New York State halts construction of all new data centers

New York became the first state to halt data center construction after Gov. Kathy Hochul signed an executive order today that temporarily bars the state from approving new permits for large projects.

Hochul’s order applies to data centers 50 megawatts or larger, potentially affecting more than a dozen projects. The state’s Department of Environmental Conservation will not issue any permits that haven’t already been completed.

While resource concerns have fueled some of the backlash, broader concern about AI has been behind much of it as well. A recent Pew Research report found that only 10% of Americans were more excited than concerned about AI use in daily life, and just 23% felt that the technology would have a positive impact on how people do their jobs. Less than a quarter of the general public feels that AI will give the economy a boost, and less than a third were confident that the government would regulate the technology responsibly.

“Progress shouldn’t arrive with a higher utility bill, deleted water supply, or noise pollution,” Hochul said at a press conference in Brooklyn. “These data centers can only be built, should only be built in places that want them. So they will never be exempt from local zoning, local approvals.”

The moratorium will be lifted once the state finalizes an environmental review process for data centers, which Hochul expects will take about a year. Hochul’s office is also considering requiring data centers to pay into a fund that would support the state’s electrical grid, and she would like to prevent hyperscale data centers from receiving tax benefits. 

Hochul’s executive order arrives as more stringent measures are moving through New York’s legislature. Last month, the legislature advanced a bill that would pause construction of data centers larger than 20 megawatts for one year, while another still in committee would institute a three-year moratorium.

The average data center built in the last few years has been smaller than 100 megawatts, but those in development are expected to be much larger as AI drives computing demands higher. Through 2030, nearly a quarter of new data centers will exceed 500 megawatts, according to BloombergNEF, driven by increasing AI investment.

The idea of a data center moratorium has been debated at the state and federal levels, but New York is the first to put one into practice. In December, more than 230 organizations called for a nationwide pause on new data centers. Vermont Sen. Bernie Sanders has also proposed a nationwide moratorium, though it hasn’t received much traction. More recently, Maine’s legislature passed a bill that would have paused construction on new data centers until November 1, 2027, but Gov. Janet Mills vetoed it.

Just years ago, data centers were sought after by states eager to secure new development projects, but recently, public sentiment on data centers has soured as new projects have grown in size. The scale and pace at which they’re being constructed has started to strain the electrical grid in addition to regional resources like water and farmland. Two-thirds of respondents to a recent poll said they were concerned about data centers driving up electricity prices. Another survey found that people would rather have an Amazon warehouse in their backyard than a data center.

Hochul’s order could be setting up for a clash with the Trump administration, which thus far has supported data center development. Last month, the Federal Energy Regulatory Commission, which is led by a Trump appointee, told grid operators to develop special fast lanes to speed data centers’ interconnections.