New York Governor Kathy Hochul Is Walking a Narrow Lane on Data Centers

New York Governor Kathy Hochul has enacted a first-in-the-nation permitting pause for data centers, attempting to balance concerns from AI skeptics, economic development advocates, and renewables boosters. The executive order, signed Tuesday, implements a one-year moratorium on new large data centers, defined as those exceeding 50 megawatts, to develop a policy framework for data centers to pay their way in terms of grid costs and electricity rates. This action has been praised by data center opponents but criticized by the technology sector and some political figures, including former President Donald Trump.

Hochul's moratorium differs from the Responsible Data Center Development Act, a legislative bill that passed both houses of the state legislature in June. The legislative proposal had a lower energy use threshold of 20 megawatts. Governor Hochul clarified that her executive order was designed to avoid impacting essential data centers serving hospitals, schools, research centers, and bank back-office operations. She indicated the process to establish new policies would be completed within a year, after which the moratorium would be reviewed and potentially lifted.

While the moratorium's impact on renewable energy development, particularly in upstate New York, remains unclear, Hochul emphasized the state's investments in other power forms. She stated that new data centers would be required to either produce their own energy or pay a premium to use the state's grid. The executive order outlines a process where new data centers might be required to fund dedicated clean electric generation and/or battery storage consistent with the state's clean energy goals. Hochul linked the moratorium to broader economic development efforts, particularly upstate, and indicated a preference for projects like Micron's semiconductor manufacturing facility that create more jobs. Legal experts like Jeffrey Moerdler from Haynes Boone expressed skepticism about the moratorium's temporary nature and its potential long-term impact on attracting data center development to New York.