New York Lawmakers on Track to Halt Data Center Construction (1)

New York lawmakers are set to approve a one-year ban on data center development and other guardrails amid residential concerns the large energy users could spike utility costs.

New legislationintroduced late Monday night allows Democrats to pause permits for new data center development for a year, plus other guardrails, such as mandating energy efficiency goals and defining what utility rate class such facilities fall in. New York would be the first state to levy such a pause on data center buildout if Gov. Kathy Hochul (D) approves the measure by December.

Democrats have acknowledged the need to address voter concerns on data centers ahead of the November election, even as state leaders tout the economic development benefits from such facilities.

“Yes, we intend to pass it,” Assembly Speaker Carl E. Heastie (D) said during a news conference on Tuesday. He added that lawmakers have been in conversation with Hochul’s office about the proposal and that she’s aware of the legislative plans to fast-track the bill

Under the omnibus measure, which combines multiple existing proposals to regulate data centers, the state Department of Environmental Conservation would also need to complete areport detailing projected impacts of each project on water, electricity, and tax revenue.

It would also require the state’s utility regulator, the Public Service Commission, to create separate utility rate classes for large data centers as lawmakers try to compel facilities to pay for their own impacts on the grid.

The measure includes certain labor standards for data center construction, including prevailing wage.

State Sen. Kristen Gonzalez (D) said addressing data centers this legislative session was not solely motivated by the upcoming election. “We know how existential this issue is, and it’s bigger than any one year, it’s bigger than any one election cycle, it’s really bigger than any one company,” said Gonzalez, who sponsors the measure.

Hochul has not supported a moratorium outright but said last week she was weighing the proposal. She has long said data centers looking to build in New York should manage their own energy costs without making local ratepayers deal with increased costs.

“It’s not a statewide approach necessarily, but it’s something I’m looking at intensely,” Hochul said during a news conference last week.

The measure proposed this week must be approved by June 5, when lawmakers are slated to depart the state Capitol.