Establish Public Benefit Conditions on All Federal Investment in AI

The federal government has for too long subsidized the largest companies in the world, offering billions of dollars in tax breaks and other vehicles of financial support while actively defunding institutions that shore up the broader public welfare. As a first measure, the federal government should repeal or roll back federal tax incentives and subsidies given to AI firms and data center speculators to prevent the government from backstopping the AI industry, as outlined in Reject the Bailout for AI Firms. 

Second, the federal government can play an important role in shaping the kinds of public infrastructure that private industry is not incentivized to develop. This strategy opens up space to consider how technological development—including data centers—might unfold if it were guided by public-interest objectives rather than private control over the AI stack. 

Congress can achieve this by attaching bold, enforceable conditions onto all existing federal funding, grants, tax exemptions,¹ and financial support² going into data centers. This is a way for Congress to reassert congressional authority over federal investment and ensure taxpayer dollars are accountable to the public. These conditions would require any AI firm or data center company receiving federal funding to abide by the strictest possible requirements for data center development, including full deference to local and state authorities.

These conditions should not be used to justify additional federal funding for any aspect of the tech or data center industry, and include the following:

Establish Binding Authority and a Mandate to Enforce

Conditions must be attached in clear, binding language and contain strong enforcement mechanisms, including a mandate to enforce.

Automatic Clawback Provisions with Independent Verification

All assistance—tax expenditures, grants, loans, loan guarantees, preferential tariffs, expedited permitting, and federally backed infrastructure—must include automatic, proportional clawbacks for noncompliance and must be verified through independent data (e.g., unemployment insurance wage records for job claims; audited utility invoices and interconnection cost ledgers for cost-shifting claims; or verified tax expenditure schedules for abatements). Specify that company self-attestations do not satisfy compliance. Repeated noncompliance triggers termination of assistance, repayment with interest, and ineligibility for future support.

Condition: Deference to Local and State Authority

Data centers receiving federal funding must abide by all local and state approval requirements. The federal government cannot provide expedited approvals designed to sidestep local and state authority for data center projects. 

Condition: No Tax Abatements or Subsidies for Data Centers

Stipulate that any firms receiving federal funds, grants, tax credits, or investment for the purposes of data center development or accompanying infrastructure cannot abate local or state taxes. (Note: See recommendation for repealing all federal tax subsidies and credits for data center projects.)

Condition: Prohibition on Stock Buybacks

All companies receiving federal support for data center development are prohibited from using any funds to engage in stock buybacks within a set period of time. This prohibition must be stated explicitly and clearly, and must apply to all funds. Learnings from the IRA and CHIPS Act suggest that a mere “preference” for recipients that “commit” to not engage in stock buybacks is insufficient. During the early CHIPS Act implementation, the Department of Commerce had discretion to encourage recipients to refrain from stock buybacks as a condition of receiving CHIPS Act subsidies. A 2024 report from the American Economic Liberties Project (AELP) highlighted that although the statute prohibits CHIPS funds for buybacks, firms with large prior buyback histories could still engage in buybacks while benefiting from federal subsidies.³ Stronger implementation guidance and tighter federal guardrails are necessary to ensure incentives support real investment instead of freeing up capital for shareholder distributions.

Condition: Restrictions on Corporate Executive Compensation

No executive and C-suite level staff of any company involved in the building, financing, or operating of data centers receiving federal investment should be allowed to make in excess of $5 million (including equity and benefits) until robust, comprehensive regulations are in place protecting the public from data center harms.

Condition: Ratepayer Protection Requirements

Data centers must pay for 100 percent of the costs necessary to service them, including transmission, energy generation, capacity, and financing costs.

Condition: Prohibition on Diesel Generators

Stipulate that any data centers receiving federal funds cannot use on-site diesel generators.

Condition: Renewable Energy Requirements

Data centers receiving federal support cannot be served by oil, gas, or nuclear energy. Require that data centers procure or subscribe to locally deliverable, additional, and zero-emissions renewable energy at all hours of the day, every day of the year, as a condition for receiving federal approval. All energy generation colocated on federal land must be renewable energy. Diesel backup generators are prohibited.

Condition: Fair Labor Requirements

Note: Data centers are not significant permanent job creators; many of the promised jobs tend to be temporary construction positions or low-paid, temporary, subcontracted data center operations roles. Establishing fair labor requirements could offset some harm, but would not address the underlying reality.

High-Quality, Stable, and Local Jobs

Funding must require data centers to hire full-time data center staff from the local population or partner with community organizations on first-source hiring programs. These employees should be directly employed by the data center operator and not hired as subcontractors. Funding must also require neutrality agreements to provide space for union organizing on-site. For construction jobs, localities should demand project labor agreements with a commitment that construction projects will employ local building-trade union workers. Funding may also require prioritizing the hiring of underrepresented groups in specific industries or labor markets—such as women in construction or veterans.

Wages

Jobs should pay, at a minimum, a living wage adjusted annually for inflation. Ideally, wages should align with market-based standards tied to the state or regional median wage for the data center industry. There must be pay equity for equal work between contractors and the data center company’s own employees.

Benefits

Employers should be required to provide health insurance and cover at least 50 percent of the premium cost for each worker. Localities should also demand that data centers provide childcare to all workers.

Health, Safety, and Well-Being

Localities should regulate working conditions, including ensuring there is an adequate break room with strong health and safety standards.

Condition: Require Comprehensive Transparency Mechanisms and Monthly Reporting

Require all projects receiving federal support to abide by strict transparency requirements, reported monthly to a federal agency charged with monitoring, tracking, and enforcing transparency requirements.

Before Operation Begins

Require the following information to be certified in a public clearinghouse (a publicly available database). Federal agencies should retain the right to revoke or suspend data center permits for failure to adequately disclose the following metrics:

Financial Vehicles

Names of all companies involved in a data center project (including developer, shell companies, data center operators and/or end users, and financers). Require disclosure of the ultimate parent company and beneficial ownership for all entities involved. Require that any subsidy caps, eligibility limits, disclosure requirements, and enforcement actions apply to the parent company aggregated across all subsidiaries, affiliates, special purpose vehicles (SPVs), and joint ventures so that firms cannot evade limits by shifting ownership to SPVs.

Water Usage

Comprehensive accounting of the data center’s projected water usage (broken out by month), including projected water used in construction, server cooling, facility cooling (including cooling towers) and other ancillary water uses; projected water sources; anticipated water-conservation plan; and water infrastructure costs.

Energy Usage and Infrastructure Needs

Comprehensive accounting of the data center’s projected monthly energy usage; breakdown of all necessary costs to service them, including transmission, energy generation, capacity, and financing costs.

Energy Emissions and Air Quality

Projected value of all on-site energy emissions. Require the installation and use of best-in-class technology to continuously monitor and report air quality.

Labor

Require projected breakout of temporary and permanent jobs, including number of full-time employees, subcontractors, and temporary workers. Require union labor where possible.

After Operation Begins

Federal agencies must monitor and enforce transparency metrics. Failure to properly disclose metrics will result in revocation of permit or operating license.

Financial Vehicles

Annual reporting of all companies involved in a data center project (including developer, shell companies, data center operators and/or end users, and financers).

Water Usage

Monthly, comprehensive accounting of the data center’s actual water usage, including projected water used in construction, server cooling, facility cooling (including cooling towers) and other ancillary water uses; projected water sources; anticipated water-conservation plan; and water infrastructure costs.

Energy Usage and Infrastructure Needs

Comprehensive accounting of the data center’s monthly energy usage; annual summary of costs necessary to service the data center, including costs arising from transmission, energy generation, capacity, and financing.

Energy Emissions and Air Quality 

Actual value of all on-site energy emissions and air-quality metrics, reported monthly.

Labor

Require annual breakout of temporary and permanent jobs, including number of full-time employees, subcontractors, temporary workers, and unionization status of all. Include demographics such as race, gender identity, sexual orientation, education level, and pay and benefits data for each represented group. Include client overhead cost for the bill-rate per head count of subcontracted workers, organized by job title.

1. Including 100 percent bonus depreciation for IT infrastructure and data center equipment under Public Law 119–21. Public Law 119–21, 119th Cong., 1st sess. (July 4, 2025), 139 Stat. 72. ↩︎
2. This includes “qualifying investment projects” under the July 2025 Executive Order 14318, Accelerating Federal Permitting of Data Center Infrastructure. ↩︎
3. American Economic Liberties Project, Reshoring and Restoring: CHIPS Implementation for a Competitive Semiconductor Industry, American Economic Liberties Project, page 6, February 6, 2024, https://www.economicliberties.us/wp-content/uploads/2024/02/20240117-AELP-IndPolSeries-CHIPS-Paper_v4-1.pdf. For example, BAE Systems, Inc., a subcontractor that received one of the first CHIPS awards ($35 million), was in the midst of a multibillion‑dollar stock repurchase program, including roughly $3 billion in buybacks in 2021–22 and another $1.9 billion authorized in 2023. ↩︎