In an executive order, New York Gov. Kathy Hochul created a one year moratorium on new hyperscale data centers for the Empire State. The order pauses state environmental permits temporarily while a framework to protect electric ratepayers from spiking utility bills can be explorted.

“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 at a press conference from behind a placard reading “Protecting New Yorkers.” “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.”

According to the governor’s office, New York is seeing unprecedented demand for data center development, driven by artificial intelligence and other high-demand computing operations.

The governor ordered the Department of Public Service (DPS) earlier this year to require through policy that data centers either pay more to secure their electricity supply or provide their own infrastructure and electricity.

New York is developing a Generic Environmental Impact Statement (GEIS) for data centers to ensure new data centers coming online are being held to consistent standards, according to a release from Hochul’s office. This standard will be used to assess environmental impacts of newly built data centers, including their impact on electricity demand. Future data center construction will then have to adhere to this standard once it is finalized.

The state will also create a framework for providing clear guidance to local entities to help them negotiate community benefits as part of any large-scale data center deal, including local infrastructure improvements and direct financial support for their community. 

Also under consideration is for the DPS to create a fund to require data centers to invest in power grid upgrades for the state’s aging transmission and distribution infrastructure.

“The fund could support the procurement of new clean energy supply and establishment of an insurance pool to which developers may need to contribute to protect against speculative large loads that create uncertainty and increase costs,” according to the release. “DPS will also consider approaches to require data centers to fund new clean electric generation dedicated to their operations, including but not limited to customer-sited distributed energy resources and battery storage.”

In the legislature, there is also an effort to repeal sales tax exemptions currently in place to make New York a more attractive place for large data center development.