New York has become the first state in the U.S. to impose a moratorium on data centers, temporarily halting construction of new facilities for one year.
Gov. Kathy Hochul issued an executive order barring state lawmakers from approving environmental permits for new hyperscale data centers. Speaking Tuesday, Hochul said the pause is intended to give officials time to develop rules that better safeguard communities and natural resources.
Hyperscale data centers house thousands of servers and generally require at least 50 megawatts of electricity to run — roughly the same amount of power used by 50,000 homes. They also depend on a consistent water supply for cooling systems.
The moratorium applies only to newly proposed projects, meaning data centers that have already received approval will be allowed to move forward.
Hochul’s reason for the temporary ban
“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.
Hochul emphasized that New York remains open to artificial intelligence investment and technology companies, saying the state wants to support their long-term growth and success.
“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,” Hochul said.
The governor’s office said the order comes amid a surge in demand for data center development, fueled by AI and other high-powered computing needs. Beyond heavy electricity use, officials warned that such facilities can consume “millions of gallons of water,” placing added strain on local supplies.
“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.
“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,” state Sen. Kristen Gonzalez added.
Hochul said New York will require data centers to either produce their own energy or pay a premium for accessing New York’s grid. Hochul also said she opposes any tax subsidies for AI data centers.
“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 create the guidelines for centers to ensure new facilities meet consistent standards.
Hochul said the process will take up to a year, prompting the moratorium.
Once state officials finalize the standards, the ban will be lifted.
A call for “clear, reliable rules of the road”
Sen. Kirsten Gillibrand applauded the move.
“This one-year moratorium is fundamentally about trust. Right now, New Yorkers aren’t convinced these massive facilities benefit them. Before we move forward, our communities need ironclad guarantees that their energy bills won’t spike, their water will be protected, and their air will remain clean,” Gillibrand said.
Gillibrand described the need for federal action regarding AI as well.
“That requires establishing clear, reliable rules of the road. We must build a framework that protects our kids from harmful algorithms and social media tools; shields seniors and consumers from AI-driven scams and fraud; and safeguards American jobs and livelihoods from displacement,” she said.
“It kills good-paying union jobs”
Not everyone is pleased with the moratorium.
“A shortsighted moratorium only accomplishes one thing: it kills good-paying union jobs. Rather than implementing guardrails to build the future of American ingenuity, Gov. Hochul is taking her ball and going home. We urge the governor to work with all parties, including the hardworking New Yorkers whose jobs are at stake, to implement common sense guardrails,” said Mark McManus, general president of the United Association of Union Plumbers and Pipefitters.
The Associated General Contractors of New York State also objected to the moratorium, calling it “the wrong policy for New York.”
“Halting permits for as much as a year in this fast-moving sector will not simply delay projects — it will send them permanently to Virginia, Texas, Georgia and other states actively competing for these investments and the construction and other jobs that come with them. Once a developer breaks ground somewhere else, that project — and the opportunities and tax revenue that come with it– are not coming back,” AGS NYS president and CEO Mike Elmendorf said. “Data center construction is the strongest-performing segment in an otherwise uncertain construction market nationwide, and New York’s construction industry, which still has not recovered to pre-pandemic employment levels, cannot afford to forfeit it.”
Elmendorf called the moratorium a “de facto ban that tells the marketplace New York is closed for business.”
Ali Bauman
contributed to this report.
