New York is hitting pause on new hyperscale data centers in the state just as the AI boom is supercharging demand for these facilities.
Gov. Kathy Hochul singed Tuesday an executive order establishing a temporary moratorium on certain new data centers that consume 50 megawatts or more of power. The move makes New York the first state in the country to impose a statewide moratorium on large data center projects.
The order directs the state Department of Environmental Conservation to put on hold discretionary permits and licenses for projects covered by the order that had not been completed by Tuesday. It applies to both new data centers and expansions of existing ones.
The moratorium will remain in effect until the Department of Public Service completes a review of the environmental impacts data center construction and operation in the state. The review will asses energy demand, water use, air and water quality, noise levels, and any disproportionate impacts on disadvantaged communities.
The review is expected to take about a year to complete, according to a press release.
“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.
Moratoriam is the first to cover an entire state
The moratorium arrives as major tech companies like Meta, Amazon, Microsoft, Google, and OpenAI are pouring billions into building out the infrastructure needed to train and run their competing AI models. Collectively, these companies are expected to spend at least $700 billion this year on AI infrastructure and development, according to CNBC.
Meanwhile, communities where these projects are planned are increasingly pushing back. A Gallup survey conducted in March found that seven in 10 Americans oppose constructing data centers for artificial intelligence in their local area, including 48% who are strongly opposed.
Several local governments have already adopted or explored temporary restrictions on new data center development including Seattle, Minneapolis and several communities in New Jersey, but this is the first state-level moratorium in the country. Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez have also proposed a nationwide moratorium until Congress passes AI legislation that “ensures the safety and prosperity of the American people.”
The projects, however, have been largely embraced by President Donald Trump’s administration, which has argued that rapidly expanding AI infrastructure is crucial to U.S. national security and economic competitiveness with China.
Trump, who tech CEOs have spent the past year cozying up to, signed an executive order in December limiting what his administration described as overly burdensome state-level AI regulations. Then, in March, several major AI companies signed a White House pledge promising to cover the power generation and grid upgrades required by their data centers.
More than just a pause
Still, Hochul’s order goes beyond temporarily pausing permits. It also calls for a framework to help local governments negotiate with data center developers for things like infrastructure investments, local hiring, and apprenticeships. The order also calls on state regulators to consider creating a fund requiring data center operators to contribute upfront toward grid upgrades, clean-energy generation and battery storage.
Additionally, Hochul is still considering a stricter data center bill passed by state lawmakers last month. That legislation would cover projects consuming 20 megawatts or more, rather than the executive order’s 50-megawatt threshold. It would also establish energy-efficiency standards for facilities larger than one megawatt and require them to rely almost entirely on renewable energy by 2050.
Hochul also said, at press conference this morning, that she plans to pursue legislation repealing New York’s sales-tax exemptions for large data centers.
