New York Gov. Kathy Hochul’s (D) executive order placing a moratorium on state permits for large data centers larger than 50 MW is notable not because it seeks to ensure responsible development, but because it sidesteps the permitting process designed to achieve that goal.
The rationale outlined, to study the cumulative impacts of data centers on energy demand, water consumption and surrounding communities, is understandable. These facilities consume enormous amounts of electricity and water while requiring significant investment in utility infrastructure. Every proposed construction deserves rigorous environmental scrutiny, which is exactly what the work permit was created to do.
New York already has an extensive environmental review framework. State agencies can scrutinize proposals, require mitigations, impose conditions, or reject projects that do not serve the public interest.
A blanket moratorium sends a different message: that New York no longer trusts the same process it created to separate worthy projects from unworthy ones.
If this is true, the state should reform the permit system, not suspend it. The executive order creates another equally damaging problem for the construction industry: uncertainty.
To compound the problem, the length of the moratorium is unclear. Officials have suggested the review could take about a year, but the order itself does not set a time frame. For owners, developers, contractors and lenders, uncertainty is even more destructive than an unfavorable decision. Capital can value risk. You cannot set a price for indefinite delay.
Construction works with certainty and when certainty disappears, investment follows elsewhere.
This matters because data centers are no longer speculative private developments. Instead, data centers should be seen as digital infrastructure, and as essential today as highways, ports and water systems were to previous generations.
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Would Albany Suspend Bridge Permits While Studying Future Transportation Demand? Would it freeze water treatment plant approvals while assessing tomorrow’s utility needs?
Data centers deserve scrutiny. The question is whether New York should replace project-by-project review with a statewide ban. It shouldn’t be.
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A blanket moratorium sends a different message: that New York no longer trusts the same process it created to separate worthy projects from unworthy ones.
Bryan Gottlieb,
ENR’s online news editor
Demand for data centers won’t go away because a state stops allowing them. It will be moved. Developers will simply pursue projects where regulatory pathways are predictable.
Texas, Virginia and other states are poised to welcome that investment, along with the construction work and tax revenue that comes with each build. New York risks only one thing: giving up its place in one of the nation’s fastest-growing construction sectors.
None of this is to say that New York doesn’t have legitimate concerns.
To be fair, New York faces a real challenge. The Climate Leadership and Community Protection Act requires 70% renewable electricity by 2030, while New Yorkers already pay electricity rates 50% higher than the national average. Pausing data center construction may seem like an easy way to curb demand, but environmental stewardship and economic development don’t have to be mutually exclusive.
Projects must meet rigorous environmental standards, and those that fail should not be allowed to continue. A functioning permitting system distinguishes responsible development from unacceptable impacts.
A general moratorium does neither.
Whatever its intent, the executive order will almost certainly invite litigation while delaying investment, clouding the business climate and signaling to investors that uncertainty, not planning or public review, has become the state’s infrastructure policy of choice.
The Empire State earned its name by building what others thought impossible. It shouldn’t start defining itself by the projects it decides not to build.
Bryan Gottlieb is ENR’s online editor. Email him at gottliebb@enr.com.
