New York has become the first US state to temporarily halt the construction of large-scale data centres, imposing a one-year moratorium on new facilities consuming 50 megawatts or more of electricity. Governor Kathy Hochul announced the measure in the past week, citing concerns over increasing power demand, pressure on natural resources and the wider impact of artificial intelligence (AI)-driven infrastructure on local communities. 
Under the executive action, the state's Department of Environmental Conservation will not issue discretionary permits for eligible data centre projects unless applications have already been deemed complete. During the one-year period, state agencies will prepare a Generic Environmental Impact Statement to establish a consistent regulatory framework governing future data centre developments. The review will assess the environmental effects associated with the construction and operation of large facilities before new approvals are granted. 
Governor Hochul said the rapid expansion of data centres had raised concerns about rising electricity bills, depletion of natural resources and uncertainty for New York residents. She also announced plans to pursue legislation repealing sales tax exemptions currently available to hyperscale data centres, signalling a broader review of incentives supporting large technology infrastructure investments. 
The moratorium comes as lawmakers across the United States examine the growing impact of AI-related infrastructure on electricity grids, water resources and surrounding communities. Technology companies have accelerated investment in hyperscale data centres to support expanding AI workloads, prompting regulators in several states to consider measures aimed at balancing economic development with environmental and infrastructure constraints. 
New York's legislature passed a separate bill in the past month proposing additional safeguards for data centres consuming more than 20 megawatts of electricity. However, the legislation has yet to reach the governor for approval. State officials described the proposal as more complex than the executive action and said further discussions with lawmakers would be required before it progresses. 
Major technology companies offered limited public comment following the announcement. Alphabet and Microsoft declined to comment, while Meta, Amazon and Oracle did not immediately respond to requests for statements. 
Among infrastructure operators, Digital Realty said the moratorium could redirect investment away from New York. The company stated that while it supports responsible growth and continued engagement with policymakers, a year-long pause was unlikely to encourage future investment. NTT Global Data Centers said the industry should improve communication around the local economic benefits of data centres, including employment opportunities and investment, while acknowledging the need for greater public understanding of environmental impacts. Equinix did not immediately comment. 
The expansion of data centres has become a contentious issue across the United States as electricity demand continues to rise. According to a recent Reuters/Ipsos poll, only one-third of Americans support the current pace of data centre construction, while most respondents opposed having such facilities located within their own communities. 
Several state legislatures have introduced proposals aimed at regulating the environmental and economic impact of data centres, particularly their effect on electricity prices and power infrastructure. While Maine considered a similar moratorium earlier this year, the proposal was vetoed, making New York the first state to formally implement a construction freeze. 
According to the New York Independent System Operator, more than 12 gigawatts of large electricity loads, including data centres, were awaiting grid connection as of May this year. One gigawatt is capable of supplying electricity to approximately 750,000 homes. Although New York's comparatively high land costs and expensive electricity have limited data centre expansion relative to states such as Virginia and Texas, the state currently hosts more than 130 data centres, reflecting continued interest from major technology infrastructure developers. 
Source - Reuters