New York enacts one-year data center ban on projects larger than 50 megawatts — first US state to implement moratorium; will also pursue repealing tax exemptions

New York Governor Kathy Hochul signed into law Senate Bill S10642 today, also called the Responsible Data Center Development Act, which would put a one-year moratorium on all data center developments in the state. According to Reuters, this is the first temporary ban to be enforced statewide in the U.S. Maine’s legislature was actually the first one to pass a statewide moratorium, but Maine Governor Janet Mills vetoed the measure after it failed to exempt a data center project “that enjoys strong local support from its host community and region.”

“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 in a statement. She also said that she’s pursuing legislation to repeal tax exemptions for large data centers. The moratorium will apply to data center projects with a capacity of 50 megawatts or more, with the New York Department of Environmental Conservation not issuing any more permits to projects that haven’t been completed yet.

Hochul said that the state will build a Generic Environmental Impact Statement (GEIS) so that future data center developments are held to “consistent standards,” while also looking at how the construction and operation of these projects will impact the environment. Although the data center moratorium is set for one year, the governor’s office said that it will be lifted once the state has finalized the GEIS.

President Donald Trump has been pushing for the development of AI technologies, with the White House releasing the ‘AI Action Plan’ to accelerate infrastructure build-out. While this policy encouraged the development of AI data centers, the numerous large projects also resulted in memory and storage chip shortages, as well as negative impacts in the communities and regions where they’re located. For example, Monitoring Analytics, which oversees the largest power grid operator in the U.S., attributes an “irreversible” 76% price hike to increased data center demand, while a Virginia county has asked government offices to conserve power because of AI-driven price hikes. There have also been multiple issues with various data center projects relating to water consumption and air and noise pollution, which is why 70% of Americans now oppose having a data center built near their home.

All this pushback has resulted in many jurisdictions passing data center moratoriums. More than 75 projects have already been delayed in the first half of this year, amounting to $130 billion, with New York state being the first one to pass a state-wide temporary ban. Before this, Seattle, which plays host to the headquarters of Amazon and Microsoft, passed a similar one-year moratorium last month.

While delays like this will likely negatively impact the future availability of compute within the U.S., it’s also forcing tech giants to speed up innovations and governments to pass laws that protect their constituents. Multiple startups have started unveiling or even turning on their small modular reactor (SMR) prototypes, which could deliver the power needed by data centers without increasing air pollution or straining the local power grid. AI tech companies like Microsoft and Nvidia are also working on solutions that will cut data center energy use and water consumption, while Oregon’s POWER Act increased data center bills by 30% while cutting residential costs by 1.3%.