New York State Governor Kathy Hochul has announced a year-long moratorium on new high-powered data centers. The executive order, signed on Tuesday, bars the construction of new hyperscaler data centers using 50 megawatts or more of power for up to one year.
The pause would allow state agencies to craft regulations around upcoming projects regarding their potentially harmful effect on local communities, including water usage, noise, and power concerns.
“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,” said Hochul. “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.”
Why the Pause?
While New York has yet to become a major data center hub, around 30 projects requested connections to the power grid between 2020 and 2025, according to The City Reporter. This has sparked concerns that the state’s infrastructure is ill-equipped to deal with a vast number of new data facilities, particularly as the state’s average residential electricity price has risen nearly 68% since 2019.
The executive order calls for:
- The state Department of Public Service to create an environmental impact statement for evaluating upcoming projects, including effects on water and air quality, energy, and water use.
- Empire State Development to issue a “Community Investment Framework” within 60 days, providing guidance to local entities on negotiating community benefits, including local infrastructure improvements, child care investments, and direct financial support.
Hochul is also pursuing legislation to repeal sales tax exemptions for “massive data centers across the state.”
Industry and Public Reaction
The move comes amid various US lawmakers’ attempts to introduce similar moratoriums on a state level, as local residents continue to protest data center construction across the country over noise, energy, water usage, and climate effects.
According to a recent Reuters/Ipsos poll, only one in three Americans surveyed approved of the fast pace of data center construction, and most would oppose building one in their own community.
Data center operator Digital Reality told Reuters: “We’re committed to working with policymakers on solutions that support responsible growth, but a one-year pause isn’t the right approach.”
NTT Global Data Centers CEO Doug Adams said: “The heightened scrutiny reflects a desire for greater understanding of how data centers impact local communities. We welcome that conversation.”
The Bottom Line
New York Governor Kathy Hochul has signed an executive order imposing a one-year moratorium on new hyperscaler data centers using 50 megawatts or more of power. The pause will allow state agencies to develop regulations on water usage, noise, and power concerns. Hochul is also seeking to repeal sales tax exemptions for large data centers. The move comes amid growing public opposition to data center construction across the US, with only one in three Americans supporting the pace of development.
