New York becomes first US state to pause large-scale data centre development
The interim measure allows the Department of Public Service to develop regulations on energy, water use, and environmental impact, while Hochul reviews a stricter legislative bill.
New York has become the first US state to enact a statewide moratorium on new data centre developments, following an executive order signed by Governor Kathy Hochul. The order imposes a one-year pause on new environmental permits for facilities exceeding 50 megawatts, granting the Department of Public Service (DPS) time to develop comprehensive regulations addressing rising energy prices, environmental impacts, and water consumption.
The executive action serves as an interim measure while Hochul reviews a separate bill passed by state lawmakers, which would have imposed a stricter threshold of 20 megawatts. The governor’s office stated that the 50-megawatt threshold is designed to prevent disruption to smaller data centres utilised by essential institutions, such as hospitals, while the state assesses the broader implications of the infrastructure boom.
Hochul’s office has not yet identified the exact number of proposals impacted by the pause, nor has the governor confirmed whether she will sign the stricter legislative version. The moratorium allows up to a year for the DPS to establish standards for assessing expected environmental impacts, including air quality and water use. Additionally, the department has been tasked with creating a framework to help local communities negotiate benefits when data centres seek to establish operations in their areas.
The decision comes as communities across the country grapple with a wave of infrastructure build-out driven by accelerating artificial intelligence demand. This surge has raised significant concerns regarding energy costs and environmental effects, with government subsidies for data centre development becoming a contentious issue for many residents. Maine nearly became the first state to pass a similar moratorium before its governor vetoed the bill in April.
Looking ahead, Hochul plans to propose rolling back sales tax exemptions for large data centres when the legislature reconvenes next year. In a statement, the governor emphasised the need to protect residents from utility bill hikes and resource depletion, stating it is her responsibility to take action as data centre development threatens to create uncertainty for New Yorkers.
