Representational image
New York: New York became the first state in the nation to impose a moratorium on the construction of data centers Tuesday, a striking setback for artificial intelligence companies that politicians once courted for investment but have now triggered public fears about energy prices and water use.
Gov. Kathy Hochul (D) signed an executive order pausing environmental permits for large data centers for up to a year, saying the delay would give state officials time to craft rules to protect the electrical grid, the environment and communities where developers want to build.
"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 statement. "New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too.”
The immediate practical impacts of the order are not clear: New York boasts fewer data centers than other states, including Virginia and Texas. But some planned projects in the state have already sparked local skirmishes, and the moratorium marks a major escalation in the battle between the tech industry and many politicians grappling with constituents’ concerns about the knock-on effects of the construction boom and economic disruption caused by the AI systems the facilities power.
Recent polling shows much of America would be more comfortable with a nuclear power plant in their town than a data center. Even communities that have relied on data centers to balance their local budgets for decades have turned on them, most notably in northern Virginia, the world’s epicenter for compute warehouses.
The incentives tech companies once dangled to entice communities to approve their projects - including funding for local schools and promises to fund infrastructure projects - no longer impress. And officials across the country say they’re now looking to claw back tax giveaways, with Hochul also calling on lawmakers Tuesday to repeal sales tax exemptions for data centers.
Data centers require an immense amount of power. The U.S. grid is quickly running out of available capacity to accommodate data centers that now use more electricity than entire major cities.
Industry and White House officials argue that blocking development of the data centers - and the power plants that fuel them - risks ceding leadership in AI innovation to rival countries, a potentially dangerous prospect at a time AI underpins not just the future of the global economy but also advancements in weapons systems.
As the backlash has mounted, scores of local communities have passed their own bans, including Monterey Park, California, where voters recently opted to permanently block these operations.
Hochul’s plan for New York, which applies to data centers that consume at least 50 megawatts of energy, is designed to give lawmakers and regulators a year to make any market changes or other regulatory adjustments to protect consumers.
The governor’s team could not say how many proposed data centers would be affected by the moratorium. But data firm Cleanview lists 25 proposed facilities in the state, and a planned 300-megawatt facility near Ithaca has drawn opposition from local communities.
State lawmakers passed a bill in June that also calls for a one-year moratorium, but it has yet to be signed into law. Hochul’s office said signing an executive order allowed the governor to move quickly while she reviews the legislation.
Mitch Jones, the managing director for policy and litigation at environmental group Food & Water Watch, said his organization would support the governor’s order.
"This is an important victory for the thousands of New Yorkers who demanded that their government take action to put a pause on hyperscale data centers,” Jones said.
