NY Governor Halts New Data Center Construction Statewide

New York Governor Kathy Hochul issued an executive order on Tuesday, implementing the nation's first statewide moratorium on the construction of large-scale data centers. This pause, effective for up to one year, addresses growing concerns from lawmakers and citizens regarding the significant impact these facilities have on electricity prices and the stability of the energy grid. Governor Hochul stated that "As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it’s my responsibility to take action and lead."

The executive order directs the New York State Department of Public Service to cease issuing new permits for large-scale data centers for the duration of the moratorium. During this period, the department is tasked with conducting a comprehensive environmental analysis of data center impacts. Additionally, a proceeding will be initiated to "require data centers to either pay more for their energy or supply their own." This move comes as technology companies have significantly increased investments in data centers nationwide, partly driven by the escalating computing demands of artificial intelligence.

While New York lawmakers recently passed a more comprehensive data center moratorium bill, Governor Hochul has not yet indicated her decision on whether to sign it. In parallel with the executive order, Hochul also instructed the state's economic development agency to create a framework for local communities to negotiate with tech companies proposing data center construction. This framework will emphasize infrastructure upgrades, investments in child care, direct financial contributions, and labor and wage standards. The governor also announced plans for a fund designed to compel data centers to invest in New York's grid infrastructure and clean energy supply, and she urged lawmakers to revoke the state's sales tax exemption for data centers.