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New York Imposes Moratorium on New Hyperscale Data Centers

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New York imposed the US' first moratorium on new hyperscale data centers while developing a statewide regulatory framework, according to a statement from Governor Kathy Hochul on Tuesday.

Hochul signed an executive order pausing new state environmental permits for up to one year as regulators develop standards to protect ratepayers, the environment, the power grid and local communities.

The governor said artificial intelligence and other computing applications have driven a surge in data center proposals that require significant electricity and water to power and cool thousands of servers.

Earlier this year, Hochul launched the Department of Public Service's Energize NY proceeding to require future data centers to either secure their own electricity supplies or pay higher energy costs, helping shield residents from rising power prices.

Hochul also directed the Department of Public Service to prepare a Generic Environmental Impact Statement over the next year, while the Department of Environmental Conservation withholds discretionary permits for projects that have not yet completed the application process.

The state will allow new data center proposals to move forward after completing the environmental review, provided developers meet the new statewide standards and local zoning and permitting requirements, Hochul said.

The governor ordered Empire State Development to issue a Community Investment Framework within 60 days, providing local governments with a template for negotiating community benefits, labor commitments, infrastructure improvements, and workforce investments tied to large data center developments.

Hochul also directed the Department of Public Service to evaluate a New York Grid Acceleration Fund that could require data centers to invest in grid infrastructure, clean energy generation, distributed energy resources, battery storage and an insurance pool supporting the state's growing electricity needs.

Separately, Hochul is seeking to eliminate New York's sales tax exemptions for large data centers as part of a broader effort to ensure local communities benefit from future development.

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