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New York has become the first US state to impose a one-year moratorium on the construction of large data centres with power requirements of 50 megawatts or more. The move comes amid growing concerns over rising electricity demand, higher utility bills, pressure on water resources and the environmental impact of AI-driven infrastructure. During the moratorium, the state will prepare uniform environmental standards for future projects while also considering the removal of tax incentives for hyperscale data centres. The decision reflects increasing scrutiny of data centre expansion across the US.
New York has become the first state in the United States to temporarily stop the construction of large data centres, introducing a one-year moratorium on facilities that require 50 megawatts or more of electricity. The decision comes as concerns continue to grow over the impact of artificial intelligence-driven data centre expansion on electricity prices, water resources and local communities.
The one-year ban places New York at the centre of a wider national discussion on balancing AI infrastructure growth with environmental protection and power grid stability. While major technology companies continue investing heavily in new data centres to support AI services and cloud computing, several US states are evaluating measures to reduce the pressure these facilities place on electricity networks and public utilities.
New York Governor Kathy Hochul said the rapid growth of data centres was creating concerns over rising utility costs, increasing pressure on natural resources and uncertainty for residents. She also announced that the state would pursue legislation to remove the sales tax exemption currently available for hyperscale data centres.
Under the new policy, the construction ban will apply to data centres with electricity requirements of at least 50 megawatts, according to officials from the governor's office.
During the moratorium, the New York State Department of Environmental Conservation will not issue discretionary permits for new large-scale data centre projects unless the applications had already been considered complete before the order came into effect.
The governor has also directed state agencies to prepare a Generic Environmental Impact Statement (GEIS) to establish uniform environmental standards for future data centre developments. The study will assess the environmental impact of constructing and operating large data centres across the state, including their effects on electricity demand, water consumption and surrounding communities.
According to the governor's office, the moratorium will remain in force until these environmental standards are completed and formally adopted.
The decision follows legislative action taken in New York in the past month, when state lawmakers passed a bill aimed at introducing safeguards for data centre development. However, the legislation has not yet reached the governor for approval. Officials said the proposal is complex and requires further discussions with the state legislature before it can move forward.
The move comes at a time when the rapid expansion of AI-related infrastructure has significantly increased electricity demand across the United States. Utility regulators, policymakers and local communities have increasingly raised concerns that large data centres could lead to higher electricity bills, place additional stress on ageing power grids and increase pressure on local water supplies.
A recent Reuters/Ipsos survey found that only one in three Americans supports the current pace of data centre construction, while a majority said they would oppose the development of such facilities in their own communities.
Several state legislatures across the United States have introduced proposals to regulate the environmental and economic effects of large data centres. However, New York has become the first state to formally introduce a statewide moratorium on new large-scale projects.
A similar proposal was considered in Maine earlier this year, but Governor Janet Mills vetoed legislation that sought to impose a temporary freeze on new data centre developments.
According to a recent report by the New York Independent System Operator, more than 12 gigawatts of large electricity-consuming projects, including data centres, were waiting to be connected to the state's electricity grid as of the past month. Data from the US Department of Energy also shows that New York has the eighth-highest residential retail electricity prices in the country, adding to concerns over future power demand.
Source Reuters
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