New York enacts nation's first statewide temporary ban on new data centers

New York Governor Kathy Hochul has enacted the nation's first statewide moratorium on new hyperscale data center construction for one year. The executive order specifically bans state lawmakers from approving environmental permits for these facilities. Governor Hochul stated the pause is necessary to allow state officials time to develop a comprehensive framework that will protect residents and the environment from the unprecedented demands on energy and water resources, and potential increases in utility costs, posed by these large-scale data centers.

Hochul emphasized that while New York welcomes AI investments, companies must also protect the state's resources and contribute to communities. She indicated that new data centers would be required to either generate their own energy or pay a premium for grid access, and expressed opposition to tax subsidies for AI data centers. The New York Department of Public Service is tasked with creating the necessary guidelines, and the moratorium will be lifted once these new standards are finalized, a process anticipated to take up to a year.

U.S. Senator Kirsten Gillibrand voiced support for the moratorium, describing it as a matter of trust. She stated that New Yorkers need assurances that their energy bills will not rise, water supplies will be protected, and air quality maintained. Gillibrand also highlighted the broader necessity for federal action and regulation concerning AI.

Conversely, the moratorium has faced strong opposition from labor and construction industry groups. Mark McManus, General President of the United Association of Union Plumbers and Pipefitters, criticized the ban for costing good-paying union jobs and urged the governor to work collaboratively on common-sense guardrails. Mike Elmendorf, President and CEO of the Associated General Contractors of New York State, called the policy "wrong" for New York, asserting that delaying permits would permanently divert data center projects, and their accompanying jobs and tax revenue, to other states like Virginia, Texas, and Georgia, effectively signaling that New York is no longer competitive for such investments.