Hochul Temporarily Bans New Data Centers in NY Amid Scrutiny of Climate Impacts

New York Governor Kathy Hochul announced a yearlong moratorium on new energy-intensive data centers across the state, the first such ban in the U.S. Her executive order halts environmental permits for data centers of at least 50 megawatts for up to a year while state agencies craft regulations. The administration frames this as an effort to mitigate harmful effects, including substantial water use for cooling servers and potential strain on the electric grid.

Governor Hochul stated that New York would lead in establishing the nation's strongest standards for data center development to protect New Yorkers from hiked utility bills, depleted natural resources, and uncertainty. The order tasks the state Department of Public Service with creating a generic environmental impact statement for proposed projects, examining effects on water, air, energy, and water use. Additionally, Empire State Development will develop a framework for local communities to negotiate benefit agreements, and the DPS could establish a fund requiring data centers to invest in the state's power grid.

The state is also considering measures for data centers to provide their own power or pay a premium to prevent costs from impacting regular customers. Governor Hochul plans to pursue legislation in January to repeal sales tax exemptions for data centers, citing a previous controversy in Rockland County where JPMorganChase received $77 million in tax breaks for a data center expansion. This executive action follows a separate bill passed by state lawmakers this year, which also proposed a yearlong ban but for smaller facilities (20 MW) and included energy-efficiency standards, which Hochul is currently reviewing.