New York State halts construction of all new data centers

In a groundbreaking move, New York has become the first state to place a moratorium on the construction of new data centers. Governor Kathy Hochul signed an executive order that temporarily halts the approval of permits for large-scale projects, specifically those with a capacity of 50 megawatts or more. This decision is poised to impact over a dozen proposed developments across the state. The New York Department of Environmental Conservation will not issue any new permits that are not already in the pipeline. The decision has been spurred by growing concerns regarding environmental resources and the implications of artificial intelligence. A recent Pew Research survey revealed that only 10% of Americans are more excited than worried about AI in daily life, with just 23% believing it will positively influence job performance. Furthermore, less than a quarter of people think AI will enhance the economy, and confidence in effective government regulation of the technology remains low. During a press conference in Brooklyn, Hochul emphasized the importance of balancing progress with local needs. "Progress shouldn’t arrive with a higher utility bill, deleted water supply, or noise pollution," she stated, asserting that data centers should only be built in areas that welcome them and will remain subject to local zoning and approvals. The moratorium will be lifted once an environmental review process for data centers is completed, a process Hochul anticipates will take approximately one year. Additionally, her office is exploring the possibility of requiring data centers to contribute to a fund aimed at bolstering the state's electrical grid and is considering limiting tax benefits for hyperscale data centers. This executive order comes amid a legislative push in New York for stricter regulations on data center construction. Recently, a bill was approved that would pause projects larger than 20 megawatts for one year, while another proposed bill in committee aims for a three-year moratorium. Notably, many recent data centers have been smaller than 100 megawatts, but as demand from AI grows, future developments are expected to surpass 500 megawatts, according to BloombergNEF. While the concept of a data center moratorium has been discussed at both state and federal levels, New York is the first to implement such a policy. In December, over 230 organizations advocated for a national pause on new data centers. Vermont Senator Bernie Sanders has also suggested a nationwide moratorium, though it has not gained significant traction. Meanwhile, Maine's legislature recently passed a bill for a similar pause, but it was vetoed by Governor Janet Mills. Public sentiment surrounding data centers has shifted in recent years, with many residents expressing concerns about the growing size and number of projects, which are straining local electrical grids and resources such as water and farmland. A recent poll indicated that two-thirds of respondents worry about data centers increasing electricity costs, and other surveys suggest people would prefer an Amazon warehouse over a data center in their vicinity. Hochul's order could set the stage for a confrontation with the Trump administration, which has generally supported data center development. Last month, the Federal Energy Regulatory Commission, led by a Trump appointee, directed grid operators to create expedited pathways for data center interconnections.