.
I appreciate that and you including it in your written
testimony.
Gentlemen?
Mr. CROSBY. Yes. Thank you.
Look, I agree with a lot of your points. I don't think it
is fair for us to come to communities and just say, it is on--
you know, it is on you as a community. Those days were decades
ago.
Mr. OLSZEWSKI. Yeah.
Mr. CROSBY. There are a lot of new players that are doing
that sort of technique. And check their capitalization and
check their track record--that is what I would say--if you are
a community looking at these groups.
The other thing I would state is, this should be a very
bipartisan issue. Transmission upgrade is absolutely necessary.
When we transmit electricity at 69 kV, 130 kV, 90 percent of it
is lost in the air versus high voltage.
Mr. OLSZEWSKI. Yeah.
Mr. CROSBY. Ninety percent. That means we don't have to
produce more generation. That means we have generation that
just gets wasted.
And this is one of the biggest things that we should--that
all parties should rally around. We need to upgrade this. That
is the easiest, cheapest way for us to do things.
Mr. OLSZEWSKI. Yeah.
Mr. CROSBY. And data centers want to contribute to that.
Come to any of our locations and you will see that brand-new
transmission and----
Mr. OLSZEWSKI. And I appreciate the consensus.
Just with my 30 seconds left--and, Mr. Offel, hopefully I
will give you a chance to respond as well--but I just want to
put on the record, Mr. Chairman, a 2024 ``Lazard's Levelized
Cost of Energy'' report as well as a NextEra Energy's 2025
investor presentation. I ask unanimous consent to enter those
into the record.
Thank you very much.
I just want to point out that renewable energy projects,
according to these, are both cheaper and faster to get built to
help fuel this need. So I appreciate our opportunity to look at
that.
And I apologize we didn't get to you on the answer there,
but I really appreciate your testimony.
Thank you. I yield back.
Chairman ELLZEY. I now recognize Mr. Schmidt from Kansas
for 5 minutes.
Mr. SCHMIDT. Thank you, Mr. Chairman.
And, like my colleagues, I want to thank our witnesses for
being here today. It is a topic not new to you but still very
new to many of the communities that we represent, and, like a
lot of new subjects, as has been suggested here today, it tends
to present itself in different ways in different communities.
And I have listened carefully, during the time I have been
here, to some of the suggestions and responses you have had
regarding questions about community engagement, which I
appreciate very much. But let me ask just a much more, sort of,
global question on that.
So I came out of State government. I am a State- and local-
control person philosophically, and I believe it in my bones,
and I am certainly not advocating something different here.
Having said that, one of you, at least, compared in your
written testimony the development of the data-center industry
to the development of the railroads. And, obviously, 150 years
ago, that was a nationalized policy conversation that resulted
in national control, some of which, you know, we still deal
with the downstream effects of that today, but it also created
a tremendous industry.
And I guess I would just ask you to speak, either with
particularity or philosophically, about, as you look forward,
how this industry is going to grow. What is the right balance
between federalizing some of these decisions, standards,
requirements, and leaving it to those case-by-case local
advocacy decisions?
And we can just go down the row.
Mr. Crosby?
Mr. CROSBY. Thank you.
Look, I believe the local is always the first approach. You
know, there were comments about water and water usage. Those
are negotiated locally. Those are not negotiated on a big
basis. So those communities are making those decisions live,
and we see that.
The State of Texas has an advantage, in some ways, because
FERC is not engaged with some of the things, and the ability to
adapt technology is a little bit faster to try new things.
I think speed is one of the elements, where there is an
aspect where you are continually making adjustments,
continuous-improvement type of items, as you get feedback from
these sorts of infrastructure investments.
We are putting in massive amounts of capital into the
ground and into the wires that are going ahead, building
plants. Renewables was mentioned. Data centers have been--data
centers and data-center users have been responsible for over 70
percent of the PPAs that are around renewables.
We are driving change. We want to do the right thing. The
top companies definitely do. And let us work with those
communities to continue to innovate and come up with these new
and creative ways to do things.
Mr. SCHMIDT. Mr. Offel.
Mr. OFFEL. Yes, sir. Thank you for the question.
Just to put a pattern together for a bit of history, when
we started with the first major infrastructure upgrade in
America, the railways, the number-one concern was energy, and
the number-two was environmental impact.
And when we did the electrification of the grid, the
number-one concern was energy, and the number-two was the
environmental impact.
The third was the Interstate Highway System, and the fourth
was the automobile. And, in every case, the primary theme has
always been energy and what is the impact on environment. And
now we are evolving too, what are the jobs that are being
created as a byproduct of these vertical industries that are
emerging?
The things that take an industry like ours, which is
niche--and, today, this represents the fact that we are now in
the mainstream--is industries that--like the automobile
industry, when we were rolling those cars out on the road, they
lacked safety, regulation, oversight, governance, regulation,
and, many would argue, ethics--some of the same things that you
are challenging us on, and justifiably so, today.
The answer is, we have a partnership with you. We must be
working with all elements of levels of government. And we need
to be able to make sure that someday you understand that we are
no longer consumers of your utility, we are creators of it,
making us partners of it.
We will be able to reinforce--and I think in your district,
what he was talking about was to have the ability to island
ourselves. If we have, since the birth of this vertical, 55
gigs of energy on the grid, we are under construction today for
40 to 80 gigawatts of natural renewable energy, meaning that we
will not only put our own energy on the grid and tie it into
the grid in a closed transition, allowing us to co-generate,
that gives us not only the ability to move the needle to the
left, but we reinforce that grid so that the people that are
out in the urban areas aren't at risk of losing power, because
data-centers providers are the ones that are building it.
And, today, with the exception of a few misfit toys, we are
at zero-water design on data centers. We don't use water, for
the same reason you don't use water in your radiator, which is
a closed-loop system. It doesn't absorb and reject heat fast
enough. These data centers are so dense that we can't use
water.
So, we are here to partner with you on creating more water,
and we are partners to the utility. We will become a utility
ourselves.
Mr. SCHMIDT. Doctor, I have 10 seconds.
Ms. TURNER LEE. Yeah, just 10 seconds.
I actually challenge the railroad analogy, so I will start
there, because I think we need to think about the railroad as
it allowed rural communities to become transit points for the
way in which we were actually moving trade, and data centers
that actually may be incentivized to bring more profit to
companies versus people.
I want to actually challenge that, because I think AI needs
more industrial policy, in many respects, to ensure that we get
national benefits.
I would just say outside of just the energy policy for the
Congress, it is important for Congress to also create a certain
environment in the marketplace. Tariffs, the availability of
critical minerals, our availability to have the aluminum that
is going into the buildings--it is all uncertain right now. And
I think those costs could actually be passed on to communities
if we actually don't get the certainty of the marketplace right
in terms of our congressional policies.
Mr. SCHMIDT. Thank you.
I yield back, Mr. Chairman.
Chairman ELLZEY. Thank you.
I now recognize Ms. Scholten from Michigan for 5 minutes.
Ms. SCHOLTEN. Thank you, Mr. Chairman.
Dr. Turner, every 2 years, we pass a bipartisan Water
Resources Development Act, which authorizes the Army Corps of
Engineers to address water supply needs and carry out vital
infrastructure products.
I am happy to report that the Committee has been hard at
work to develop the seventh consecutive bipartisan WRDA to
navigate local water resource challenges, boost regional
economies, create jobs, and protect our natural environment.
What is the importance to our rural communities that WRDA
is passed in a bipartisan fashion?
Ms. TURNER LEE. It is extremely important. I have nothing
else to say. But I think we do need to keep passing this,
because that is actually going to allow us to negotiate through
some of these challenges that we have been talking about today.
Ms. SCHOLTEN. Absolutely.
The few operations jobs that data centers create require IT
expertise, meaning individuals in career and technical
education--careers in technical education will be increasingly
in demand.
Last week, I introduced my bill, the Honoring Vocational
Education Act, which would permanently establish a survey on
education attainment within the skilled technical workforce. It
is critical to advancing and maintaining a skilled workforce.
We have to ensure that skilled tradespeople and technical
workers are fully accounted for in federal workforce data,
especially when these jobs are becoming so critical to building
and supporting innovation.
Again, Dr. Turner Lee, what is the role of career and
technical education in ensuring that these local jobs can be
filled and created as data centers are developed?
Ms. TURNER LEE. I completely agree with you. A couple years
ago, when we had the BEAD money, I did the same thing with
broadband, because these are livable wage jobs.
Ms. SCHOLTEN. Yep.
Ms. TURNER LEE. They are jobs that we need to build the
infrastructure. Just as the Hoover Dam, we had to build that
dam, we had to find workers to do the same thing.
I think we need to continue to invest in technical
training, but I also want to make sure that there will be jobs
that have some IT slant to it, because technical jobs--even
your greatest plumber has to rely upon AI in some way or form
to do their job.
And so it is important for us to balance that--how do we do
the acute, you know, faculty skills alongside making sure rural
communities and rural citizens know how to actually maneuver
through AI itself.
Ms. SCHOLTEN. Absolutely. They go hand-in-hand----
Ms. TURNER LEE. They do.
Ms. SCHOLTEN.--and have to be developed together.
One last question for you, Dr. Turner Lee: In your
testimony, you discuss the importance of ensuring early
collaboration between utilities, local governments, and their
rural communities.
Just last month, in my district, a planning meeting for a
data center in Kent County was canceled due to overcapacity,
with hundreds of residents showing up to make their voices
heard in these discussions.
How can we, as Members of Congress, help facilitate and
support these conversations to ensure that residents aren't
left in the dark as planning for these data centers continues?
Ms. TURNER LEE. Well, I want to agree with my colleagues,
particularly the--my colleagues who are in a space where they
are working every day with some of these local communities. And
I commend them on the efforts that they have put forth.
I do think Congress should put out some type of data-center
literacy act----
Ms. SCHOLTEN. Uh-huh.
Ms. TURNER LEE.--something that allows people to know that
this next stage of innovation, if we are comparing it to the
railroad, is an all-in project.
Ms. SCHOLTEN. Yeah.
Ms. TURNER LEE. Everybody needs to be at the table.
I think we are seeing these rooms full to capacity because
people are really worried. They are worried about the things
that they know based on what the media is telling them, and
they are worried about the things that they do not know.
Ms. SCHOLTEN. Yeah.
Ms. TURNER LEE. It is an easy fix if we find ways to raise
their literacy around what data centers are and what they do.
And I actually would say that we connect this to AI
literacy bills----
Ms. SCHOLTEN. Yeah.
Ms. TURNER LEE.--so people know that when there is a data
center in your neighborhood, there is a benefit to you as
well----
Ms. SCHOLTEN. Yeah.
Ms. TURNER LEE.--and, you know, what you can access and do.
Ms. SCHOLTEN. Absolutely. I am already working on something
like that with one of my colleagues from Michigan. We would
love to run it by you, get your input on it as well.
So thank you so much for your testimony.
I yield back.
Ms. TURNER LEE. Thank you. I look forward to working with
you.
Ms. SCHOLTEN. Thank you.
Chairman ELLZEY. Thank you.
I now recognize Mr. Wied from Wisconsin for 5 minutes.
Mr. WIED. Thank you, Mr. Chairman.
Thank you to all of the witnesses for being here today. We
appreciate the work each of you are doing to shape the future
of America's digital infrastructure and the communities that
support it.
Across the country, we are seeing a rapid growth in data
centers, driven by the accelerating demand for AI.
Increasingly, these facilities are choosing rural communities,
creating new opportunities in skilled trades, construction, and
facility operations, offering a pathway to stable, middle-class
careers in regions that have too often been left behind.
At the same time, this expansion brings real challenges,
from meeting the energy needs of these facilities to the
increase in workforce demands.
Small businesses are central to this story. They are the
contractors, suppliers, and service providers who make these
projects possible and who stand to benefit long after
construction ends.
As AI demand centers continue to grow, it is my hope that
we can find solutions that balance the needs of tech
entrepreneurs while also protecting the rights and the voices
of, of course, our local communities.
Mr. Crosby, I will start with you. In your testimony, you
said that data centers act as anchor tenants that put downward
pressure, actually, on electricity rates. And that is one of
the biggest concerns. We have a project in northeastern
Wisconsin that was--you know, the local, the community was
very, very involved. That was one of the big concerns, is
electricity rates.
Could you expand, walk us through, you know, how rural
taxpayers actually could see savings?
Mr. CROSBY. Yes. In States where it is not regulated that
they have to share everything with consumers--so there are
States and regions in the country that it is forced to be
shared, so even if you wanted to foot your own bill, you are
not allowed to foot your own bill; it is forced onto consumers.
In those other States that that is not the case, you can--
one is the connection interconnect charges. That is paying to
bring the power to you. That is what we pay for, those charges
to do that.
The second is, how do the rates come down? So keep that
first cost off, of bringing the transmission to you. Now, how
do the rates come down? Because if we can utilize existing
infrastructure--the grid runs at about 50 percent right now.
And if we can use that infrastructure for the vast majority of
the year--in a State like Wisconsin, you might have 20 hours a
year of peak power, out of 8,760 hours. That means we could be
utilizing that capacity and then island ourselves during those
times where the grid operator says, ``It is a tough
environment. Go ahead and come off the grid. We don't want
consumers to--we don't want there to be anything to hurt the
grid.'' That is a grid stability.
If you are using infrastructure that is already built and
paid for, it will drive down costs for consumers. We have seen
that. Southern Company, Chris Womack's company, they put out a
report there about that. PGE put out a report, Maria Pope.
We work very closely with utilities--EPRI, EEI. We are
trying to get the regulatory environments to allow us to pay
for what we want--pay for the power that we want to use and
help us drive down these costs.
Mr. WIED. You also mentioned--another thing that I have
heard a lot with this most recent one in our community is
depletion of the aquifer.
You mentioned that Compass mandates water-free cooling
technology to protect agriculture water supplies. Can you
explain what that looks like in practice?
Mr. CROSBY. Yeah. I grew up in the State of Texas. Water
has always been a precious resource. We were one of the very
early adopters of saying no water. A lot of evaporative cooling
was used in the space.
That got eliminated several years ago but for a few, as
Kirk likes to say, misfit toys and then some that are using
evaporative cooling but creating water-positive environments,
where they are investing in and replenishing aquifers more than
what they use.
I do not think it is a valid claim anymore to say with a
blanket statement that data centers use water. I reject the
premise of that.
Mr. WIED. Let's go to Mr. Offel.
I think you--well, you acknowledged that the industry
hasn't communicated very well with local communities. And I
feel, you know, we don't want them blindsided.
And so, from your point of view, what is--no question, we
need early engagement, and engagement is very important in
these types of things. What does early engagement look like to
you? How do we ensure that rural residents, they feel informed
rather than blindsided?
Mr. OFFEL. That is a fair question. And their concerns are
extremely valid. We are not trivializing those. The only way to
solve it is with immersion.
There are three different types of audiences that we need
to address. There is no silver-bullet answer that will make
everybody happy.
We need to convert the way that we view these things as
something that is just a consumer of utilities, and we need to
help them understand what AI means to them as a human beings,
how does it help them.
As a small business, AI gives me the ability to compete
against the Goliaths of this world, because it level-sets the
playing field. Plus, for those people that want to be in the
game, it opens up better career opportunities, because it
lowers the barrier of entry to market for new jobs.
Mr. WIED. Thank you, Mr. Chairman. I yield back.
Chairman ELLZEY. Thank you.
I will now recognize Dr. Morrison for her closing
statement.
Ms. MORRISON. Thank you, Mr. Chairman. And congratulations
on a very amiable hearing. I think this has been a really
interesting and important conversation.
And I am grateful to the witnesses for your presence.
You know, we have talked about the good, the bad, and the
ugly, in some cases, parts of the data-center boom. It is a
very nuanced topic. And there are so many ways that data
centers play with existing issues, such as tariffs, which are
crushing our main streets and industries--we have recent
evidence that supports what economists have been saying from
the beginning of this chaotic tariff war, that Americans pay
them in taxes; 96 percent of tariffs have been paid for by
Americans over this past year--and the immigration crackdown
choking our workforce and entrepreneurs and, as someone from
the Twin Cities, literally terrorizing our communities.
I intend to submit further questions for the record. I hope
to keep the conversation going down the line. There is so much
to discuss.
Thanks so much, again, to the witnesses for your insights.
And, with that, I yield back.
Chairman ELLZEY. Thank you, Dr. Morrison.
I recognize myself for a closing statement.
I am so proud to have data centers in my rural community
just south of Dallas.
There was a lot of concern at the very beginning about what
does this mean, this new technology, this new horizon of ours
in technology and AI and everything that goes with it. I
understand the fear of some of my colleagues on particularly
the Eastern Seaboard, which is stretched thin with energy,
power, and water and lines and so many other things.
I am here to tell you that if you are interested in seeing
what they really do, how they really contribute to our
communities, Doctor, come visit us in Red Oak and Midlothian
for a couple days, stick around. These gentlemen would be happy
to host you, and so would I.
As I look at the city of Red Oak, which is growing by leaps
and bounds because of industry coming there, a talented
workforce--all of the people in that community are benefiting
from these data centers coming to them, from construction, from
flipping burgers, from Walmart, from Brookshire's, to
homebuilders, to everybody else in between, and a strong,
stable tax base to provide excellent schools, excellent public
schools for our kids.
They are not drawing on the water. They are adding to the
power. They are adding security in a lot of rural communities
that, in many cases in Texas and elsewhere, those rural
communities are looking for a reason to survive, and many of
them are struggling. This new technology gives them an
opportunity to do so. They are doing so responsibly, with the
cooperation of State and local governments. And they are an
incredible benefit to the State of Texas and to Red Oak,
Midlothian, and Ellis County.
So I want to thank everybody for participating in this
robust discussion today. It has been a fantastic hearing. I
hope it generates more discussion going forward. Thank you all
for being here.
And, without objection, Members have 5 legislative days to
submit additional materials and written questions for the
witnesses to the Chair, which will be forwarded to the
witnesses.
I ask the witnesses to please respond promptly.
If there is no further business, without objection, the
Committee is adjourned.
[Whereupon, at 11:22 a.m., the Subcommittee was adjourned.]
A P P E N D I X
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]