Business groups say Hochul's pause on data centers could hurt New York State

ALBANY — Business and technology groups slammed Gov. Kathy Hochul’s executive order placing a one-year pause on new hyperscale data centers on Tuesday, while environmental advocates urged further action.

Hochul signed the executive order, the first of its kind in the nation, at an event Tuesday overlooking the East River in Williamsburg. She said the order is necessary because the state’s regulatory agencies need time to develop a framework to handle the data centers' potentially massive water and energy needs.

"The bottom line is, progress shouldn't arrive at a higher utility bill, depleted water supply, or noise pollution," Hochul said. "So, we have no choice but to address these challenges created by these massive facilities."

Hochul’s announcement comes as communities around the state grapple with the potential environmental and financial impacts of large-scale data centers. It will apply to data centers over 50 megawatts that have not already received permits to begin construction.

But business groups and construction unions warned the move could cost the state jobs as technology companies decide to construct data centers elsewhere.

Stacey Sikes, acting president and CEO of the Long Island Association, said the move sends the wrong signal. "The global race for artificial intelligence will not pause for New York, and the consequence will be that investment and innovation will locate elsewhere," she said.

Mark McManus, general president of the United Association of Union Plumbers and Pipefitters, criticized the moratorium as a job-killer. "Rather than implementing guardrails to build the future of American ingenuity, Gov. Hochul is taking her ball and going home," he said in a statement.

Nassau County Executive Bruce Blakeman, the Republican gubernatorial nominee, had previously said he opposed a blanket moratorium. In a statement Tuesday, he blamed Hochul for the state’s already high utility costs and lack of economic development.

Environmental assessment

As part of the moratorium, the state will develop a standard environmental assessment that will look at the energy demands, water usage, noise levels and impact on disadvantaged communities from data centers. Also under the order, data centers will be required to generate their own energy or pay a premium to tap into the regular grid, to protect the public, Hochul said.

The move comes more than a month after the State Legislature passed a bill that would have also put a one-year pause on building new large data centers. But Hochul decided to issue the executive order now to more quickly meet residents’ concerns, her office said.

By choosing to focus on projects of 50 megawatts or more, the governor’s order captures the majority of data-center proposals pending for the New York Independent System Operator, which operates the state’s power grid. Also, the governor’s order specifically exempts facilities tied to biomedical research, manufacturing and certain other uses, that the legislature’s bill might have impacted.

There were concerns that working through the legislation with Assembly and Senate leaders would take time, but the executive order doesn’t mean Hochul won’t ultimately sign the legislation, her office said.

State Sen. Kristen Gonzalez (D-Queens), who sponsored the legislature’s data center bill, said Hochul’s pause would ensure that development would not come at the expense of New Yorkers. "Technology should make our lives better, not pollute our water, strain our energy grid, or drive up our utility bills," Gonzalez said.

Further action

Several environmental groups echoed the need for further action and called on Hochul to sign the legislature’s bill.

Vanessa Fajans-Turner, executive director of Environmental Advocates NY, called the moratorium a step in the right direction.

"A moratorium and environmental impact statement gives the state time to understand this industry's full impact on our water, grid, and utility bills, but we must put lasting protections in place to ensure environmental protection," Fajans-Turner said.

Food & Water Watch’s New York State Director Laura Shindell credited residents across the state who pushed back against proposals for data centers and pressuring Hochul to act. But Shindell noted smaller data centers that have drawn community opposition are excluded from the order.

Assemb. Charles Lavine (D-Glen Cove) applauded Hochul’s approach, saying it put residents’ economic needs and environmental protections first. "It just makes sense to take the necessary time to study the critical issues involved in data center development," he said.

 Assembly Minority Leader Ed Ra (R-Garden City) said he understood the need to take a deliberate approach when it comes to data centers. But the state’s environmental review process has cost it in the past, he said.

"New York’s infamous, hyper-regulatory process results in longer delays, added costs, and make us less competitive," Ra said.

Newsday's Yancey Roy contributed to this story.

By Matthew Chayes

matthew.chayes@newsday.com,matthew.chayes@newsday.comchayesmatthew,

Matthew Chayes, a Newsday reporter since 2007, covers New York City.