New York Places 1-Year Moratorium on New Data Center Construction

­New York has become the first state to put the kibosh on new AI data center construction. Citing their effect on energy demand, water use and quality, and air quality, Governor Kathy Hochul signed an Executive Order creating a one-year moratorium so regulators can assess the dangers and act appropriately. In other words, the second-most regulated state in America is about to add more red tape to their ledger.

While New York’s 130+ data centers are paltry compared to Virgina’s 600 and Texas’s 500, they still have a voracious appetite for electricity and freshwater.

In general, larger data centers – 20 megawatts+ variety that New York is targeting – can consume up to 5 million gallons of water a day, mostly for cooling. And the new AI-focused “hyperscale” data centers allegedly use as much power as 100,000 households.

The former can be especially painful during droughts (or even help enable them), and the latter can put enormous strain on the grid.

But is a one-year moratorium the right move? Nationwide, data centers make up about .01% of total daily US water withdrawals – no small number at such a large scale, but it’s certainly the only (or biggest) drain on water supplies. Far from it.

There’s also the possibility of stifling innovation and scaring away critical business resources.

Data center operator Digital Realty noted that – as with much regulation -- ‌this move will likely send investments out of state. "We're committed to working with policymakers on solutions that support responsible growth, but a one-year pause isn't the right approach," they said.

For their part, Governor Hochul’s office noted the moratorium’s necessity “in order to build a nation-leading regulatory framework that protects ratepayers, the environment, the energy grid and communities across the state.”