New York becomes first U.S. state to impose AI data center ban

New York becomes first U.S. state to impose AI data center ban.

Key Points: New York State Governor Kathy Hochul on Tuesday signed an executive order barring the construction of new "hyperscaler" data centers using 50 megawatts or more of power for up to one year. It is the first statewide data center ban in the U.S., though similar measures, also referred to as "moratoriums", are being considered by other states.

New York State Governor Kathy Hochul on Tuesday signed an executive order barring the construction of new large-scale data centers using 50 megawatts or more of power for up to one year, making the Empire State the first state in the nation to impose such a ban.

"We're in the midst of one of the most significant economic upheavals in generations ... perhaps ever," the governor said. "These hyperscale AI data centers consume enormous amounts of power, truly threatening to outpace our grid's capacity," she added. "They drive up costs for local ratepayers, and I refuse to let those costs get passed down to New Yorkers."

Leaders of the data center opposition celebrated the governor's decision. "This one-year moratorium is a huge step forward for New York communities fighting against an onslaught of massive data center proposals," stated Laura Shindell, director of New York State's Food & Water Watch.

"This one-year moratorium is fundamentally about trust," said Senator Kirsten Gillibrand, in a statement. "Right now, New Yorkers aren't convinced these massive facilities benefit them."

Many, however, voiced their dissatisfaction, claiming that the moratorium would hinder New York's ability to compete in a rapidly expanding technological field. "A statewide moratorium is the wrong answer to the right questions," New York State Assemblyman Scott Gray, a Republican, and three of his colleagues wrote in a letter to the governor in June opposing data center moratoriums. "It freezes investment, takes decisions away from the communities that should be making them and duplicates or ignores work the governor's own administration already has underway."

"China wins," said Pennsylvania Senator John Fetterman in an X post on Tuesday morning.

A data center moratorium remains popular in the state. A Siena Research Institute poll conducted in June revealed that 46% of respondents believed that a "one-year moratorium on new permits for large data centers in New York" would be good for the state, whereas only 21% said it would be bad. The issue appeared to be fairly bipartisan as well, with Democrats backing the idea by a margin of 37 percentage points and Republicans supporting it by a margin of 13.

In addition to the pause on new data center construction, Hochul directed the NYS Department of Public Service to consider approaches to require data centers to fund new clean electric generation dedicated to their operations. Once the state develops a comprehensive framework to support municipalities and strong standards for construction, Hochul says, the moratorium will be lifted.