Hochul To Approve Nation’s First State-level Data Center Pause

ALBANY, New York — Gov. Kathy Hochul is enacting the nation’s first state-level moratorium on large-scale data center construction amid concerns over the impact of the facilities meant to support artificial intelligence.

The move, being implemented through an executive order Hochul will sign Tuesday, pauses construction permits for up to one year so that state officials can create a regulatory plan addressing energy and environmental issues.

“As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it’s my responsibility to take action and lead,” Hochul said. “New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too.”

The moratorium, which would likely run past Hochul’s November election, has been contemplated since at least last month, when POLITICO first reported the governor was weighing a data center construction pause through executive order. Permits that have already been issued for projects will not be impacted.

There will be some exceptions for facilities that generally use less power and are built for research, education and health care purposes, Hochul’s office said.

The governor also wants to work with state lawmakers to eliminate sales tax subsidies for data centers when they return to Albany in January — something that requires legislative action.

New York’s Democratic-led Legislature approved a one-year data center construction pause in June before concluding its six-month session. It’s not clear if Hochul intends to veto state lawmakers’ bill.

AI firms, private-sector boosters, data center developers and unions have opposed the moratorium. The governor herself was previously skeptical of a statewide ban and showed deference to local decision making.

The moderate Democrat’s pause is likely to increase demands for similar state-level action across the country as data centers become a potent, bipartisan issue.

Hochul’s order wades into an increasingly thorny political concern for the nation’s governors who want to benefit from the economic potential of the artificial intelligence boom while also contending with local-level moratoriums that have been approved across the country.

Energy and water hungry data centers have generated bipartisan pushback over concerns the facilities will further drive up utility costs — an issue that has become swept up in the broader affordability woes raised by voters.

The Empire State is home to about 133 data centers, far fewer than nation-leading states like Virginia and Texas. Hochul’s moratorium, though, stands to create a playbook for how other governors may ultimately address the issue absent federal intervention.

New York utility regulators will develop a structure for building data centers in order to create consistent standards. State environmental officials will not grant discretionary permits for data center construction until the environmental study is completed.

At the same time, the state’s economic development arm is drawing up a “community investment framework” so local governments have a guide on what to negotiate for if they’re considering a data center in their communities.

A Siena Research Institute poll released in June found most New York state voters, 46 percent to 21 percent, back a one-year data center moratorium.