New York State announced on Tuesday a one-year “Data Center Moratorium” to address concerns about the impact of the artificial intelligence (AI) boom on residents’ electricity bills, depletion of water resources, and increased burden on local communities. This move makes New York the first state in the United States to halt the construction of large new data centers.
Governor Hochu stated in a declaration, “When the development of data centers threatens residents’ electricity bills, depletes our natural resources, and brings uncertainty to New Yorkers, it is my responsibility to take action and lead.”
The governor also announced plans to push for legislation to completely eliminate the sales tax exemptions for large data centers.
Officials from the governor’s office stated that the executive order issued this time will specifically target giant data centers with power consumption at 50 megawatts (MW) or higher.
During the one-year moratorium, the New York State Department of Environmental Conservation (DEC) will freeze all discretionary permits that have not been approved.
The governor has instructed officials to develop a General Environmental Impact Statement (GEIS) to study the potential environmental impacts of constructing and operating data centers in New York, ensuring that future reactivated data centers meet “consistent strict standards.” Once this unified statewide environmental and energy standard is finalized, the moratorium will be lifted.
The infrastructure expansion triggered by the AI demand has already increased electricity demand and costs in large areas across the United States, sparking strong public and political backlash. According to a recent Reuters/Ipsos survey, only one-third of Americans support the rapid expansion of data centers, with the majority opposing the construction of these facilities in their communities.
Tech giants such as Alphabet, Microsoft, Meta, Amazon, Oracle, along with top data center operators like Digital Realty, Equinix, and NTT Data, have remained silent and have not issued any comments.
Before this, dozens of state legislatures across the United States introduced bills attempting to address the negative environmental and societal effects of data centers, but New York is the first state to take action and implement a “comprehensive freeze.”
A recent report from the New York Independent System Operator (NYISO) indicated that as of May this year, there are over 12 gigawatts (GW) of ultra-high-power consumption projects in the pipeline waiting to join the grid in the state (including many data centers). According to data from the U.S. Department of Energy, 1 gigawatt of electricity is enough to power approximately 750,000 households.
Currently, residential electricity prices in New York State rank eighth in the nation. Despite the expensive land prices and tight electricity supply that previously limited New York’s competitiveness in attracting data centers, given New York’s social and economic status in the United States, many data center operators have still identified New York State as a key focus for their expansion.