Gov. Kathy Hochul puts 1-year pause on large data centers in NYS

ALBANY — Gov. Kathy Hochul is ordering a one-year pause on permitting hyperscale data centers, the massive facilities that power artificial intelligence services but have drawn opposition in many communities.

Hochul said the pause will allow the state to develop an environmental impact assessment for data centers, so they are held to consistent standards across the state. It will also allow a state regulatory agency to finish rules laying out how data centers will need to provide their own power sources.

In remarks in Williamsburg Tuesday, Hochul said that New Yorkers would require that data centers generate their own energy or pay a premium to tap into the regular grid, to protect the public.

"The bottom line is, progress shouldn't arrive at a higher utility bill, depleted water supply, or noise pollution," she said. "So we have no choice but to address these challenges created by these massive facilities."

When the moratorium ends, "these data centers can only be built in places that want them," Hochul said.

Hochul’s announcement Tuesday  comes as communities around the state grapple with the potential environmental and financial impacts of large-scale data centers. It will apply to data centers over 50 megawatts that have not received permits to begin construction.

"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," Hochul said.

The move comes more than a month after the state legislature passed a bill that would have also put a one-year pause on building new large data centers. But Hochul decided to issue the executive order now in order to more quickly meet residents’ concerns about data centers, her office said.

There were concerns that working through the legislation with Assembly and Senate leaders would take time, but the executive order doesn’t mean Hochul won’t sign the legislation, her office said.

Lawmakers in 15 states are considering bans on data centers, according to the National Conference of State Legislatures, but none had gone into effect as of July 1.

Additional actions

Hochul's order will exempt some facilities, choosing the size threshold — 50 megawatts — because she didn't want to inhibit local data centers.

"We want to make sure we didn't touch the data centers that are powering hospitals, and schools, and research centers," she said.

Meanwhile, Empire State Development is creating a community investment framework for local governments that want to ink community benefit deals with data center developers.

And Hochul is also directing the Department of Public Service to consider creating a fund that would require data center developers to invest in the state’s aging grid infrastructure to help manage the increased demands.

Earlier this year, Hochul ordered the department to come up with rules requiring data centers to either produce their own power or bring their own power to the site.

She said she would pursue legislation next year to strip sales tax exemptions from data centers across the state.

Community concerns

Hyperscale data centers are needed to support artificial intelligence models and massive amounts of data storage. But many communities have opposed them over concerns about environmental costs and increases in utility costs.

In June, state legislators approved legislation to pause construction of new hyperscale data centers in response to some of those concerns.

The bill also would have required data center developers to obtain at least one-third of their energy supply from renewable sources. It also would reclassify data centers for purposes of calculating charges for water and energy consumption.

On Long Island, the Town of Brookhaven is considering — and likely to pass — an 18-month moratorium on data centers. Town Supervisor Dan Panico, a Republican, has called for state lawmakers to support a regional approach to siting issues.

Blakeman's stance

Bruce Blakeman, the Republican running against Hochul for governor, said in June he would oppose a moratorium on data centers because such an approach was too broad.

Instead, Blakeman said if a community supported having a data center, it should be allowed to pursue it.

"You have to take it on each individual application," Blakeman said. "I think a moratorium is too broad and makes us less competitive with other states."

The Nassau County executive did say developers must provide adequate "incentives" packages to benefit host communities.

Newsday's Matthew Chayes, Carl MacGowan and Yancey Roy contributed to this story