New York is now the first state in the country to impose a moratorium on new data center construction, after Gov. Kathy Hochul signed an executive order Tuesday pausing environmental permits for hyperscale facilities for up to one year, according to CBS News.
Hyperscale data centers contain thousands of computer servers and typically consume 50 or more megawatts of power, roughly the equivalent of 50,000 homes. They also require large volumes of water to stay cool. Hochul said the moratorium will give state officials time to build a regulatory framework before more projects are approved.
"Massive data centers are being built across our state and our country. The scale and speed of this development has put unprecedented demand on energy and water resources, and threatens to drive up utility costs. Before it goes any further, I need safeguards in place to protect New Yorkers," Hochul said.
The order applies only to new projects. Facilities that had already received approval before the moratorium will continue moving forward. The governor's office said the pause is necessary because the state is seeing unprecedented growth in data center demand driven by artificial intelligence and other computing operations.
State Sen. Kristen Gonzalez pointed to a recent example of grid stress. "It is a fact that our energy grid is already too strained. Over the July 4 weekend, we saw how vulnerable our grid was when Mayor Mamdani asked New Yorkers to keep their thermostats at 78 degrees during a heat wave," Gonzalez said.
Hochul said that once standards are finalized, New York will require data centers to either produce their own energy or pay a premium to access the state's grid. She also said she opposes tax subsidies for AI data centers and pointed to examples in other parts of the country where communities have collected significant payments from data center developers.
"We've seen parts of our country collect millions, even hundreds of millions of dollars from these centers to go from everything for new roads, water supply, infrastructure, schools, community centers, playgrounds, fire departments, medical centers, even farm preservation," Hochul said. "The bigger the data center, the bigger the investments that communities can and should expect."
The Department of Public Service will develop guidelines to ensure new facilities meet consistent standards. Hochul said the process of creating those standards will take up to a year, which is what prompted the moratorium's timeline.
"The bottom line is progress shouldn't arrive with a higher utility bill, depleted water supplies, or noise pollution. So we have no choice but to address these challenges created by these massive facilities," Hochul said.
Despite the pause, Hochul said New York still welcomes AI investment and wants those businesses to grow. "But when you benefit from the talent and energy of New York, we expect you to protect our resources and give back to our communities," she said.
