New York becomes the first U.S. state to halt construction of large data centers

New York has taken an unprecedented step in the United States: Governor Kathy Hochul signed an executive order temporarily halting the approval of permits for large new data centers, defined as those of 50 megawatts or more. The measure could affect more than a dozen projects that were in the pipeline, as the state's Department of Environmental Conservation will stop issuing any permit that was not already completed before the announcement. It is the first time a U.S. state has put a moratorium of this kind into practice, although the idea had long been debated at both the state and federal levels.

The official justification combines very specific environmental and social concerns. Hochul was blunt in her appearance in Brooklyn: 'progress should not come with a higher electricity bill, with the water gone, or with noise pollution.' She added that these data centers 'can only be built, should only be built in places that want them,' and that they will never be exempt from zoning or local approvals. This message connects with an underlying trend: just a few years ago states competed to attract data centers as an engine of economic development, but public sentiment has shifted as projects have grown in size and in their impact on the electrical grid, water, and farmland of nearby communities.

The public opinion data cited in the report are revealing of the current climate toward artificial intelligence in general. According to a recent Pew Research report, only 10% of Americans are more excited than concerned about the use of AI in daily life, and barely 23% believe the technology will have a positive impact on how people do their jobs. Fewer than a quarter of the public think AI will boost the economy, and fewer than a third trust that the government will regulate the technology responsibly. Added to this, two-thirds of respondents in another survey expressed concern that data centers will drive up electricity prices, and yet another survey found that people would rather have an Amazon warehouse in their neighborhood than a data center. Together, these figures paint a picture of social skepticism toward AI that extends well beyond physical infrastructure and that is likely fueling political support for measures like Hochul's.

The executive order is not an isolated measure but is part of a broader legislative process in New York. Last month, the state legislature had already advanced a bill to pause the construction of data centers larger than 20 megawatts for one year, and another bill, still in committee, proposes a three-year moratorium. The governor herself has floated additional measures for when the pause is lifted: she is considering requiring data centers to contribute to a fund supporting the state electrical grid, and she wants to prevent hyperscale data centers from receiving tax breaks. The current moratorium will be lifted when the state completes an environmental review process specific to data centers, a process Hochul estimates will take approximately one year.

The context of these facilities' growth helps explain the urgency of the regulatory response. The average size of data centers built in recent years has stayed below 100 megawatts, but projects currently in development are set to be much larger due to the rising demand for computing that AI requires. According to BloombergNEF, by 2030 nearly a quarter of new data centers will exceed 500 megawatts, driven by growing investment in artificial intelligence. It is precisely that jump in scale—from facilities once measured in tens of megawatts to others reaching several hundred—that has strained the electrical grid and other regional resources such as water and farmland, and that explains why the threshold Hochul chose (50 megawatts) is deliberately low so as to capture a large share of new projects.

New York is not acting in a vacuum: the debate over data center moratoriums has also arisen elsewhere, though with mixed results. In December, more than 230 organizations called for a national pause on the construction of new data centers. Vermont Senator Bernie Sanders has also proposed a nationwide moratorium, though with little progress. More recently, the Maine legislature passed a law that would have paused the construction of new data centers until November 1, 2027, but Governor Janet Mills vetoed it. This mosaic of failed or stalled attempts in other states underscores how exceptional it is that New York has managed to put the measure into practice.

Hochul's decision also opens the door to a political clash with the Trump administration, which has so far actively backed the development of data centers. Last month, the Federal Energy Regulatory Commission (FERC), led by a Trump appointee, instructed grid operators to develop special 'fast lanes' to expedite data center interconnections. The contrast between a federal government speeding up approvals and a state freezing them foreshadows a regulatory friction that will likely be repeated in other states as public pressure grows over the energy and water consumption of AI infrastructure.

Ultimately, the New York case sets a precedent that other states will watch closely: it is the first time that public concern over the environmental and energy cost of AI has translated into a real administrative freeze on construction already underway, and not just into legislative proposals or opinion debates. For the AI industry, which depends on the rapid and continuous expansion of computing infrastructure, the signal is clear: the unconditional political backing that data centers enjoyed just a few years ago can no longer be taken for granted, and the social acceptance of these facilities will increasingly depend on concrete commitments regarding energy costs, water use, and tax breaks.