Gov. Kathy Hochul is pictured earlier this year during her state budget presentation. Hochul signed an executive order Tuesday enacting a less restrictive one-year moratorium on data centers than the one passed earlier this year by state lawmakers.

New York state will have a one-year ban on construction of large data centers, but Gov. Kathy Hochul’s executive order on the issue is less restrictive than legislation passed near the end of the state legislative session. Hochul announced early Tuesday morning that she will sign an executive order enforcing a statewide moratorium on hyperscale data centers to give state agencies time to put together rules requiring data centers to pay their fair share of utility costs, protect the environment and provide benefits to host communities. Hochul also wants to repeal sales tax exemptions for data centers, something on which she will work with state lawmakers, she said.

“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 in a prepared statement according to the Syracuse Post-Standard. “New York will lead the way in creating the strongest standards in the nation for data center development.”

Both Assemblyman Andrew Molitor and state Sen. George Borrello opposed legislation creating a one-year moratorium on new data center construction in the state as was proposed in A.11560/S.10642, legislation passed largely along party lines in the waning days of the legislative session. Hochul chose not to sign the legislation and instead issued an executive order. The bill approved by the legislature would have set a prevailing wage standard for data center projects and would have set a high bar for the use of renewable energy to power data centers.

The state Legislature had proposed requiring hearings before a data center permit is issued and requiring the Department of Environmental Conservation to prepare an environmental impact report on data center development in the state. The state Public Service Law would have been amended to require each electric corporation, gas corporation and municipality to establish an independent classification of service for large energy use facilities while the state Public Service Law would have been changed to require each water works corporation to establish an independent classification of service for large energy use facilities. The state Public Service Commission would not have been allowed from approving any change of rates or related updates to a tariff unless a data center proposal includes a service classification for large energy use facilities, and an adjustment mechanism. Legislators also wanted a new section in the Public Authorities Law authorizing NYSERDA, in conjunction with the federal bulk system operator, the Public Service Commission and the state Climate Action Council to determine reasonable energy consumption efficiency goals for the design and operation of data centers, including the recycling of waste heat, and a new section in the state Energy Law requiring data centers to derive increasing percentages of their electricity consumption from renewable energy systems, either via on-site production or power purchase agreements.

Hochul is proposing a much simpler moratorium.

Hochul is ordering the state DEC not to issue data center permits until a generic environmental impact statement is developed to evaluate each project’s impact on energy demand, water use, water quality and air quality. The Public Service Commission will be asked to consider a “grid acceleration fund” that would require data centers to invest in the state’s electric grid infrastructure, including possibly building their own power generators or battery storage systems. Empire State Development is being ordered to develop a framework to help municipalities statewide negotiate benefit agreements with data center developers that could include infrastructure work or direct financial support.

“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,” Hochul said, according to the New York Post.