New York moved to the head of the pack in protecting consumers from looming rate hikes resulting from the inadequately regulated boom in data center construction. Recently, Governor Hochul issued an executive order placing a one-year moratorium on the permitting of hyper-scale (50MW or more) data centers in New York State. The governor’s move gives state regulators time to more carefully consider the environmental impacts of these industrial behemoths and comes amid growing public calls for restricting the permitting or construction of data centers in communities across the state.
These data centers are used for a variety of purposes. They provide the backbone of the information “cloud,” processing digital transactions the place where much of our data is stored. A typical facility contains an enormous number of computers, and given the modern need for computing they are housed all over the country – indeed spread throughout the world.
The construction and use of these data centers is driving a rise in utility rates all across the nation and New York is not immune. During the past legislative session, lawmakers took a step toward slowing down the data center construction “race” to allow time to formulate policies to ensure the public is protected. The legislation, known as the Responsible Data Center Development Act, places a one-year moratorium on data center development while reasonable safeguards are created. The bill passed both houses overwhelmingly, with support across the political spectrum.
While the governor has yet to act on the legislation, she signed her executive order – essentially a more limited version of the bill – in order to “pause” approval of proposed and pending data center construction projects, while beginning to review public protections. The governor’s order targets projects using 50 megawatts of power or more. The legislation would impact proposals using 20 megawatts of power or more and has broader regulatory requirements.
Of course, her action led to predictable partisan and ideological sniping (some more ridiculous than others).
From the public’s perspective, it makes perfect sense to take a breath before embarking headlong into a data centers construction boom. However this “pause” is finally implemented (either through the order alone or in conjunction with the legislation), safeguards must be put in place. Among those safeguards should be measures that:
- Insulate the public from getting stuck with the bill if the data center flops or falls short. New Yorkers should not be left “holding the bag” if data center projects go belly up or greatly underperform.
- Make data centers’ permits and contracts available to the public without secrecy. New York has exemptions in its open public records law that can be used to keep these contracts secret. They must not be.
- There must be regular, ongoing monitoring and public reporting of water use, as well as noise impacts.
- Ensure that not one residential utility ratepayer dollar should be – directly or indirectly — used to subsidize data centers. Data centers are expected to need a fantastic amount of electricity; they must not be driving up utility rates for New Yorkers.
- Not one electron from the existing grid should be used to power data centers. Another way to jack up utility rates to subsidize data centers is by diverting current electricity in the grid to power data centers. Then ratepayers are on the hook to come up with new energy capacity.
New York now has at least one year to get it right. The governor deserves credit for getting the ball rolling. Signing the legislation would also add protections. Regardless of how this plays out, it will be up to the public to watchdog the process carefully to make sure the public’s interests are served.
There is an old political adage: “Money is the mother’s milk of politics” It means that political power flows from large warchests to candidates and to lobbying efforts that influence government decisions.
But where does the money come from? Powerful organized interest groups and the wealthy.
We saw it this year when lawmakers were wrestling with New York’s $268 billion-plus state budget. The successful campaign to weaken the state’s heretofore landmark Climate Law was to a large extent the result of a multi-million-dollar advocacy campaign launched by the oil and gas industry and large investor-owned utilities.
Another example was the successful effort to make it harder for victims of car crashes to get compensated. In that case, it was widely reported that ride sharing giant Uber was spending millions of dollars on an advocacy campaign to limit compensation for injured car passengers and drivers. Why? Because they are on the hook when their drivers are involved in an accident.
All in all, according to the most recent data, lobbying campaigns spent nearly $400 million to influence government decisions.
On the other side of the influence peddling coin is the campaign financing system. New York’s weak campaign contributions limits, poor disclosure rules, and huge contributions to the political parties have resulted in a system that relies on a small number of very large donors – entities that usually have business before the government.
New York has long been on notice of the failure of its state’s campaign finance law. Over thirty-five years ago, the final reports of the Commission on Government Integrity were issued. The Commission commented “In many instances these campaigns are disproportionately financed by groups, corporations or individuals whose businesses are directly regulated by government officials…[T]hese practices, among others, erode the public’s confidence in elected officials by giving at least the impressions that campaign contributors make contributions to candidates in order to obtain favorable treatment.”
Starting about ten years ago, New York took significant steps toward improving the system. It shrunk a loophole that allowed some businesses to give larger contributions than others. It established a voluntary campaign financing system that allowed a public “match” for small contributions, in order to help limit the influence of big donors. And it lowered campaign contribution limits for candidates running for office (although they are still high). But big donations to the political parties were left intact.
Campaign contributions to the political committees (for example the State Democratic and Republican Committees) are “capped” at $138,600, a ludicrously high level. Political committees are then allowed to transfer contributions of any amount to the candidates of their choice, effectively circumventing candidates’ contribution limits.
For those who want to give more, donations of any size are allowed to these political committees – as long as they are not used to advance a candidate.
Who makes contributions of these amounts? Those with access to big money, the same entities and individuals who are capable of spending big efforts on lobbying.
The result? Not enough has changed in Albany; it’s still a big money town. As the 1980s Commission noted, “torrents of money, unrestrained by real limits, pour from corporations, PACs and unions…The Commission found that this creates an unhealthy climate of indebtedness, with some candidates owing their success to party leaders who are in turn dangerously dependent on large contributions from special interests and those doing business with the government.”
What was true then, is still true today. As candidates run for state office, ask them how they intend to address this “unhealthy climate of indebtedness.”
