he Army is warning that a House-approved defense measure aimed at restricting certain foreign-made components in commercial data centers built on Defense Department land could jeopardize more than $1.3 billion in planned private investment as the Pentagon expands its data center footprint.

The provision, sponsored by Rep. Cory Mills, R-Fla., was added to the House Armed Services Committee's version of the fiscal 2027 National Defense Authorization Act before the bill passed the House this week.

If enacted, the measure would bar companies leasing Defense Department land from installing or operating data center equipment containing certain printed circuit boards, advanced semiconductors, chipsets and other components the Pentagon considers national security risks because of where they are manufactured.

"Honored to pass this amendment to protect our military installations from Chinese components being used in data centers on our installations," Mills said last month. "This bill protects national security, promotes American businesses, and builds industry capability."

The Army, however, told Federal News Network the proposal would create a "federal land penalty" by imposing requirements on projects built on military installations that would not apply to comparable commercial developments elsewhere.

The service said the measure would establish an "unworkable standard" that could "drive world-class commercial partners — and over $1.3 billion in private capital — away from Army land."

The dispute comes as the Pentagon moves to host more privately financed data centers on military property to support growing artificial intelligence capabilities.

The Army has selected Carlyle Group to develop a large data center at Fort Bliss, Texas, and CyrusOne — jointly owned by KKR and BlackRock — to build a similar facility at Dugway Proving Ground in Utah. The Fort Bliss project is expected to reach its initial operating capability in fiscal 2027.

The Air Force is pursuing a similar initiative by making unused land at five military installations available for commercial AI data centers.

Congress, meanwhile, is also examining the broader effects of locating commercial data centers on military property.

House appropriators have directed Defense Secretary Pete Hegseth to assess proposed projects before on-site construction begins, citing concerns about electricity demand, water use, environmental impacts, physical security, mission assurance and cumulative effects on nearby communities.

Rep. John Garamendi, D-Calif., unsuccessfully sought to add separate restrictions during the House Armed Services Committee's consideration of the defense bill.

Rep. Derrick Van Orden, R-Wis., opposed Garamendi's amendment, arguing military installations are a better location for AI data centers than productive farmland.

"I believe that [the amendment] is going to stand in the way of us maintaining AI dominance over China and it is going to prohibit us from being able to use federal reserves, which means that these data centers are going to go on black dirt and remove tillable soil from our farm economy, which we just don't need right now," Van Orden said.

House Armed Services Committee Chairman Mike Rogers, R-Ala., also opposed Garamendi's amendment, saying it could interfere with the Army's negotiations with commercial partners.

"The nation with the best data infrastructure will possess a decisive advantage in the next warfare. The U.S. cannot afford to lose this position," Rogers said.

Separately, Rep. Rashida Tlaib, D-Mich., introduced legislation this week that would prohibit AI data centers from being built on federal land.

"Everywhere I go in our district, our residents tell me loud and clear, data centers are not welcome in our communities," Tlaib said in a statement. "Our residents are choking on smog and already paying too much for their utility bills, yet the Trump administration wants to place heavier cost burdens on the shoulders of hardworking Americans."

"The No AI Data Centers on Federal Lands Act establishes a critical guardrail to protect our public lands and ensures that the rush to build AI infrastructure does not come at the expense of our health, environment, or democratic voice," added Mar Zepeda Salazar, legislative director for the Climate Justice Alliance.