Governor Kathy Hochul has signed an executive order establishing a statewide moratorium on the development of new hyperscale data centers, a move that marks the first such regulatory action of its kind in the United States. The order is intended to establish a rigorous regulatory framework designed to protect the state’s environment, energy grid, and utility ratepayers.
The moratorium implements a temporary pause of up to one year on state environmental permits. During this period, the Department of Environmental Conservation will not issue discretionary permits for projects that have not already been deemed complete. This pause is intended to allow the state to develop comprehensive standards for the construction and operation of large-scale data facilities.
State officials cited an unprecedented surge in demand for data center development, driven primarily by the growth of artificial intelligence and other high-intensity computing operations. These facilities require significant amounts of electricity and water to power and cool thousands of individual computer servers, raising concerns regarding the depletion of natural resources and potential increases in utility costs for residents.
To address these concerns, the Governor has directed the Department of Public Service to develop a Generic Environmental Impact Statement specifically for data centers. This assessment will evaluate the potential environmental consequences of these facilities, including their impact on air quality, water use and quality, and overall energy demand. This follows the earlier Energize NY proceeding, which requires data centers to either contribute more to the energy system or supply their own power to ensure energy remains affordable for New York consumers.
In addition to environmental oversight, the administration is moving to ensure local communities benefit from large-scale developments. Empire State Development has been directed to issue a Community Investment Framework within 60 days. This framework will provide guidance to local entities, helping them negotiate community benefits such as infrastructure improvements, childcare investments, and direct financial support during negotiations with developers.
The framework also seeks to include organized labor in the development process by prioritizing project labor agreements and prevailing wage standards. Furthermore, the Governor intends to pursue legislation to repeal sales tax exemptions currently granted to massive data centers throughout the state.
Once the state finalizes its new standards and environmental impact assessments, the moratorium will be lifted. At that time, new data center projects may proceed provided they adhere to the newly established state regulations, as well as local zoning codes and other municipal approvals.
