New York imposes one-year moratorium on large hyperscale data centres

New York State has imposed a one-year moratorium on the construction of large new hyperscale data centres, becoming the first state in the United States to do so. The pause applies to projects that use 50 megawatts of power or more, and it will block new discretionary permits during the review period. Governor Kathy Hochul announced the move on Tuesday, saying the state needs time to build a regulatory framework for the sector.

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The state said the decision is intended to address concerns about rising utility costs, electricity demand and pressure on local water supplies. Hochul said the policy is meant to prevent data centre development from hiking bills, depleting natural resources and creating uncertainty for residents. The order also shifts more of the costs linked to data centre operations onto the facilities themselves rather than the wider public.

Under the new approach, developers will be expected to pay more for the power they use, contribute to upgrades of the state power grid, provide their own power and invest in clean energy to run their facilities. The governor also said New York is looking to repeal sales tax exemptions for data centres. The moratorium is meant to give officials time to assess electricity demand and the impact of these projects on local communities.

The decision comes as data centre construction has become a political issue across the United States, with bans proposed in at least a dozen states. New York already has 148 operational data centres, making it the state with the sixth-largest concentration in the country. That scale helps explain why the issue has become more prominent in state politics, especially as demand for computing capacity continues to grow.

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The move also has electoral and policy implications in New York, where progressives in the state legislature have called for a moratorium. State Senator Kristen Gonzalez introduced a bill last month that also sought a pause on construction. Hochul is due to face re-election in November, and her opponent has opposed a ban on data centre construction.

What remains unclear is how long it will take the state to complete the regulatory framework and whether the pause will lead to longer-term restrictions or revised permitting rules. It is also not yet clear how developers will respond to the new cost requirements or whether the proposal to repeal sales tax exemptions will advance. The broader debate over where the costs of large-scale digital infrastructure should fall is likely to continue as the moratorium takes effect.

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