Frontier Institute Public Comment On Bolstering Data Center Growth
Re: Request for Comments on Bolstering Data Center Growth, Resilience, and Security
October 28th, 2024
Stephanie Weiner
Chief Counsel
National Telecommunications and Information Administration U.S. Department of Commerce
1401 Constitution Avenue NW
Washington, DC 20230
Re: Request for Comments on Bolstering Data Center Growth, Resilience, and Security
Docket No. 240823-0225
Dear Ms. Weiner,
Frontier Institute thanks you for the opportunity to comment on challenges surrounding data center growth, resilience and security in the United States amidst a surge of computing power demand due to the development of critical and emerging technologies. In the following comments, Frontier Institute focuses on areas where we have the most expertise and can provide the most informed insights.
Background on the Frontier Institute
Frontier Institute is a Montana-based think tank. Founded in 2020, The Frontier Institute’s mission is to keep the spirit of the western frontier alive with sound public policy and educational programs that ensure today’s pioneers are free to build, create, and innovate for years to come.
We work on a variety of public policy areas, with the most pertinent being energy, permitting, artificial intelligence, data centers, and blockchain technology. As a state-based think tank, we have a specific perspective that allows us not only to speak to the implications of federal policies, but also to how they interact with and impact state-level policies. All of the following comments are outlined in greater detail in the following reports:
- Montana 2050: Data Centers– frontierinstitute.org/reports/montana-2050-data-centers
- Montana 2050: Artificial Intelligence– frontierinstitute.org/reports/montana-2050-artificial-intelligence
- Montana 2050: Critical Minerals– frontierinstitute.org/reports/montana-2050-critical-minerals
- Montana 2050: Crypto– https://frontierinstitute.org/reports/montana-2050-crypto/
2. What are critical market considerations for the data center industry seeking to modernize or expand their footprint?
a. Please describe key considerations such as: access to key markets, customer demand, access to renewable energy, data residency requirements, available high-speed broadband telecommunications infrastructure, access to workforce, government incentives, land or water availability, power grid connectivity, low power costs, or any other key considerations.
c. What key regulatory barriers exist at the federal, state, local, tribal, and territorial level?
e. What role or actions, if any, should be taken by the private sector, civil society or the U.S. government to mitigate potential barriers to, or foster opportunities for, data center market entry, growth and modernization?
f. What are the causes of foreign, exogenous forces, if any, pulling data center market opportunity away from the United States?
2a. While there are a number of critical market considerations for a growing and modernizing data center industry, there are three fundamental elements necessary:
- access to broadband telecommunications infrastructure,
- access to reliable and affordable energy, and
- access to the minerals that make semiconductors possible.
Without access to the internet, data centers can’t connect or transmit data. Without access to reliable and affordable power, data centers can’t operate. Without access to minerals, the semiconductors that enable data processing cannot be produced.
2c. These three fundamental elements–access to broadband telecommunications infrastructure, access to reliable and affordable energy, and access to the minerals that make semiconductors possible–face significant regulatory hurdles both at the state and federal levels. The most significant regulatory barriers being state and federal permitting processes.
Federal Barriers: The National Environmental Policy Act (NEPA) poses a significant barrier, particularly in the western U.S., impacting every aspect of these three fundamental elements. The federal government owns roughly 46.4% of the land in the 11 coterminous western states, making it highly likely that a western project aimed at expanding telecommunications through new fiber optic cables, increasing energy capacity through either new generation infrastructure or new or upgraded transmission infrastructure, or mining and processing critical minerals for semiconductors, will to some extent take place on public land and will be subject to NEPA review. Not only does the NEPA process itself lead to extended delays, but its vague and open-ended nature also opens the door to frivolous litigation, destroying the predictability necessary for financing projects.
State Barriers: Sixteen states have adopted a State Environmental Policy Act (SEPA), some of which are modeled directly after its national predecessor, NEPA. In states that have a SEPA, such as Montana, projects that provide the infrastructure, energy, and materials that make data centers possible are routinely litigated. For example, under the Montana Environmental Policy Act, critical projects essential for data centers, such as wind power projects and copper mines, can face years of delays, some of which may ultimately lead to the projects demise. Meanwhile, Texas, a state which does not have a SEPA, has led the way on new energy projects.
2e. Leaders at the state and federal level should reform permitting processes like NEPA and SEPAs. To ensure a substantial and lasting impact, these reforms should be focused on the primary issues causing with these procedural laws: vague definitions which apply to nearly every government action, lack of clarity around sufficient analysis, an open-ended nature that causes analysis paralysis and agency litigation proofing, and frivolous lawsuits that use these procedural laws as a way to simply delay or stop projects they don’t like. While Categorical Exclusions for vital infrastructure can provide immediate opportunities, larger more comprehensive reforms should be contemplated. Without clear guidance from state and federal governments to limit permitting process abuses, it is likely that data centers will continue to move out of the country, to nations that enable them to scale operations more quickly.
2f. One of the key factors causing data centers to be built outside the United States is the ease of which it is to build a data center and secure the three fundamental elements needed for data centers to operate. Due to today’s lengthy, unclear, and frequently litigated permitting process at the state and federal level, projects can face years of delays, a factor unacceptable to data centers looking to rapidly expand their computing operations. Without serious reforms to the permitting process, it is likely that data centers will continue to look for places outside the US that will enable them to build projects quickly and predictably.
7. What challenges do data centers face in accessing power for their facilities? What novel solutions are data center operators exploring or implementing to ensure access to power
7. In regard to power consumption data centers can be broken into two general categories, traditional data centers and crypto mining data centers. Traditional data centers, like those that provide cloud storage generally require constant power, and thus require back up generators. However, data centers that perform crypto mining, and potentially Artificial Intelligence model training, have a greater ability to scale up or down power use based on energy availability and price, a capability also known as load flexibility. A notable example occurred during the 2022 Polar Vortex in Texas, where major Bitcoin mining facilities reduced their operations by up to 97%, freeing up 1,500 megawatts for the grid—enough to heat over 1.5 million small homes. Encouraging such practices can enhance grid stability and support energy infrastructure.
While the differences in flexible power consumption between traditional data centers and crypto mining/AI facilities affect energy grid strategies, another key factor driving data center location decisions is the diminishing availability of easily accessible energy sources. As the easily accessible energy sources diminish, data centers are increasingly opting to colocate at the power generation sites. This is in part due to data centers increasingly relying on Power Purchase Agreements (PPAs) to secure power rather than obtaining it from state-regulated markets. This trend will likely continue to drive data centers to locate outside traditional data center hubs, like Virginia, and closer to the sites where energy is being generated. If this shift is coupled with state and federal permitting reforms that enable greater access to the three fundamental elements required for data centers—access to broadband telecommunications infrastructure, reliable and affordable energy, and the minerals needed to produce semiconductors—it would make large parts of the western United States an ideal location for new data centers.
We appreciate the opportunity to provide comment, and are available to answer any questions you may have.
Tanner Avery
Policy Director
Frontier Institute