On Tuesday, September 15, the New York State government proposed a new plan to require developers of large-scale data centers to provide economic benefits to the communities where they are located in response to the pressure on electricity, infrastructure, and public resources brought about by the expansion of data centers.
According to Reuters, New York State Governor Kathy Hochul proposed that local governments negotiate with developers of new data center projects to seek investments of at least $1 million for community development for every 1 megawatt of utility electricity demand. State government documents state that such investments can be used for local infrastructure, childcare services, and direct funding to the community.
Hochul also requested that the Empire State Development Corporation (ESD), the state’s economic development agency, develop a “Community Investment Framework” to provide guidance on negotiating community benefits with local governments and large data center projects.
Hope Knight, the CEO of the Empire State Development Corporation, stated that unlike traditional manufacturing industries, data centers require a significant amount of power, land, and infrastructure, but their contribution to local employment is relatively limited. With the increased demand for data centers, New York State needs to establish common standards to ensure that local communities can benefit from such projects.
Currently, major data center developers including Amazon, Meta, and Google’s parent company Alphabet have not responded to this proposal from New York State, while Microsoft has declined to comment.
At the same time, New York State is strengthening control over the expansion of data centers. On June 4th of this year, the New York State Assembly passed Bill A.11560, proposing a one-year moratorium on permits for large data centers, requiring utility companies to establish separate power service categories for large data centers, and setting requirements for energy efficiency, renewable energy, community benefits, and labor standards.
On July 14, Governor Hochul signed an executive order suspending the issuance of state environmental permits to new large-scale data centers for up to one year. During this suspension period, New York State will develop a data center regulatory framework, and the Empire State Development Corporation will draft a community investment framework.
Data centers, especially artificial intelligence data centers, have rapidly expanded in recent years, driving up electricity demand in certain parts of the United States. Governments and residents alike are increasingly concerned about issues such as grid capacity, electricity prices, water resources, and infrastructure costs.
A Reuters and Ipsos survey conducted in June of this year showed that only about one-third of Americans support the current rapid pace of data center construction, with the majority of respondents expressing opposition to building data centers in their communities.
In Texas, Governor Greg Abbott requested on September 14 that state regulatory agencies take punitive measures against data centers that do not disclose their water usage. Texas is one of the regions in the United States where artificial intelligence infrastructure development is advancing rapidly.
Meanwhile, Republican members of the U.S. House of Representatives are planning to push for related legislation in an attempt to restrict the increase in electricity prices caused by data center expansion. It is reported that dozens of state legislatures, including Maine, have also introduced similar bills.