New York puts the brakes on its data center rush. The governor Kathy Hochul has decided to suspend up to one year new plants with a power equal to or greater than 50 megawatts, opening a front destined to weigh on the future of artificial intelligence in the United States. At the heart of the crackdown are rising utility bills, pressure on the electricity grid, water consumption, and the impact on local communities.
With an executive order signed on July 14, Hochul introduced the first state moratorium on large data centers The moratorium has now effectively come into force in the country. The measure freezes the issuance of discretionary permits for projects that, as of the date of the order, had not yet completed the authorization process. However, already operational facilities and those whose applications have already been declared complete will be able to proceed. Certain facilities primarily intended for manufacturing, scientific research, education, and healthcare are also exempt from the moratorium.
The decision does not definitively close the door to technological investments. The goal is To gain some time To establish common standards and stricter regulations before authorizing a new wave of energy-intensive infrastructure. “Data center development threatens to increase utility bills, deplete our natural resources, and create uncertainty for New Yorkers,” Hochul said. “It's my responsibility to step in and lead the way.”
New York presents the bill to the big operators
The measure arises from the growing concern about the impact of data centers on the power grid, on household rates and water resources. The expansion of artificial intelligence has pushed tech companies to invest billions of dollars in facilities capable of hosting increasingly powerful servers, but also consuming energy and water in quantities comparable to those of entire communities. According to New York's independent grid operator, in May, more than 12 gigawatts of large energy loads, including data centers. One gigawatt can power approximately 750 homes. The state also starts from a delicate situation, with residential electricity prices among the highest in the United States.
During the moratorium, a general assessment of environmental impacts and uniform standards will be established for new projects. The suspension will be lifted once the new regulatory framework is completed. The Department of Public Services will also have to evaluate measures to force data centers to either bear a greater share of energy costs or to produce their own electricity for their operations.
Hochul also announced the creation of a financed fund from new facilities to support the electricity grid and clean energy production. Another issue concerns tax breaks. The governor intends to ask the state legislature to eliminate sales tax exemptions granted to large data centers.
In 60 days, the state economic development agency will have to develop a model to help local communities negotiate compensation with companies. Possible compensations include infrastructure investments, direct financial support, childcare services, local hiring, apprenticeships, and wage guarantees. However, the industry fears a flight of investmentsDigital Realty warned that the pause could push new projects out of New York. "We are committed to working with policymakers to find solutions that support responsible growth, but a one-year pause is not the right approach," the company said.
Data Center Ban: Maine Precedent Vetoed
New York was not the first state to attempt to impose a moratorium. In April 2026, the Maine Legislature had passed LD 307, the first bill of its kind to pass both chambers of a U.S. state. The measure would have suspended permits for new data centers of at least 20 megawatts until November 1, 2027. This threshold was therefore lower than the one set by Hochul and would have affected a larger number of facilities.
The provision it had been approved The bill passed by 79 votes to 62 in the Chamber of Deputies and 21 to 13 in the Senate. The aim was to study the effects of large-scale plants on electricity prices, the grid, water resources, air quality, and local economies. The moratorium, however, never came into force.On April 24, the Democratic governor Janet Mills vetoed, while declaring himself in favor of a temporary suspension in principle. The sticking point concerned a project planned at the former Androscoggin paper mill in Jay, which closed in 2023. Mills had requested a waiver to allow for the redevelopment of the industrial site, arguing that the plant would reuse existing infrastructure and provide new economic opportunities to a community impacted by the loss of more than 200 jobs.
Legislators rejected the exception. The project's supporters, however, emphasized that, in a rural area with few job opportunities, even a hundred jobs and increased tax revenues could represent a significant result.
Protests grow in local communities
Hochul's decision comes as the United States increases resistance to data center expansionThe issue has now entered citizen assemblies, state parliaments, and national political debate. According to a survey Reuters / Ipsos, only one in three Americans approves the speed with which these infrastructures are being built and the majority would be against having one near their homes.
Throughout the country, dozens of state legislatures have introduced proposals To limit the impact of data centers on utility bills and the environment. At the local level, moratoria, referendums, and protests are proliferating, often accompanied by demands for greater transparency regarding projects and agreements reached with local governments.
Erin Brockovich also joined the mobilization, the activist made famous by her battle against Pacific Gas & Electric. After collecting thousands of reports from citizens concerned about facilities being built near their homes, Brockovich created a map of data centers operating, under construction, and planned in the United States. The main issue the bill remains to be paidLarger plants can require enormous amounts of electricity and millions of gallons of water per day for cooling, as well as producing noise, e-waste, and strain on local infrastructure.
The race to artificial intelligence thus reaches its physical limits. Growth no longer depends solely on the availability of chips and capital, but on the ability to find energy, water, land, and social consensus. New York has chosen to pause for a year and write new rules. The risk is that investments will shift elsewhere. The opposite is that expansion will proceed without establishing who should bear the costs of infrastructure and environmental impact.
This is the real game opened by the Hochul moratorium. Not deciding whether or not to build data centers, but establishing which facilities are sustainable, who should finance its energy needs and what benefits should remain for the communities that host them.
