KC Counts speaks with New Mexico State Senator for District 36, Jeff Steinborn, about the amendment that allows data centers to consider power generation as individual sources, skirting environmental law. Here is a transcription of their conversation.
KC Counts:
I want to talk to you about your call to close loopholes for micro grids like the one we're learning about because of Project Jupiter. How did we get a loophole and how do you propose we close it?
Jeff Steinborn:
Well, we got a loophole because there was a lobbying effort in the legislature to craft an amendment to a bill to basically allow self-source generation. And the reason I call it a loophole is because it exempts that self-source generation from our environmental transition called the Energy Transition Act. It applies to normal power generation through utilities, which is going to require them to become carbon emission-free within a few years. This amendment literally exempted them from that; and it was a last-minute thing that literally the entire debate took less than 5 minutes, it came the last day of the session, so it really caught us by surprise. And then we come to find out that, in fact, the lobbyists for these AI data centers were involved. So very much a loophole that needs to be closed.
KC Counts:
So that was something that happened at the tail end of the session, and then the memorandum of understanding came next?
Jeff Steinborn:
The memorandum of understanding might have come at some point, some point in the middle of that, but it's not, it's not something that was shared, with me, might have happened with the governor, but it wasn't, there's so many moving pieces. I alone had probably over 10 pieces of legislation in 60 days. So,dots aren't always connected. And this was certainly one of those major issues.
KC Counts:
It sounds like what you experienced as a state lawmaker is what county officials, at least some of them, say they experienced. And certainly, residents feel like this was rushed and they didn't have time to learn about all the details. Can you put the genie back in the bottle, though?
Jeff Steinborn:
Yeah, well, I've been working-- I mean, since the announcement, I've been working with the parties involved to try to force a serious look at how to incorporate renewable energy into the project, and with a goal of using as much renewable energy as possible. Their plan was to start with 100% natural gas. So, which is just kind of outrageous. And so yes, I think the genie, while the commitment and the deal with the county and the data center has been made, the exact plan of power generation from the operation itself is still clearly being developed, or at least it felt like it is. And so I've I've been working to try to bring parties together to explore more renewable energy use. And that's one thing that I'm working on with regard to this issue.
KC Counts:
I guess people would wonder, since it's such a perfect place for both solar and wind, why wouldn't they have gone with that first? Is natural gas still cheaper?
Jeff Steinborn:
You know, it's not that it's cheaper. And in some ways, maybe it's even more money. It's just out of expediency and convenience for them, honestly, because they did a deal that required them to start delivering power in two years. That's what they have said, okay? That is their agreement with OpenAI and Oracle and the people that are contracting this. And so the law, I think they just, the environmental concern, the law itself that they, of course, crafted and the policy makers that knew what they were doing, they did not make environmental protection at the forefront of this agreement. And I think they certainly could have, and that's what I've been trying to do kind of after the fact. And I think OpenAI, or those guys, the developers, certainly had a sales pitch about, oh, we're going to incorporate some solar power. But the fact is, is that talk is cheap until you have a meaningful agreement and meaningful commitments. And it's only a 15-year agreement that the developers have with their customer, which is OpenAI. So if we don't get going with having it really front loaded with renewable energy, you know, some commitment that at some point in the future we're going to have more green energy could really be kind of hollow or not a very meaningful offering. And the fact is, there is time to develop and deploy renewable energy on the front end of this project and a significant amount of it, but it requires that becoming a priority and following those steps. And it requires pressure, frankly, from government. And that's, I think, what we've had a steep learning curve as policymakers with us and certainly as the public, but there are communities all across the country that are dealing with this issue of the environmental impacts of these data centers, but also how it can impact electrical rates when that infrastructure and those utility generation or power generation is then shifted onto other customers, the cost of that. So we're having our own learning curve here in Doña Ana County and it's unfortunate because it was not unforeseen. I mean, data centers are synonymous with extreme energy usage, and this should have been kind of item one for policymakers engaging in discussion about it, in my opinion. It certainly was for me when I heard about it.
KC Counts:
So going into the 30-day session, is it likely at all that something would be on the table to rein in this issue?
Jeff Steinborn:
I hope so. I mean, it's going to depend on the governor, quite frankly, because the governor controls the agenda of a 30-day session. We have been trying for several years to pass a climate change bill that gave more regulatory powers to the state to enact by law reductions in climate emissions in the state of New Mexico. And it's possible a bill like that could help rein in and set more across-the-board limits on these types of things. We have a problem with this loophole, which I call it a loophole, this amendment we passed on the microgrid that exempts them specifically from those kinds of environmental requirements. And I believe that we need to fix that law.
KC Counts:
What currently, what kind of mechanisms exist for regulation, if not that?
Jeff Steinborn:
Well, unfortunately, they have air quality permits that they have to fall under a certain threshold. That's really the only limitation right now. But what this project has done is they have kind of come up with a clever little workaround on that. It's not so clever, it's pretty obvious, but where they have split the project in half to where now they call it two separate projects from an air permit standpoint, because if they had called it just one, it would have surpassed the air quality limit. So they break it up into multiple units. But I mean, that's an obvious loophole in and of itself to try to work around the intent of an air quality limitation. So really, we have limits, but they're not very significant. And it's, again, incumbent upon the governor, the administration, the environment department, and ultimately the legislature to close this loophole so that we don't exempt data centers or any self-source power generation entity from being exempt from these environmental standards, that we need to require that to have a significant amount of renewable energy and to quickly move towards completely carbon emission-free energy like the Energy Transition Act does for public utilities.
KC Counts:
All right. Well, Senator Jeff Steinborn, thank you so much for sharing your perspective on this issue. One we'll be following, no doubt, for a very long time. We appreciate your time.
Jeff Steinborn:
You're so welcome. Thank you.
