New York Becomes the First State To Ban New Data Centers

New York Governor Kathy Hochul has enacted a one-year moratorium on new environmental permits for hyperscale data centers in the state. The executive order targets facilities that consume or could consume 50 or more megawatts of energy, pausing their development to allow lawmakers to create a new regulatory framework.

Governor Hochul stated that the moratorium is necessary to address potential issues such as increased utility bills, depletion of natural resources, and general uncertainty for New Yorkers. The Department of Public Service has been directed to analyze the impact of data centers on the state's electric grid, including energy and water usage, air quality, noise levels, and disproportionate effects on disadvantaged communities. During this period, all pending applications for the construction or expansion of data centers are to be held.

Additionally, Empire State Development, the state's economic development agency, will assist local governments in developing a Community Investment Framework. This framework aims to help communities negotiate economic benefits from data center developers, potentially including contributions to a community investment fund for projects like energy affordability, childcare, and public infrastructure. The framework will also ensure union involvement in hiring and wage negotiations.

Further, the order discusses the potential creation of a New York Grid Acceleration Fund, which would require developers to make upfront capital contributions for grid improvements, participate in demand response programs, and support clean energy procurement, consistent with the state's goal of 70 percent renewable electricity by 2030 and 100 percent zero-emission by 2040.