Debate Over Data Centers Intensifies In NJ, Bill Sits On Murphy’s Desk

The debate continues in New Jersey over a proposed law that would increase state oversight of “data centers,” including artificial intelligence (AI) processing facilities.

Some New Jersey lawmakers have been taking a closer look at the impact of AI processing – and asking for more regulation.

Last month, a proposed state law involving data centers advanced out of the Senate Environment and Energy Committee. If it crosses the finish line, S-4293 would require owners or operators of data centers to submit quarterly reports to the state Board of Public Utilities detailing their water and energy usage, performance calculations and indicators, and their “sustainability indicators.”

The bill survived votes in the state Senate and Assembly on June 30, and is currently sitting on Gov. Phil Murphy’s desk for a potential signature.

Some advocates have alleged that large artificial intelligence “data centers” popping up across New Jersey are fueling a massive surge in demand for electricity across the region – and sticking Garden State residents with the cost.

Meanwhile, critics argue that the bill will create a chilling effect for businesses thinking about placing data centers in New Jersey. They also claim that data centers get an undeserved rap as environmental hazards.

SURGING DEMAND, RISING BURDEN

The bill is in “direct response to mounting concerns over surging electricity demand,” driven in part by the rise of data centers across the region, its sponsors said.

“Data centers consume an extraordinary amount of energy and water, using as much in a single day as hundreds of homes,” Sen. Teresa Ruiz said.

“As their growth continues to surge, we must be diligent in assessing their environmental footprint and economic impact,” Ruiz said.

Sen. Renee Burgess agreed with her legislative peer, saying that as more data centers move into the region, the strain on New Jersey’s electric grid will grow.

“Tracking energy and water consumption at data centers is key to ensuring this new technology does not place an undue burden on New Jersey communities,” Burgess said.

Nonprofit advocacy group New Jersey Policy Perspective recently released a report that claims a spike in demand that is fueling price hikes for electricity can be largely attributed to the rapidly growing artificial intelligence industry.

According to the report – which also calls for more “clean energy” options – AI data centers account for nearly 70 percent of the projected increase for PJM, the company that manages the electric grid in New Jersey and 12 other states.

>> Read More: Electric Bills Being Driven Up By AI Data Centers In NJ, New Report Says

‘SENDING THE WRONG MESSAGE’

Last week, the New Jersey Business and Industry Association (NJBIA) reached out to Gov. Murphy with a plea to veto the bill.

According to the group, its members have serious concerns about data security and privacy – as well as the potential effect on drawing more data center operators to the state.

“At a time when states and nations are vying to attract data centers – and the jobs and economic activity they create – it's crucial that we maintain an environment conducive to growth and development,” NJBIA deputy chief government affairs officer Ray Cantor wrote in a July 17 letter to the governor.

Read the full letter here.

“S-4293 does not promote greater environmental awareness; instead, it mandates the public disclosure of sensitive information that could be used against businesses, potentially exposing proprietary data that companies depend on for their operations,” Cantor said.

“This risk alone is enough to prompt these centers to relocate from our state or to exclude New Jersey from consideration when planning expansion,” he added.

Cantor said the bill perpetuates a false narrative that the industry is extremely harmful to the environment and surrounding communities – “which could not be further from the truth,” he claimed.

According to Cantor, it’s in the industry’s own best interest to make sure it is using energy and water efficiently because energy and water are among its largest expenditures.

“Right now, our state remains competitive with our regional partners by being home to roughly 77 data centers,” Cantor noted. “But legislation like S-4293 risks that. This legislation sends the wrong message to our business community and unintentionally vilifies data centers and the great resources they provide.”

Cantor noted President Donald Trump recently announced that various businesses, including Amazon, are collectively investing $90 billion for the construction of data centers and their energy supplies in Pennsylvania.

“If [this bill] is signed into law, New Jersey will be erecting an unnecessary barrier to the growth of the AI industry in the Garden State,” he said.

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