Dive Brief:
- New York Gov. Kathy Hochul, D, on July 14 signed the first state moratorium on new hyperscale data centers, those that could consume 50 megawatts or more of electricity, by pausing state environmental permits for these facilities for up to one year while policymakers build out a regulatory framework.
- Hochul issued the executive order to give the government time to parse through a broader bill that the state legislature passed, but the governor hasn’t yet signed, that would include requirements impacting existing data centers.
- Hochul’s executive order addresses many of the same policy concerns as New York’s proposed Responsible Data Center Development Act, A11560, which passed on June 4, but is narrower, according to DLA Piper.
Dive Insight:
New York Independent System Operator, the state’s electricity grid operator, reported that its large-load interconnection queue grew from six projects totaling roughly 1,045 MW in 2022 to 48 proposals totaling approximately 12 GW as of Dec. 31, according to a Harris Beach Murtha analysis.
Although the executive order is intended to govern future data centers, it could affect projects already in the permitting pipeline, according to an analysis by Davis Wright Tremaine. Projects in the pipeline with approval pending as of July 14 by the state’s Department of Environmental Conservation could be impacted while those proceeding solely through local permitting processes that don’t require DEC approval wouldn’t be.
“For companies developing, financing, or operating data centers, the Executive Order serves as a reminder that successful projects increasingly require coordination across land use, environmental permitting, energy, technology transactions, commercial contracting, financing, and regulatory compliance,” the Davis Wright Tremaines analysis says.
The key difference between the bill and the EO is scope, DLA Piper says, with the EO using a 50-MW threshold, compared with the bill’s lower, variable peak thresholds of 1-, 5- and 20-MW, and different approaches to timing and application to existing facilities.
“Under A11560, the key carve-outs are modifications, renewals, reissuances, and recertifications of existing approvals and projects that commenced construction on or before the effective date,” the DLA Piper analysis says. “Under the EO, there is no such grandfathering mechanism. Instead, the applicability of the EO depends on [New York State Department of Environmental Conservation] permitting status.”
The executive order pause will remain in effect until the New York Department of Public Service completes a Generic Environmental Impact Statement assessing the potential environmental impacts of data center construction and operation in the state, including impacts on energy demand, water use and quality, air quality and noise levels, according to the state.
As part of the legislation that hasn’t yet been signed, the Empire State Development Fund – a state agency that provides grants and loans to projects – is given 60 days to publish a framework for giving localities more say in data center projects. Among other things, the framework would address the creation of a community investment fund that would get its money from data center companies and would include direction on local infrastructure investments, prevailing wage and project labor agreements, and reporting on economic metrics, according to Davis Polk analysis.
The legislation would require data centers with a peak load of at least 5 MW to procure at least a third of their electricity from renewable sources by 2030, with higher percentages in later years, and to meet energy-efficiency goals to be developed by the New York York State Energy Research and Development Authority, according to an analysis by Harris Beach Murtha.
It could also impact clients with water-intensive cooling designs, the Davis Polk analysis says. NYDEC would also need to assess whether new or amended regulations are needed for water withdrawal programs as applied to data centers, with a report due within 12 months, Davis Polk says.
Under A11560, large new data centers and any existing facility adding 20 MW or more of load must also fund a host-community benefits program that will cover residential energy upgrades, community infrastructure and measures to mitigate water and wastewater impacts, according to Harris Beach Murtha.
