N.Y. Governor Signs First Statewide Data Center Moratorium, Halting $10B Of Development
Gov. Kathy Hochul signed an executive order Tuesday to impose a yearlong ban on data center construction, making New York the first state to block the development of large-scale server farms.
The moratorium deals a blow to New York’s $10B data center pipeline, much of which is still in the early stages of planning and development.
The temporary ban applies to data centers with capacities of at least 50 megawatts, above the 20 MW threshold sought by the state legislature when it passed a moratorium in June. That bill has yet to be sent to Hochul's desk.
Industry players have said the bar is too low, with many new developments in the pipeline coming from so-called hyperscale users whose facilities exceed 100 MW.
As of May, nearly 12 gigawatts, or 12,000 MW, of data center load requests were in the New York Independent System Operator interconnection queue, with more than 8 GW entering the queue in 2025 alone, according to Hochul's executive order.
The moratorium is designed give the state time to study the impact of data centers on communities and the environment and to enact new regulations as needed.
The executive order directs the Department of Public Service to form a working group within 60 days that will be responsible for identifying and resolving issues related to the interconnection of data centers and other large-load facilities.
If the process takes less than a year, the moratorium may be lifted sooner. Until then, the Department of Environmental Conservation will not issue any discretionary permits not already deemed complete.
Additionally, Hochul has directed Empire State Development to issue a community investment framework within 60 days, which will guide localities negotiating community benefits as part of any large-scale data center deal. Benefits may include local infrastructure improvements, childcare investments and direct financial support for the community.
The framework will also ensure that unions have a seat at the table to negotiate prevailing wage standards and project labor agreements for data center construction, local hiring, apprenticeships and workforce development.
Among the largest concerns is that data centers will increase energy costs for the average consumer. Earlier this year, Hochul instructed DPS to require data centers to pay more for their energy or supply their own.
New York has not been a leading market for data centers in part because it has the second-highest commercial electricity rate in North America, according to a report by JLL. The state has aimed to attract investment from artificial intelligence companies and manufacturers by providing billions of dollars of tax credits and other funding.
Just last week, Hochul was in Central New York, celebrating Micron pouring the concrete foundation on its $100B semiconductor manufacturing campus. The company manufactures computer memory and data storage products, many of which are used in data centers.
The executive order could reverse course on the initiatives that attracted the likes of Micron. Hochul will also be pursuing legislation to repeal sales tax exemptions for data centers across the state, according to her office.
“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,” Hochul said in a statement.
