In New York, a data center moratorium sparks questions

New York put a marker down in the fight to regulate AI, becoming the first state in the nation to enact a moratorium on data center infrastructure.

Gov. Kathy Hochul, a Democrat, signed the bill on July 14, restricting construction of data centers 50 megawatts or larger for one year.

It’s a less ambitious bill than legislation in Maine vetoed by Gov. Janet Mills, also a Democrat, in May; that law would have put data centers 20 megawatts or larger on ice until November 2027.

Nonetheless, the moratorium is a major step toward tighter regulation on data centers, one that hasn’t escaped scrutiny from industry analysts and advocates like Daniel Castro, president of the Information Technology and Innovation Foundation. In an email, Castro told IT Brew that a moratorium was the wrong approach, citing the possibility data centers could be built overseas instead as a reason to keep the infrastructure domestically located.

“The goal should be to enable responsible development, not delay it,” Castro wrote. “Americans should want the AI economy to run on data centers built in the United States, creating American jobs and strengthening US competitiveness, rather than pushing that investment overseas.”

Energy up. One of the chief issues for skeptics of the infrastructure in New York was data center use of energy and water. Hochul acknowledged the role of energy in her signing statement, highlighting the potential impact on state residents.

“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.

Sid Jha, CEO of climate risk solutions platform Arbol, told IT Brew that while he understands concerns over data center energy impacts, local protections won’t stop the problem on a national scale.

“Data centers will just move to the states with more favorable regulations,” Jha said. “You just have very different regulatory structures in different states for the foreseeable future, until there are more clear federal laws.”