NYS Legislature approves bill to slow development of data centers

ALBANY — State legislators approved a bill Thursday that could make New York the first state to enact a one-year pause on the development of massive data centers.

The Assembly and Senate, voting largely along party lines, passed what lawmakers called an "omnibus" data-center bill meant to pump the brakes on development by mandating a moratorium and requiring statewide hearings and new regulations.

Democrats who lead the Legislature said the state needed to act after hearing from local governments and residents who feel overwhelmed by the rapid growth in data centers and the uncertain impact on energy, water and air resources, which has been triggered by the expanded use of artificial intelligence.

"Across the state, our residents are talking about data centers, are worried about data centers, are confused about data centers and are asking questions about data centers," said Assemb. Didi Barrett (D-Claverack), chairwoman of the Assembly Energy Committee, kicking off the debate in the Assembly.

"This is our opportunity, as state leaders, to say we want a pause," Barrett said. "We want to look at the whole phenomenon and what’s going on."

The Assembly approved the measure, 102-39. The Democratic-led Senate followed suit, 44-16.

Fourteen other states are considering pausing development of data centers, according to the National Conference of State Legislatures. But New York could be the first to enact a moratorium, according to Good Jobs First, a government watchdog group.

The Maine State Legislature passed a moratorium bill, but it was vetoed by Gov. Janet Mills.

In New York, it’s not certain whether Gov. Kathy Hochul would do the same.

The Democrat, up for reelection this fall, has expressed interest in updating laws regarding power rates to account for the high energy usage rates by the centers. Hochul also has said she doesn’t want data centers to "drain local resources."

On Wednesday, at a public event in Brooklyn, the governor said: "I will look at this one-year moratorium in the context of also knowing that the status quo can't continue, that much more needs to be done to derive benefits if they are in the State of New York."

Building and construction unions, often allies of Democrats, are on the opposite side this time. They made a last-minute bid to block the legislation, saying a moratorium will cost jobs and send data centers elsewhere, long after the moratorium ends.

Republican lawmakers made the same case Thursday, while also contending that Democrats were taking control from local governments.

"Other states are not waiting. They are actively recruiting this kind of job development that we are running away from," Assemb. Paul Bologna, a Buffalo-area Republican, said during the Assembly debate.

"The question isn’t whether data centers will be built," said Assemb. Josh Jensen, a Rochester-area Republican. "The question is will the jobs be here? Will the tax base be built here?"

But Sen. Rachel May (D-Syracuse) said the sprawling complexes raise questions for local boards that are "beyond their normal capacity" to handle.

Besides the moratorium, the bill also mandates data centers provide a "host community benefits" package and obtain at least one-third of their energy from renewable sources. It reclassifies data centers for purposes of calculating charges for water and energy consumption.

It also calls for the state Department of Environmental Conservation to conduct statewide hearings and provide a report with possible regulations in 18 months.

By Yancey Roy

yancey.roy@newsday.com@yanceyroy