NEW YORK STATE — On Tuesday, July 14, Gov. Kathy Hochul signed a first-in-the-nation executive order creating a one-year moratorium on the development of new large-scale data centers, as well imposing as other regulations on the industry. 

Executive Order 62 establishes a one-year moratorium on the development of data centers that use or can use 50 megawatts of energy or more. The governor’s office said in a release this gives the state time to create a regulatory framework in order to sustainably develop data centers and protect “ratepayers, the environment, the energy grid and communities across the state.”

“We want AI companies to invest here, grow their businesses and do well,” Hochul said in a video about her executive order. “But when you benefit from the talent and energy of New York, we expect you to protect our resources and give back to our communities. This is a critical moment, and New York is going to take the time to get it right.”

In addition to the moratorium, the executive order orders the Department of Public Service (DPS) to examine the impacts of the construction of data centers in the state and create a Generic Environmental Impact Statement. DPS is also tasked with considering a specialized fund to help offset the strain on the energy grid by data centers, with data centers paying into the fund and the fund being used for modernization of the grid and other maintenance.

The order also requests that Empire State Development create a Community Investment Framework, which communities that host data centers can use to negotiate how the center and its developers will give back to the community. This framework will include guidance on the creation of a community investment fund, investment in local infrastructure, organized labor participation and transparency.

The winds of change

Speaking on the executive order, Hochul emphasized the rapid development of AI technology, and its potential effects on the state's economy and infrastructure. 

“New York is the place where people of all ages, all walks of life, all companies want to be,” Hochul said. “We've remained the economic center of the world by embracing change, but also demanding that change uplift our people. And today, the winds of change have blown in with the force of a hurricane. We're in the midst of one of the most significant economic upheavals in generations, perhaps ever.”

“Artificial intelligence is changing the way we work, the way we learn, the way we communicate, the way we do business, and has sparked a heated debate over the rapid construction of massive energy-guzzling infrastructure that is needed to power the industry,” Hochul said. “These hyperscale AI data centers consume enormous amounts of power, truly threatening to outpace our grid's capacity, and they drive up costs for local ratepayers. And I refuse to let those costs be passed on to New Yorkers who already pay too much for their utility bills.”

Also present at the executive order signing was State Sen. Kristen Gonzalez (D, WF-59), who was the senate sponsor of the Responsible Data Center Development Act (S.10642/A.11560). This legislation was a compromise that would have also seen a one year moratorium put in place, along with stricter regulations. 

At the order’s signing she thanked the Governor for her leadership and the diverse coalition that advocated for the issue. She went on to say that the executive order was a symbol of governmental collaboration and good policy. Both Gonzalez and Assembly Member Didi Barrett (D-106), the Assembly sponsor of the bill, were consulted on the executive order.

“In my time in office, I have learned what it means to make good tech policy and what makes good government. Good tech policy is founded on the principle that technology should make our lives easier, not harder, and good government means collaborating, balancing interests and delivering real wins for New Yorkers,” Gonzalez said. “Today's executive order establishing the first in the nation-statewide data center moratorium shows what is possible when we take both of these principles seriously.”

The future of the Responsible Data Center Development Act, which passed both houses with bi-partisan support, has been cast into doubt by the executive order.

The governor’s office did not respond to requests for comment by the time of printing on whether or not she would veto or sign the legislation, and Gonzalez did not speak about the bill during her comments. However, other state legislators involved with the creation of the bill are still pushing for its signature into law.

On Thursday, July 16, Hochul held a roundtable discussion on data centers and their impacts. Barrett spoke at the roundtable, thanking Hochul for her leadership, but also saying that further discussion of her and Sen. Gonzalez’s legislation is needed as she believes the bill contained some regulations that the executive order did not.

“Gov. Hochul’s executive order is a timely and important first step, and I thank the governor and her team for their partnership in working with the legislature as we tackle these very critical and thorny issues of our time and in our state,” Barrett said. “There is more in our responsible data center legislation that remains to be discussed, and I look forward to working with the governor, her team, Sen. Gonzales, and my assembly colleagues to get those priorities addressed for the state of New York.”

Gunnar Wordon, Barrett’s chief of staff, said that the office is still going to advocate for their bill, and hopes to see it signed into law before the deadline at the end of the year.

“[We’re] definitely still pushing for the Governor to sign the Responsible Data Center Development Act, which included several critical components not included in the Governor's Executive order,” Wordon said. “We are focused on getting it signed into law this year.”