US President Joe Biden (2L), with US Senate Majority Leader Chuck Schumer, and New York Governor Kathy Hochul, looks at a 3D rendering of a future Micron factory presenting by CEO of Micron Technology Sanjay Mehrotra (L) during a tour of the Micron Pavilion at the SRC Arena and Events Center of Onondaga Community College in Syracuse, New York on October 27, 2022.
Mandel Ngan | AFP | Getty Images
New York State Governor Kathy Hochul on Tuesday signed an executive order barring the construction of new large-scale data centers using 50 megawatts or more of power for up to one year, making the Empire State the first state in the nation to impose such a ban.
“We’re in the midst of one of the most significant economic upheavals in generations … perhaps ever,” the governor said, announcing the executive order in New York City. “These hyperscale AI data centers consume enormous amounts of power, truly threatening to outpace our grid’s capacity,” she added. “They drive up costs for local ratepayers, and I refuse to let those costs get passed down to New Yorkers.”
Hochul’s sentiment echoes that of many state residents and environmental leaders, who have heavily scrutinized hyperscaler data centers on the basis of their excessive consumption of power and natural resources, particularly fresh water.
The announcement noted that New Yorkers have seen their electric bills surge, with the state’s average residential electricity price climbing nearly 68 percent since 2019. This fact has skewed public opinion starkly against new data center construction, with major public backlash against proposed facilities in townships such as Lansing and East Fishkill.
Leaders of the data center opposition celebrated the governor’s decision.
“This one-year moratorium is a huge step forward for New York communities fighting against an onslaught of massive data center proposals,” stated Laura Shindell, director of New York State’s Food & Water Watch, a high-profile environmental nonprofit. “It comes as the direct result of immense public pressure from people across the state demanding their elected leaders protect them from Big Tech’s assault, which threatens the state’s clean air and water and New Yorkers’ financial security.”
Praise was not limited to environmental and community leaders, however, as it also came from the governor’s allies, both in Congress and in the state legislature.
“”This one-year moratorium is fundamentally about trust,” said Senator Kirsten Gillibrand, in a statement provided to WRGB Albany. “Right now, New Yorkers aren’t convinced these massive facilities benefit them. Before we move forward, our communities need ironclad guarantees that their energy bills won’t spike, their water will be protected, and their air will remain clean.”
“Technology should make our lives better, not pollute our water, strain our energy grid, or drive up our utility bills,” State Senator Kristen Gonzalez, a Democrat, stated in the New York State announcement. “By giving our State time to plan, we can ensure that development and innovation do not come at the expense of all of us.”
Many, however, voiced their dissatisfaction, claiming that the moratorium would hinder New York’s — and the United States’ – ability to compete in a rapidly expanding technological field.
“A statewide moratorium is the wrong answer to the right questions,” New York State Assemblyman Scott Gray, a Republican, and three of his colleagues wrote in a letter to the governor in June opposing data center moratoriums. “It freezes investment, takes decisions away from the communities that should be making them and duplicates or ignores work the governor’s own administration already has underway.”
“Siting belongs to local communities. Albany’s job is to set the regulatory framework, facilitate interconnection and protect ratepayers and grid reliability,” Gray and his colleagues wrote. “It is not Albany’s job to decide for a town or village whether it wants one of these projects. That is a local decision, and it should remain one.”
“China wins,” said Pennsylvania Senator John Fetterman in an X post on Tuesday morning.
There have been claims made by those building data centers that foreign rivals of the U.S. are supporting the anti-AI movement, and evidence of foreign-created anti-AI content being published for a U.S. audience.
A data center moratorium remains popular in the state. A Siena Research Institute poll conducted in June revealed that 46% of respondents believed that a “one-year moratorium on new permits for large data centers in New York” would be good for the state, whereas only 21% said it would be bad. The issue appeared to be fairly bipartisan as well, with Democrats backing the idea by a margin of 37 percentage points and Republicans supporting it by a margin of 13. This same poll showed Hochul, a Democrat, leading her Republican challenger, Nassau County Executive Bruce Blakeman, by a margin of 20 percentage points – a promising sign for her reelection campaign.
The first-in-the-nation statewide moratorium marks a significant show of authority by Hochul, who has now carried out a landmark policy that her Democratic colleagues, such as Maine’s Janet Mills and Virginia’s Abigail Spanberger, have cautioned against. Fourteen state legislatures across the country have introduced bills restricting new data center construction, none of which, to this point, have been signed into law.
Tuesday’s moratorium might not be the last action taken by the governor’s office, either. The Responsible Data Center Development Act, passed by the state legislature earlier this year, contains a one-year moratorium on the construction of new data centers with a peak energy demand of 20 megawatts or more. Hochul has yet to take action on the bill but has indicated that she will work with the legislature to “further review” its nature. Furthermore, a statement released by Hochul’s office stated that the governor is actively “pursuing legislation to repeal sales tax exemptions for massive data centers across the state.”
In addition to the pause on new data center construction, Hochul directed the NYS Department of Public Service to “consider approaches to require data centers to fund new clean electric generation dedicated to their operations, including but not limited to customer-sited distributed energy resources and battery storage.”
Once the state develops a comprehensive framework to support municipalities and strong standards for construction, Hochul says, the moratorium will be lifted. New York ranked among CNBC’s best-positioned states to win AI data centers in its recent annual rankings of Top States for Business.
