New York to become first US state to impose a moratorium on new data centres

New York is planning to halt the construction of new large data centres for up to a year so the state can develop rules to protect the environment and energy grid from the power-hungry facilities that fuel artificial intelligence technology.

Governor Kathy Hochul is expected to sign an executive order on Tuesday morning imposing the country's first statewide moratorium on hyperscale data centres. These facilities house thousands of computer servers and require massive amounts of electricity, as well as a steady supply of water, to keep them cool.

Under the order, the state will pause permits for new large data centres and direct regulators to develop standards addressing environmental impacts, energy demand, water usage, and other related concerns, the governor's office said.

Tech giants raise concerns

Technology companies have argued that such a moratorium could hurt job growth in local communities and potentially give China an edge in the AI race. Other states have also considered establishing similar ground rules. Earlier, Maine was poised to introduce a similar moratorium, but the measure was vetoed by the state's Democratic governor.

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Part of the reason for the veto was that the town had struggled economically following the closure of a local mill.

According to the Associated Press, the New York state legislature approved its own moratorium bill this year. However, Hochul's office described the legislation as complex and said it required additional work. The governor is now opting for an executive order that will take effect immediately once it is signed.

The construction ban will apply to new data centres with a power demand of 50 megawatts or more, officials from the governor's office said, according to Reuters.

As of May, more than 12 gigawatts of large energy-intensive projects, including data centres, were waiting to connect to New York's power grid, according to a recent report by the state's independent grid operator. Data from the U.S. Energy Department also shows that New York has the eighth-highest residential electricity prices in the country, underscoring growing concerns over the strain that power-hungry AI infrastructure could place on the state's energy system.