As hyperscale data center project proposals abound, local communities around the country are fighting back — and so are lawmakers in Albany. Gov. Kathy Hochul signed an executive order on July 14, pausing the issuance of state permits for the construction of hyperscale data centers until state regulators can produce a report on the impacts of data center construction and operation on the environment. The moratorium will expire after a year and, for now, blocks a potential data center development in the town of Lysander — home to Beaver Lake Nature Center and the Three Rivers Wildlife Management Area.  Environmentalists and state lawmakers across Central New York want the governor to go further. Ultimately, they would like to permanently keep data centers away from their communities or at least enact a more stringent version of the moratorium due to the environmental risks data centers pose to bodies of water, the electric grid, and utility bills of nearby residents.  There are currently 38 large data center project proposals being considered by utility regulators in the state. Those projects would demand nearly double the energy of all New York households combined, according to a recent analysis. Advocates’ and elected leaders’ plight for regulation comes at a time when both the salience of data centers as a political issue, as well as the public backlash against them, are at an all-time high. Central Current spoke to environmental activists, elected officials representing CNY, advocates of indigenous communities in the state, and policy experts shaping the perception of data centers about the governor’s regulations.  Unanimously they accepted the moratorium as a necessary measure to build regulatory guardrails around data centers even as AI has become one of the only sectors nourishing the American economy.  A moratorium, environmentalists and elected officials say, will give the state time to evaluate the impacts of data centers and put enforceable protections in place before decisions are made that could affect utility bills, public health, water resources and electric grid reliability and tax incentives.  “We should do the due diligence ahead of time to make sure that they’re not just sucking resources out of our communities and giving nothing back.” said State Sen. Rachel May, who represents the 48th Senate District, including parts of Onondaga County. The stakes are highest in Western New York, where the Tonawanda Seneca Nation and its allies are resisting a 2.2 million square foot data center in Genesee County. That massive facility would directly abut the Big Woods, a natural preserve holding sacred and practical meaning for the Tonawanda Senecas. The Genesee County Economic Development Center has offered Stream U.S. Data Centers $1.46 billion in tax subsidies for the project, which the company says will create 125 jobs. Stream and GCEDC did not respond to interview requests from Central Current reporters. “The land is actually priceless, and, at some point, I feel like you just really can’t get to some of those people who have subscribed themselves to that way of thinking,” Logan said. “But we still need to do our part as human beings in standing up for the environment and the animals and the birds, because they’re our relatives, too.” The Tonawanda Seneca Nation does not participate in American government, Logan said, but the moratorium is still a boon for the Nation’s efforts to resist Stream’s data center.  Ryan Madden, Indigenous solidarity director for the environmental group NY Renews, said the moratorium grants the organized resistance against data centers in the state a year to continue pushing back. “We think that’s pretty significant,” said Madden, who has been supporting efforts to stop localized resistance to the construction of Stream’s data center in Genesee County. Elsewhere, NY Renews is undergirding the Mohawks United in Safety and Health’s efforts to permanently block such projects from materializing in the town of Massena near Mohawk lands. Proponents of data centers cheered Hochul’s efforts to draft environmental and utility regulation guidance, but warned that a national moratorium on data centers would be catastrophic to the national economy and America’s designs on establishing a market hegemony on the world of AI. Chris McGuire, a senior fellow for China and emerging technologies at the Council on Foreign Relations, said that states need to take the lead on regulating data centers to protect local communities from bearing the brunt of energy and environmental costs while ensuring they enjoy the benefits that data center proponents say the facilities will bring.  By looking to fine-tune regulations on data centers now rather than later, McGuire said, New York lawmakers can protect communities from unregulated development while insulating developers from constrictive regulations that stifle investment. “New York’s done some really good things already on the safety side,” McGuire said. “I would hope that on the infrastructure side, it finds a reasonable path forward as well that allows for real development and cost sharing, but in ways that don’t negatively impact citizens.” Regulating the ‘21st century version of an oil well’ Hochul’s moratorium, the first of its kind in the U.S., directs the New York Department of Public Service to develop an environmental impact statement for data centers so they can be held to consistent standards.  That impact statement will assess the effects the construction and operation of data centers may have on energy demand, water use and quality and air quality. Regulators will use that information to set standards for data center construction and operation. The moratorium covers data centers that consume more than 50 megawatts of electricity and it can remain in place for up to a year while DPS drafts the environmental impact statement. This means that the state’s Department of Environmental Conservation will not issue any permits that weren’t already deemed complete before the executive order was issued. Sen. May and other state lawmakers, along with environmentalists like Madden, say Hochul’s executive order does not go far enough. Instead, they favor and have urged the governor to sign the “Responsible Data Center Development Act.” That bill is a more potent moratorium proposal that passed the state legislature a month before Hochul announced her version of a pause on data center permitting.  The legislature’s bill, sponsored by downstate lawmakers Didi Barrett in the Assembly and Kristen Gonzalez in the State Senate, also pauses permitting for a year. However, it includes all data center proposals set to demand more than 20 megawatts of electricity.  The legislation also differs from Hochul’s executive order in that it directs state regulators to review data centers’ impacts on electronic waste, farmland and public health. It is also more direct, said Mary Holland-Bavis, the chief of staff for Anna Kelles, the Assemblymember in Ithaca who helped draft and co-sponsored the “Responsible Data Center Development Act.” A data center proposal in Kelles’ district has created a massive rift among residents, leading to some lawmakers and residents to lobby the state for environmental regulations.  Hochul’s executive order, Holland-Bavis said, directs agencies to consider and develop potential protections, while the Legislature’s bill outlines them and codifies them into law. The bill would also require a separate utility rate class for data centers so operators pay electric and water service costs, Holland-Bavis said.  The executive order directs a state agency to explore ways to prevent infrastructure costs from being shifted onto customers.  “It’s not enough to know how much electricity or water one facility might use in isolation, we need to understand what the rapid development of multiple hyperscale facilities could collectively mean for New York,” Holland-Bavis said. Another tenet of the executive order aims to ensure that localities can reap economic benefits from data center development. This comes at a time when the cost-benefit analysis of jobs created, weighted against tax incentives requested by data centers, has come into question by the governor and national economic development experts. Sen. May said she does not expect hyperscale data centers in New York to create many long-term jobs.  “Almost nobody works in these,” May said. “It’s just a warehouse full of computers, essentially. That it’s not a good investment of taxpayer money for us to be trying to attract these kinds of developments.” May said she worries counties and their respective industrial development agencies will give big tax breaks without much to show for. State policy advocacy thinktank Reinvent Albany in its 2024 report found that economic and industrial development agencies in New York have a “perverse incentive” to hand away tax dollars to win projects, because these non-elected public bodies derive the overwhelming bulk of their operation budgets from deal fees. May introduced the “Stop Subsidizing Data Centers Act,” which caps financial incentives for data center developers at $25,000 per anticipated full-time job. It also denies assistance for data center projects capable of consuming more than 20 megawatts during normal operations. Hochul has publicly committed to exploring how to prevent tax incentive deals that would be predatory to municipalities.  There are at least two cases where IDAs have offered multiple millions of dollars per job to data center developers. The package GCEDC offered Stream in Western NY would net the developer $11.7 million in subsidies per permanent job created. A spokesperson for Hochul told Central Current the governor will review May’s legislation once it has passed the legislature. As lawmakers seek to regulate data centers, May says her ideal vision of CNY is one where the region has no hyperscale data centers.   May called data centers a “21st century version of an oil well.” She said that many residents in her district won’t see the value of data centers. “They’re just putting their tentacles into the ground, in the water, and the energy system and sucking out as much as they can to do their data work,” May said. ‘NIMBYism’ and the ‘Hydra effect’ Some in New York hope the data center moratorium may grow into something closer to a permanent ban on hyperscale data centers throughout the state. While McGuire is supportive of New York state’s moratorium as a pause, he believes a permanent ban on data centers could have a catastrophic domino effect on the nation.  Comparing a total, permanent ban on data center development to NIMBYism — an acronymic pejorative meaning “Not in my backyard” sometimes leveled in the housing sector against residents who resist new developments near their own homes — McGuire said that New York may be able to make do without locating hyperscale data centers in-state, but at the cost of losing out on the “most important resource in the world.” “New York has an outsized voice in how the United States is going to approach, adopt, and regulate technology, and if it’s not going to take a kind of principled voice, a stand that can be replicated by other states, there’s significant risks that other states kind of fall off the wagon, too,” McGuire said.  McGuire argued such action risks the U.S. ceding global dominance in AI to China, which could have implications for the country’s economy and way of life. In the interests of American democracy, McGuire contended, it is critical states identify and implement balanced regulations that protect residents without overly constricting data center development. Logan said he detests the idea that AI and data centers are inevitable, arguing the notion of AI’s inevitability stems from rhetoric from industry stakeholders who stand to profit the most from AI and data center development. Despite the buzz around leading AI companies, questions have abounded for years about whether the companies’ products will actually prove profitable.  70% of Americans polled oppose data centers for artificial intelligence in their area, according to a March poll from Gallup. “I don’t think that there’s any really true community buy-in when people are coming to communities with that mindset, saying that this is going to happen whether you like it or not,” Logan said. Logan pointed to an apparent pattern playing out across the country, which he called a “Hydra effect.” Some communities that mount prolonged resistance to data centers have succeeded in prompting data center companies to abandon plans and locate elsewhere.  “These data centers, when they’re struck down in one place, they pop up someplace else,” Logan said. “That’s why it’s so good for our allies to fight for that moratorium,” Logan said. “Because then maybe, just maybe, if they can get a ban, a full ban, then they won’t have to worry about that.” Aside from its ramifications on foreign policy initiatives, data centers are the infrastructure that “is going to power everything going forward,” McGuire said, reiterating his belief that states will not want to avoid investing in hyperscale data centers out of principle. “I totally recognize the legitimate concerns in the politics here, but just from a long term perspective, this is going to be something that you’re going to want to have some stake in,” McGuire said. To Logan, Madden and Indigenous communities across New York, the resources presented by data centers cannot measure up to the resources that New Yorkers could stand to lose from constructing such facilities: water, land, air and natural life. “There are some people in this country… who can go an entire month without touching soil or grass,” Logan said. “It’s troubling to think that it’s people like that who oftentimes are making decisions for places where it’s still green, where the birds still sing, and where the water is falling unobstructed.” The post New York paused AI data center development for a year. In the interim, lawmakers want to block tax breaks  appeared first on Central Current. ...read more read less