NY puts one-year moratorium on large-scale data centers

New York Governor Kathy Hochul has enacted a one-year moratorium on new hyperscale data center development across the state, signed via Executive Order. This unprecedented move aims to establish robust standards for data center development by temporarily pausing state environmental permits. The moratorium will allow the Department of Environmental Conservation (DEC) to develop a Generic Environmental Impact Statement (GEIS) to assess the potential impacts on energy demand, water use and quality, and air quality.

The Governor's action is in response to a surge in demand for data centers driven by AI, which has raised concerns about increased utility bills, depletion of natural resources, and strain on the energy grid. Alongside the moratorium, Governor Hochul has directed the Department of Public Service (DPS) to implement the "Energize NY" proceeding, requiring data centers to either pay higher energy costs or supply their own power. She is also directing DPS to explore a New York Grid Acceleration Fund, compelling data centers to invest in grid infrastructure and clean energy.

Additionally, Empire State Development (ESD) is tasked with issuing a Community Investment Framework (CIF) within 60 days. This framework will guide localities in negotiating community benefits from large-scale data center projects, including infrastructure improvements, childcare investments, and direct financial support, while also prioritizing organized labor, prevailing wage standards, and local hiring. Furthermore, Governor Hochul is pursuing legislation to repeal sales tax exemptions for large data centers statewide. Dr. Kirk Scirto, a family medicine specialist, has voiced opposition, calling data centers "parasitic centers" due to noise and light pollution.