New York pauses large AI data center construction for up to one year
Gov. Kathy Hochul's order covers new hyperscale facilities drawing at least 50 megawatts, citing grid strain, utility bills and water concerns.
By Sarah Jenkins · Chief Macro Economics Correspondent
· 4 min read
New York Gov. Kathy Hochul on Tuesday signed an executive order blocking construction of new hyperscale data centers that would use at least 50 megawatts of power for as long as one year. Her office said the move makes New York the first U.S. state to impose a statewide moratorium on such projects, a step with direct implications for AI infrastructure developers and utilities planning for rapid load growth.
Hochul, announcing the order in New York City, said large AI data centers risk exceeding grid capacity and raising costs for households. Her office cited rising residential power bills, noting that New York’s average residential electricity price has increased nearly 68% since 2019, according to the Empire Center.
The order targets the largest facilities, often called hyperscale data centers, which aggregate large numbers of servers and networking equipment to process cloud computing and artificial intelligence workloads. Their power demand can resemble that of industrial plants, requiring grid interconnection, substations, cooling systems and, in some cases, additional generation or storage resources.
Alongside the construction pause, Hochul directed the New York State Department of Public Service to consider ways to require data centers to pay for new clean electricity dedicated to their operations. The governor’s office said those resources could include customer-sited distributed energy systems and battery storage.
Political support and local resistance
The decision follows growing opposition to proposed data center projects in New York communities including Lansing and East Fishkill, where residents and environmental groups have raised concerns over electricity demand, water use and local costs.
Food & Water Watch’s New York director, Laura Shindell, welcomed the moratorium and attributed it to public pressure from communities concerned about what the group describes as threats to clean air, water and household finances.
Sen. Kirsten Gillibrand, in a statement provided to WRGB Albany, said New Yorkers need stronger assurances that large facilities will not increase energy bills or harm water and air quality. State Sen. Kristen Gonzalez, a Democrat, said in the governor’s announcement that the pause gives New York time to plan standards for development.
Public polling indicates support for a temporary halt. A Siena Research Institute poll conducted in June found that 46% of respondents said a one-year moratorium on new permits for large data centers would be good for New York, while 21% said it would be bad. Siena found Democratic support exceeded opposition by 37 percentage points, while Republican support exceeded opposition by 13 points.
Critics warn on investment and competition
Opponents said the statewide approach could deter capital spending and weaken local control. Assemblyman Scott Gray, a Republican, and three colleagues wrote to Hochul in June that a moratorium would halt investment, remove decisions from municipalities and overlap with existing state work. They argued that Albany should set rules, support grid interconnection and protect ratepayers, while towns and villages should decide whether to host projects.
Sen. John Fetterman of Pennsylvania criticized the move in a post on X, writing, “China wins.” Some data center developers and supporters have claimed that foreign rivals are encouraging anti-AI sentiment in the U.S.; The New York Times has reported evidence of foreign-created anti-AI content aimed at U.S. audiences.
Other states are also weighing restrictions. The National Conference of State Legislatures has identified 14 state legislatures that have introduced bills limiting new data center construction, though none had become law before New York’s action, according to CNBC.
Further New York action remains possible. The state legislature has passed the Responsible Data Center Development Act, which includes a one-year moratorium for new data centers with peak demand of at least 20 megawatts. Hochul has not acted on that bill and has said she will work with lawmakers to review it further. Her office also said she is pursuing legislation to end sales tax exemptions for large data centers across the state.
The governor’s office said the moratorium will be lifted once New York develops a broader framework to support municipalities and establish construction standards.
This story draws on original reporting from CNBC.
