NEW YORK – On Tuesday, New York became the first state to enact a moratorium on new “hyperscale data centers”—which are defined as computing infrastructure that supports artificial intelligence (AI), cloud computing, streaming services, and other computing operations.

The moratorium would temporarily pause environmental permits for up to one year, while the state studies the environmental impacts of data centers and creates a “Community Investment Framework” model.

According to a press release from Governor Kathy Hochul, the moratorium will establish the strongest standards for data center development and create a blueprint to support localities.

“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.

According to the governor’s office, New York State is experiencing unprecedented growth in demand for data center development driven by artificial intelligence and other computing operations.

The increase in demand has led to proposals across the state for the construction and operation of data centers that could require massive amounts of energy and water to run and cool thousands of computer servers.

Earlier this year, the Governor directed the Department of Public Service (DPS) to begin the Energize NY proceeding, which will require data centers to either pay more for their energy or supply their own.

On the federal level, Congressman Josh Riley from the NY-19 District (which includes Sullivan County) introduced a bill that would mandate data center operators to cover energy utility costs, rather than passing it on to ratepayers.

According to the Environmental and Energy Study Institute, data center power demands are contributing to higher energy bills, with utilities requesting more than $29 billion in electricity rate increases across the country in the first half of this year.

What would the moratorium do?

As part of the governor’s executive order, DPS will also develop a Generic Environmental Impact Statement (GEIS) for data centers to ensure new data centers coming online are being held to consistent standards.

The state will use the GEIS to assess the potential environmental impacts of the construction and operation of data centers in the state, including their effect on energy demand, water use and quality, and air quality.

Once the state finalizes these standards, the moratorium will be lifted, allowing new data center projects to proceed as long as they follow state, zoning code and other local approvals.

The Governor also directed Empire State Development (ESD) to issue a Community Investment Framework (CIF) within 60 days, which will provide guidance to local entities to help them negotiate community benefits as part of any large-scale data center deal, including local infrastructure improvements, child care investments, and direct financial support for their community.

Additionally, the Governor is directing DPS to consider creating a New York Grid Acceleration Fund to require data centers to invest in the state’s aging grid infrastructure and energy needs.

Finally, Governor Hochul is pursuing legislation to repeal sales tax exemptions for massive data centers across the state.

On the town level

As the state and country contend with data center development, local municipalities have taken it into their own hands. In June, the Sullivan County Legislature pledged its support for a New York bill that would enact a moratorium on data centers, and the Town of Highland, also in June, enacted its own one-year moratorium.

There are no proposed or existing data centers in Sullivan County. According to Congressman Riley, several data center developments have been proposed across New York’s 19th Congressional District.

In Lansing, Maryland-based TeraWulf is seeking to build a 300-to-400-megawatt AI data center at the former Cayuga Power Plant, and in Oneonta, a company called Eco-Yotta has pursued a rezoning for an AI data center on County Road Nine.

Just across the border from Sullivan County, in Clinton Township, PA, a 682-acre industrial data center campus is being proposed, however, the Clinton Township Planning Commission declared the proposal incomplete and the township supervisors also enacted a six-month data center development moratorium to draft stricter regulations, according to news reports from The River Reporter.