New York has enacted the first statewide moratorium on new data center permits, pausing projects over 50 megawatts for up to a year. This move aims to address concerns over rising energy prices and environmental impacts.
New York Governor Kathy Hochul signed an executive order on Tuesday, placing a one-year moratorium on state environmental permits for large data centers. This action makes New York the first state in the nation to implement such a ban. The moratorium applies to data center projects with a peak demand of 50 megawatts or more. Governor Hochul stated that the pause is intended to provide state officials with time to develop regulations that will protect the environment, the electrical grid, and communities where these facilities are proposed. The governor's office indicated that this process could take up to a year.
The executive order follows the passage of a bill by the state legislature that also proposes a one-year moratorium. However, the governor's office stated that the executive order allows for immediate action while the legislative bill, described as complex, is reviewed. The bill passed by the legislature, known as the Responsible Data Center Development Act, would also impose a one-year moratorium on permits for large data centers, defined as those with a peak demand of 20 megawatts or more. The legislative bill also includes provisions for public hearings before permit issuance and requires the Department of Environmental Conservation to prepare an environmental impact report on data center development.
Governor Hochul's executive order includes exceptions for facilities such as hospitals, research centers, and educational institutions, which typically consume less electricity. Prior to this order, Governor Hochul had directed state regulators to explore requiring data centers to either pay more for their energy or provide their own power sources. She also expressed a desire to pursue legislation that would remove sales tax exemptions for large data centers in New York.
The demand for data centers has increased significantly, driven by the growth of artificial intelligence and other computing operations. However, these facilities are known for their substantial energy and water consumption. Concerns have been raised about the potential for data centers to increase utility bills for residents, deplete natural resources, and create uncertainty for communities.
Environmental groups and some legislators have supported the moratorium, viewing it as a necessary step to address the impacts of data center development. Mitch Jones, managing director for policy and litigation at Food & Water Watch, stated that the governor's order is an important victory for New Yorkers who have called for action on hyperscale data centers.
Conversely, some opponents argue that such moratoriums could discourage investment and lead New York to lose potential projects and jobs to other states. In Maine, a similar moratorium bill was vetoed by the governor, who cited concerns about blocking a proposed data center that could have benefited a struggling town.
New York has not historically been a major hub for the largest hyperscale data centers compared to states like Virginia and Texas. However, some planned projects in New York have already generated local opposition. The governor's office has stated that the state intends to lead in creating strong standards for data center development, ensuring that the success of companies in New York benefits the state's residents. The Department of Public Service is tasked with developing guidelines for data centers to ensure new facilities meet consistent standards, a process expected to take up to a year.