Governor Kathy Hochul has signed an executive order imposing a year-long moratorium on the construction of new hyperscale data centers in New York that require 50 megawatts or more of power. This pause is intended to provide state agencies with time to develop new regulations for such projects, focusing on their potential environmental and community impacts. The move comes amid growing concerns about the strain large data centers can place on local resources and infrastructure.
Hochul stated that the moratorium is a necessary step to ensure that New Yorkers benefit from the economic opportunities presented by data center development. "New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too," she said. The state aims to address issues such as increased utility costs, depletion of natural resources, and general uncertainty for residents.
While New York has not yet been a major hub for data center construction, approximately 30 potential projects have sought grid connections between 2020 and 2025. This surge in interest, coupled with a nearly 68% rise in the state's average residential electricity price since 2019, has fueled anxieties about the state's capacity to support such facilities. The executive order mandates that the Department of Public Service prepare an environmental impact statement for upcoming data center projects, assessing their effects on water and air quality, energy consumption, and water usage during the moratorium period.
Additionally, the governor has directed Empire State Development, the state's economic development agency, to establish a Community Investment Framework within 60 days. This framework will guide local entities in negotiating community benefit agreements for large-scale data center deals, potentially including investments in local infrastructure, childcare, and direct financial support. Governor Hochul is also reportedly pursuing legislation to eliminate sales tax exemptions for large data centers statewide.
This decision aligns with similar moratorium proposals and protests occurring in other U.S. states, where local residents have voiced concerns about noise, energy and water consumption, and climate effects associated with data center construction. Senator Bernie Sanders has also proposed a nationwide pause on data center development, citing similar issues. A recent Reuters/Ipsos poll indicated that only one in three Americans surveyed approved of the current pace of data center construction, with most opposing such facilities in their own communities. Industry representatives have responded with a mix of concern and openness to dialogue, with Digital Realty stating that a one-year pause is not the right approach, while NTT Global Data Centers has welcomed increased scrutiny and conversation regarding community impact.