New York state has paused new data center construction for one year while it develops regulations to limit rate hikes, protect the environment and reduce pressure on the power grid.
Governor Kathy Hochul on Tuesday signed an Executive Order to create the nation’s first moratorium on new hyperscale data centers by temporarily pausing state environmental permits for up to one year.
Earlier this year, the governor directed the Department of Public Service to begin the Energize NY proceeding, which will require data centers to either pay more for their energy or supply their own, allowing the state to keep energy more affordable for New Yorkers. As part of that proceeding, Hochul said she is now also directing DPS to develop a Generic Environmental Impact Statement for data centers to ensure new data centers coming online are being held to consistent standards.
The state will use the GEIS, which will take up to a year, to assess the potential environmental impacts of the construction and operation of data centers in the state, including their effect on energy demand, water use and quality, and air quality. Once the state finalizes these standards, the moratorium will be lifted, allowing new data center projects to proceed as long as they follow state, zoning code and other local approvals.
“New York has always been at the forefront of innovation and change but we’ve also always guaranteed that New Yorkers benefit," Hochul said in a statement. "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 governor also directed Empire State Development to issue a Community Investment Framework within 60 days, which will provide guidance to local entities to help them negotiate community benefits as part of any large-scale data center deal, including local infrastructure improvements, child care investments, and direct financial support for their community.
The CIF will also establish frameworks that provide organized labor a seat at the table and prioritize prevailing wage standards and project labor agreements for data center construction, local hiring, apprenticeships and workforce development to maximize economic benefits. This framework will additionally include a formula to help communities assess where to begin investment negotiations. An outline of the CIF is currently available on ESD’s website, and New Yorkers are encouraged to submit feedback.
Additionally, Hochul said she is directing DPS to consider creating a New York Grid Acceleration Fund to require data centers to invest in the state’s aging grid infrastructure and energy needs so all New Yorkers benefit from responsible development. The fund could support the procurement of new clean energy supply and establishment of an insurance pool to which developers may need to contribute to protect against speculative large loads that create uncertainty and increase costs.
DPS will also consider approaches to require data centers to fund new clean electric generation dedicated to their operations, including but not limited to customer-sited distributed energy resources and battery storage.
