New York has become the first state in the nation to put the brakes on large-scale data center construction, enacting a one-year pause on Tuesday as worries mount that the facilities powering the artificial intelligence industry are driving up energy bills, depleting water resources, and placing heavy burdens on communities.
The move thrusts New York to the center of a widening national conversation about how states should handle the massive infrastructure demands of artificial intelligence. Technology companies have been aggressively building new data centers across the country, while lawmakers and regulators in numerous states are exploring ways to limit the impact these facilities have on power grids, utility costs, and neighborhoods.
“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,” said Hochul, who also announced plans to pursue legislation that would eliminate sales tax exemptions currently benefiting large data centers.
According to officials in the governor’s office, the construction freeze will cover data centers that draw 50 megawatts or more of electricity. During the moratorium period, the state’s Department of Environmental Conservation will not issue any discretionary permits for projects that have not already been deemed complete.
Hochul directed state officials to develop a Generic Environmental Impact Statement — known as a GEIS — to establish consistent standards for new data centers and to study the potential environmental consequences of building and operating such facilities in New York. The moratorium will be lifted once those standards are finalized, according to her office.
The state legislature passed a bill last month aimed at placing guardrails on data center development, but that legislation has not yet been delivered to Hochul for her signature. Officials in her office described the bill as complicated and said “it’s going to take some time to work through” with lawmakers.
The rapid spread of data centers across the United States has been pushing power demand — and electricity rates — higher in many parts of the country, triggering backlash from residents and elected officials alike. A recent Reuters/Ipsos poll found that only one in three Americans support the fast pace of data center construction, and most people said they would oppose having one built in their own community.
Dozens of state legislatures have introduced measures aimed at curbing the effects data centers have on energy bills and the environment, but New York is the first to enact a complete construction moratorium. In April, Maine’s governor vetoed a similar bill that would have frozen data center construction in that state.
As of May, more than 12 gigawatts of very large energy-consuming loads — including data centers — were waiting to connect to New York’s electrical grid, according to a report from the state’s independent grid operator. New York also ranks eighth in the country for the most expensive residential electricity prices, based on data from the U.S. Energy Department.
