New York has become the first U.S. state to impose a 1-year moratorium on the construction of large new data centers, as concerns grow over rising electricity demand, water consumption, and the impact of AI infrastructure on local communities.
The announcement places New York at the centre of a growing national debate over how to balance the rapid expansion of AI-driven data centers with environmental and infrastructure challenges. While technology companies continue to invest heavily in new facilities, lawmakers across several states are considering measures to reduce pressure on electricity grids, utility costs, and natural resources.
“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,” said New York Governor Kathy Hochul. She also announced plans to pursue legislation that would repeal sales tax exemptions for large data centers.
The moratorium applies to new data centers with power requirements of 50 megawatts (MW) or more. During the pause, the New York State Department of Environmental Conservation will not issue discretionary permits for new projects that have not already completed the approval process.
Governor Hochul has also directed state agencies to prepare a Generic Environmental Impact Statement to establish consistent standards for future data center developments and assess their environmental impact. The moratorium will be lifted once these standards are finalised.
The move follows the passage of a state bill last month that proposes additional regulations for data centers consuming more than 20 MW of electricity. However, the legislation has not yet been signed into law.
Industry leaders have expressed concern over the decision. Digital Realty said the moratorium could shift future investments outside New York, while Doug Adams, CEO of NTT Global Data Centers, said the industry should engage more actively with communities to explain the economic benefits, job creation, and environmental impact of data centers.
The expansion of AI infrastructure has significantly increased electricity demand across the United States, prompting growing public concern. A recent Reuters/Ipsos poll found that only 1 in 3 Americans support the current pace of data center construction, and most respondents opposed building one in their local community.
According to the New York Independent System Operator, more than 12 gigawatts (GW) of large electricity-consuming projects, including data centers, are currently waiting to connect to the state’s power grid. 1 GW of electricity can supply power to approximately 750,000 homes.
New York currently has more than 130 data centers, compared with over 600 in Virginia and around 500 in Texas.
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