New York governor signs nation’s first moratorium on large data centers

New York Gov. Kathy Hochul today signed a first-in-the-nation executive order imposing a one-year statewide moratorium on hyperscale data centers and promising to build strong standards for the centers’ future development.

Hochul’s order temporarily pauses the issuance of state environmental permits for hyperscale data centers, which are large centers that use 50 megawatts or more in power.

During that pause, which is expected to last up to one year, she pledged to build a “nation-leading regulatory framework” to ensure communities receive the most benefits from new developments and make sure residents aren’t paying for transmission and infrastructure build outs in their utility bills. Hochul also promised to pursue legislation that would repeal sales tax exemptions for large data centers.

“New York has always been at the forefront of innovation and change but we’ve also always guaranteed that New Yorkers benefit,” Hochul said in a statement. “As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it’s my responsibility to take action and lead. New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too.”

Hochul’s executive action comes just over a month after the New York legislature passed the Responsible Data Center Development Act, an effort that included a one-year moratorium on hyperscale data centers, as well as requirements around environmental impact assessments, new rate classes for water and electricity usage, and labor protections.

That legislative milestone, achieved just before the legislature gaveled out for the year, came as an increasing number of localities are banning the facilities and residents are voting on whether to restrict data centers across the country. All thist comes on the back of a recent Hochul proposal advanced by the New York Public Service Commission that would require data centers to pay their fair share for the power they use. She floated acting on data centers in her State of the State address earlier this year.

In a briefing for reporters before Hochul signed the order, members of her policy team said she has not yet decided whether to sign or veto the Responsible Data Center Development Act as it is “complicated” and requires further study.

“The governor's feeling is that New Yorkers are calling for action right now,” an official said during the briefing. “We are seeing new communities every week pop up with concerns, with moratoriums, with pushback, and she felt real urgency about getting a framework in place and putting a stop on forward development until that was done.”

Bills imposing various kinds of moratoriums on data center development appear to be spreading across the country, based on research by the National Conference of State Legislatures. Lawmakers in 14 states are considering bans, NCSL found, with those moratoriums often paired with requirements to study data centers’ impacts on local communities. NCSL noted that several efforts have failed, while Maine Gov. Janet Mills vetoed that state’s proposed ban on data centers larger than 20 MW in April.

Under her executive order, Hochul has directed the state’s Department of Public Service to begin a proceeding to require data centers to either pay more for their energy or supply their own. She also is directing DPS to develop a Generic Environmental Impact Statement for data centers to ensure new facilities coming online are being held to consistent standards, which is expected to take a year and is the driving force behind the statewide moratorium.

The state will use the GEIS to assess the potential environmental impacts of the construction and operation of data centers in the state, including their effect on energy demand, water use and quality, and air quality. Once New York officials finalize these standards, the moratorium will be lifted, allowing new data center projects to proceed as long as they meet various state and local rules.

Hochul mandated that the Empire State Development agency  issue a framework within 60 days to provide clear guidance to local governments on how to negotiate community benefits, including local infrastructure improvements and direct financial support, as well as supporting organized labor and protecting wages.

Officials on the briefing with reporters said they did not have information on the exact number of hyperscale data centers that have been proposed or are under development. They said the state government is “not looking to stop [data centers] forever,” but officials want to get a framework in place to protect local communities before large projects proceed further.

“We are obviously seeing substantial pushback around the country on this particular issue in blue states, in red states, and actions in both states,” an official said. “This is nation leading in how aggressive the governor is being on this issue at this moment in time, but we are seeing across the country a lot of pushback here and a lot of concern.”