New Jersey Joins States Cracking Down on Data Center Energy Use
New Jersey has enacted new legislation requiring data centers to disclose energy and water usage and pay for their own grid connections, signaling a growing trend of stricter state-level regulation. Other states like New York and Texas are also implementing new policies, and federal lawmakers are considering legislation to allow states to create separate utility rates for large energy consumers. This comes amidst increasing bipartisan and public concern over the energy and water demands of data centers.
New Jersey has emerged as the latest state to impose stricter regulations on data center development, with Governor Mikie Sherrill signing legislation on Thursday. The new law mandates that data centers disclose their energy and water consumption to the state's Board of Public Utilities every six months, a measure intended to promote transparency amid public criticism of the industry's significant resource demands. This is the second of four "guardrails" Sherrill is implementing, following a July law that requires data centers to cover their own electricity needs and grid connection costs. Future requirements are expected to include incentive packages for host towns and labor agreements.
The move by New Jersey reflects a broader bipartisan trend across the United States to regulate the energy-intensive data center sector, particularly with the rise of artificial intelligence. New York, for instance, previously enacted a one-year ban on data center development, a policy Governor Kathy Hochul has supported to allow time for crafting targeted regulations. Similarly, Texas Governor Greg Abbott has directed the state
Federal lawmakers are also addressing the issue, with Congress considering the Ratepayer Protection Act (H.R. 9340). This bill, which unanimously passed the House Energy and Commerce Committee in July, would empower states to establish separate utility rate classes for "large-load customers" like data centers, aiming to prevent residents from subsidizing their high energy consumption.
The debate is influencing political campaigns, with Michigan Senate candidate Mike Rogers advocating for a one-year pause on data center construction, while his opponent Abdul El-Sayed calls for developers to provide their own energy and sign community benefits packages. Community activists and environmental groups are actively leveraging this sentiment to demand accountability from "Big Tech" and ensure that data center growth benefits local communities rather than solely industry interests.