In New York, the development of data centers is increasingly encountering State and local resistance. We previously wrote about the New York State legislature’s attempt to pause and pressure data center development. Over a month later, Governor Hochul has yet to sign or veto what is known as the “Responsible Data Center Development Act” (S10642/A11560) (“RDCDA”).
While the RDCDA rests in limbo, some municipalities are taking measures into their own hands to halt or impede the development of this critical infrastructure. One common approach, whether or not there is an emergent local necessity, is the adoption of zoning moratoria on the issuance of permit entitlements for data centers. More often than not, these interim local legislative measures are simply reactionary to citizenry and intended to exclude development of new technology, rather than study and actually plan for data center development in furtherance of legitimate zoning purposes.
As of the drafting of this post, there are at least 20 communities throughout New York State with an active moratorium prohibiting or impeding the development of data centers, some of which are barring permits for three-year periods. There are two additional municipalities with pending local laws that would enact a moratorium on data center development and others discussing it. We expect the number of moratoria to grow through concerns stoked through social media and in many cases misinformation on water and power consumption and conservation measures at data center sites.
A local moratorium is an extraordinary planning tool often weaponized for the wrong reasons. Temporary land use moratoria are intended to preserve the status quo while planning or zoning changes are studied and made. However, few municipalities are actually spending the time, energy, and resources to follow through on legitimate planning and zoning objectives; which begs the question – are these moratoria legal or simply community pressured bans adopted by elected officials that would not withstand judicial scrutiny?
In evaluating the legality of a moratorium, reviewing courts consider several factors to ensure they are not an abuse of legislative authority. A moratorium must be for a reasonable time certain, in furtherance of a valid public purpose, address a situation burdening the public at large, and adhere to the procedure for adoption of a local law. Unfortunately, these standards are often being disregarded with municipalities using moratoria as indefinite bans on what is modern day utility infrastructure that benefits constituents.
Moreover, many of these moratoria are capturing far too many types of smaller data center projects that have been around for decades, versus the 100 MW+ hyperscaler variety that have caught national attention. As the private sector continues to modernize New York’s digital infrastructure, municipalities must recognize that data centers are not menacing industrial uses. In all varieties, they are a critical backbone for the data and communications relied on by virtually every sector of the economy.
There is constant and growing demand for cloud computing, artificial intelligence (AI), digital communications, and online services. Businesses, hospitals, schools, financial institutions, emergency services, government agencies and individuals all depend on the secure reliable IT infrastructure that data centers support. Like electric substations, cell sites, pump stations, central switching centers and other infrastructure, data center sites deliver services locally.
Even the largest data center developments can offer significant benefits to local communities with few environmental effects. For example, these resources generally provide private on-site power production, closed loop cooling systems, low traffic rates, and expanding tax bases without reliance on municipal services. In the right location, large data centers certainly offer a new form of economic development when comparing them to the municipal costs incurred in supporting other types of land uses.
We’ll have to see if this latest proliferation of moratoria is about planning or a proxy for prohibition by politicians. One thing is for certain though, New Yorkers need data centers as part of secure and reliable networks now and in the future. Municipalities would be well served by differentiating in the data center space (i.e. the difference between a substation and a power plant in energy) as part of planning for the next generation of digital infrastructure to serve the community.
