Permitting Paused for Data Centers 50 Megawatts and Above
Today, Governor Kathy Hochul issued Executive Order No. 62 that pauses discretionary New York State Department of Environmental Conservation (DEC) permitting for data centers—50 megawatts (MW) and above—in New York State. The result of discussions between the Governor and state legislature after the Responsible Data Center Development Act was passed last month, the Executive Order also includes a number of other regulatory actions related to data centers. Here are the key takeaways:
- Directs the NYS Department of Public Service (DPS) to initiate the process to develop a Generic Environmental Impact Statement (GEIS) to assess the potential environmental impacts of data center development. The Executive Order directs DPS to examine impacts under the ongoing Proceeding on the Motion of the Commission to Address Interconnection Reforms for Large Loads (Case 26-E-0045).
- Until DPS has finalized its GEIS, DEC will pause any new discretionary permit or other approval for data centers “that consume or can consume” 50 MW or more. This pause applies to any application not yet deemed complete by DEC. Data centers that support manufacturing, research, education or the provision of medical care are exempted. The Executive Order treats a group of facilities on contiguous sites as one data center.
- Directs the development of a Community Investment Framework to assist municipalities in obtaining community benefits where they opt to host data centers. The framework will be developed by Empire State Development (ESD) within 60 days of the Executive Order. The framework will include guidance on mitigating environmental impacts, investing in local infrastructure, developing project labor agreements and requiring transparent reporting.
- Directs DPS to consider establishing a Grid Acceleration Fund—a pool of money funded by data center developers to finance grid improvements, participate in demand response programs, support the procurement of clean energy resources and establish an insurance pool. DPS will also consider collaborating with utilities to identify such grid improvements.
- Directs DPS to form a Data Center Interconnection Working Group within 60 days to support efficient interconnection of new large loads and to ensure compliance with “beneficiary pays” principles for related grid buildout. In addition, the Executive Order directs DPS to convene New York’s transmission owners to review—and report on within 90 days—their practices and methodologies for studying grid system impacts of data centers.
- Directs DEC to deliver a report within 12 months that assesses whether any new or amended regulations or other policies are necessary to ensure its water withdrawal program requirements reflect the water demands of large use customers, such as data centers.
What Phillips Lytle is Watching
- Mismatch between the text and the press release. The text of the Executive Order does not include a deadline for DPS to submit its final GEIS and related findings, whereas the press release states a moratorium of up to one year has been established. Without further clarification from DPS, DEC, and the Governor’s Office, this omission is likely to bring uncertainty to data center developers.
- In last month’s order to show cause, the Federal Energy Regulatory Commission also required the New York Independent System Operator and New York transmission owners to review and justify their practices and methodologies for interconnecting large loads. We will be monitoring how these parallel federal-state proceedings differ, and what opportunities they afford data center developers to provide feedback.
- The Community Investment Framework to be developed by ESD will not override local permitting for data centers. We will be reviewing ESD’s forthcoming guidance to identify areas where both data center developers and local municipalities can maximize mutual benefit.
There are many data centers in the development phase with applications and permits not yet completed that will likely be affected by this Executive Order’s pause. We will be working with our clients to identify solutions to help their projects stay on track.
