NY governor orders a pause on large AI data center construction, to ensure that 'when companies succeed because of New York, New Yorkers succeed too'

New York State governor Kathy Hochul has announced a year-long moratorium on new high-powered data centers. The executive order, signed on Tuesday, bars the construction of new hyperscaler data centers using 50 megawatts or more of power for up to one year.

The pause would allow state agencies to craft regulations around upcoming projects in regards to their potentially harmful effect on local communities, including water usage, noise, and power concerns (via CNBC).

“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 Hochul. “New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too.”

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According to The City Reporter, while New York is yet to find itself a major part of the data center boom, around 30 projects that could become possible data centers requested connections to the power grid between 2020 and 2025.

This, among several upcoming planned data center projects, has sparked concerns from authorities and local groups that the state’s infrastructure is ill-equipped to deal with a vast number of potential new data facilities, particularly as the state’s average residential electricity price has risen nearly 68% since 2019.

A still from a video demonstrating how large Meta's planned Hyperion data center would be if it was place on Manhattan island

(Image credit: Meta)

The executive order also calls for the state Department of Public Service to create an environmental impact statement for evaluating upcoming data center projects, including their effects on water and air quality, energy, and water use while the moratorium is in place.

The governor has also directed Empire State Development, New York’s economic development agency, to “issue a Community Investment Framework (CIF) within 60 days, which will provide clear guidance to local entities to help them negotiate community benefits as part of any large-scale data center deal.” The framework would also include provisions for “local infrastructure improvements, child care investments, and direct financial support for their community.”

Among other measures, governor Hochul is also said to be pursuing legislation to repeal sales tax exemptions for “massive data centers across the state.”

The move comes amid various US lawmakers attempts to introduce similar data center construction moratoriums on a state level, as local residents continue to protest data center construction across the country, citing many of the same concerns in regards to noise, energy, water usage, and climate effects.

A photo of a large computer centre, showing clean white floors and many cables hanging from the ceiling

(Image credit: AMD | ZT Systems)

Earlier this year, US senator Bernie Sanders announced a bill calling for a nationwide pause on data center construction, echoing many of the same points.

According to a recent Reuters/Ipsos poll, only one in three Americans surveyed approved of the fast pace of data center construction, and most would oppose building one in their own community. Responding to governor Hochul’s announcement, data center operator Digital Reality told Reuters: “We’re committed to working with policymakers on solutions that support responsible growth, but a one-year pause isn’t the right approach.”

Meanwhile, NTT Global Data Centers CEO Doug Adams told the outlet: “The heightened scrutiny reflects a desire for greater understanding of how data centers impact local communities. We welcome that conversation.”