New York Democrats Propose Sweeping Pause On Data Center Construction

ALBANY, New York — Key Democratic state lawmakers alarmed by the surge in demand for power by the tech industry want to pull the plug on new data centers in New York.

New legislation in Albany would freeze state and local approvals for data centers for three years — a sweeping moratorium that has not previously been reported. The pause would continue until new regulations are in place.

The move would put New York on the front lines of a national reckoning over whether states can absorb the energy demands of the AI boom without driving up electricity costs or destabilizing already strained power grids.

"Massive data centers are gunning for New York, and right now we are completely unprepared,” said Democratic Sen. Liz Krueger, one of the bill’s sponsors and chair of the state Senate’s powerful Finance Committee. “It's time to hit the pause button, give ourselves some breathing room to adopt strong policies on data centers, and avoid getting caught in a bubble that will burst and leave New York utility customers footing a huge bill.”

Politicians across the country are grappling with the thirst for power driven by AI. In neighboring Pennsylvania, Democratic Gov. Josh Shapiro has pivoted from being an outspoken advocate for attracting the industry to proposing new requirements to protect residents from higher energy costs. Florida Gov. Ron DeSantis, a Republican, has also floated restrictions and liberal firebrand Sen. Bernie Sanders has called for a national moratorium.

In New York, Gov. Kathy Hochul has backed requirements for data centers to bring their own power or pay more to ensure costs don’t rise for residents. She’s also embraced the potential benefits of AI and funded a university-based AI research initiative that includes a new data center.

Lawmakers in Albany have an appetite to tackle the data center issue this session — but it remains to be seen if a moratorium can overcome almost certain opposition from labor unions, which are particularly influential with state assemblymembers.

While the state hasn’t seen a significant buildout of large-scale data centers like in Virginia or Texas, there are thousands of megawatts of these projects looking to hook up to New York’s grid.

That crush of requests has led to concerns about the reliability of the state’s electric grid in the coming years and sparked worries about spiking energy prices.

The New York moratorium bill would halt new data centers over 20 megawatts for three years. It would require the state Department of Environmental Conservation to complete an environmental review and issue regulations to address any impacts identified. The state’s utility regulator would also have to issue regulations to prevent higher energy costs for residential ratepayers from new data centers.

New York is the largest state where lawmakers have proposed a moratorium on data centers. But concerns about the growing issue are bipartisan, with Republicans and Democrats backing moratoriums in various states.

Similar measures have been introduced in Maryland, Georgia, Oklahoma, Virginia and Vermont. A Republican legislator in Michigan — where dozens of local governments have already passed moratoriums — has said she’ll introduce a statewide measure there, as well. In Wisconsin, a Democratic gubernatorial candidate has also called for a moratorium.

The New York measure has backing from Food and Water Watch, an environmental organization that’s also spearheaded calls for a national moratorium. Environmentalists see data centers driving fossil fuel use and new gas plants across the country.

“It's an issue that legislators feel strongly about, and they feel strongly about it because they get that this is the hottest environmental thing there is at the moment,” said Alex Beauchamp, Northeast director at the organization.

There’s also major concern that the added demand from data centers could undermine New York’s moribund efforts to decarbonize its electric grid. More power demand without added supply also likely means higher electricity prices for consumers.

The projects bring few permanent jobs to offset these concerns. Other Democratic lawmakers in New York have also offered proposals to put tighter guardrails around data centers.

“In a session where everyone is talking about affordability, it's frankly, hard to think about something that would have a bigger impact on utility rates than addressing data centers,” Beauchamp said.

Assemblymember Anna Kelles, a Democrat from the Ithaca area, is the lead sponsor of the bill in that chamber. Kelles has opposed a data center project in her district.

“This is the time to take a pause and set up strong regulations that ensure protections for New Yorkers from carrying the economic burden of the high energy demands of data centers and minimize environmental harms of water, noise, light, and air pollution,” she said.

Kelles also championed a moratorium on gas-powered cryptocurrency mining operations that Hochul signed in 2022. There are several parallels between that battle in Albany and the data center issue.

Cryptocurrency mining was a relatively novel issue when that moratorium was passed. Labor unions whose members build data center projects are likely to oppose a moratorium, as they did on the cryptocurrency issue.

“These are really good projects for our members overall,” said Daniel Ortega, head of community affairs for Engineers Labor-Employer Cooperative (ELEC 825) and executive director of New Yorkers for Affordable Energy.

Ortega said the group would oppose a moratorium and also objected to Hochul’s proposal to have data centers pay more.

Beauchamp likened the data center fight to a different environmental battle: the successful effort to ban fracking in New York more than a decade ago.

“Most things in politics, people have really, really solid views that have been developed for years or decades. Something like data centers isn't like that, because nobody thought about them five years ago,” he said. “I'm hopeful there's a similar political moment here where you can very quickly make positive change.”