New York’s data center moratorium could be the opening salvo for other state leaders seeking to rein in technology infrastructure and for Congressional Democrats hoping to take up the issue in November’s midterm elections.
The executive order signed Tuesday by Democratic Gov. Cathy Hochul is the first state-level moratorium on data center construction, following dozens of local governments in red and blue states passing similar moratoriums. But with poll numbers showing growing public skepticism about AI, industry supporters and detractors alike say it’s unlikely to be the last.
The moratorium also serves as a bridge of sorts between moderate Democrats like Hochul and progressives like Sen. Bernie Sanders (Iconic, R-Vermont) who want more restrictions on data centers and artificial intelligence. Even as Democrats from Pennsylvania to California tend to support a push to install new guardrails on vast, energy-intensive AI hubs, the party remains divided over how hard to draw the line on one of Silicon Valley’s top priorities.
Sanders told Politico on Tuesday that the concept of a moratorium, dismissed as a “radical idea” just a few months ago, is becoming mainstream.
“There is a growing understanding that it may be better to slow the process to understand the profound impact that AI will have on our economy, our privacy rights, our children’s mental health, and even our existential threats,” Sanders said.
Earlier this year, the senator, along with Representative Alexandria Ocasio-Cortez of New York, introduced a bill that would impose a national moratorium on data center construction. A month later, one of the party’s most powerful moderates, Rep. Frank Pallone of New Jersey, the top Democrat on the House Energy and Commerce Committee, also supported a federal moratorium.
While calls for a moratorium have yet to gain traction among Congressional Democrats overall, data center developers have expressed concern about where the trend will lead.
If a state the size of New York can suspend permits, developers should assume it can happen anywhere, said Joseph Hofer, principal and chief AI officer at lobbying firm Monument Advocacy.
“I wouldn’t say panic, but the concerns were real and things moved quickly,” Hofer said. “The industry’s real concern is not specifically New York, but the precedent.”
“If the industry doesn’t wake up soon and start solving this problem, the situation will only get worse.”
Caleb Max, CEO, National Association for Artificial Intelligence
Despite Hochul’s decision, some Democratic lawmakers remain opposed to suspending the federal government. Rep. Josh Gottheimer (D.J.), co-chair of the House Democratic Committee on AI, warned that a moratorium risks ceding innovation leadership to China.
“A blanket moratorium where we just pack up and go home and hand over AI to China and let them lose makes no sense to me,” Gottheimer told POLITICO on Tuesday.
There’s a similar vibe across the aisle, with Republicans keen to protect ratepayers from rising energy costs associated with data centers but, like Gottheimer, unwilling to risk giving China an advantage in the AI race.
Republican Rep. Nancy Mace expressed support for a data center moratorium in South Carolina. But most party members aren’t willing to go that far, instead supporting the tech companies’ voluntary Ratepayer Protection Pledge signed with the White House in March.
These contracts require data center developers to buy, bring in or build power for their projects so that consumer customers don’t bear the brunt of rising energy costs.
growing opposition
Energy costs, water scarcity, and general anxiety about AI are all contributing to the surge in dissatisfied voters. But governors and state lawmakers from both parties have struggled to secure data center lanes.
Lawmakers in 15 states have introduced bills that would impose a moratorium on data centers, according to information from the National Conference of State Legislatures. Only two states, Maine and New York, have had bills reach the governor’s desk, but neither was signed.
Overall, state legislatures have introduced more than 300 bills related to data center regulation this year.
The Maine Legislature voted in April to impose its own data center moratorium. That was vetoed by Democratic Gov. Janet Mills, who wanted to preserve one $550 million project already in development in Franklin County and said the plant’s closure created an urgent need for new economic investment. (The data center developer froze the project anyway.)
Both Republican and Democratic candidates to replace Mr. Mills, who is term-limited, say they would have signed the moratorium, citing environmental and economic concerns.
Even Mills would have signed if the Franklin County project had been exempt, said her spokeswoman Anna Parker.
“I am confident that the Maine Data Center Advisory Commission, which the Governor recently established under executive order, will help legislators responsibly balance the benefits of data centers, especially for economically disadvantaged communities, with the risks of rising energy costs and potential environmental impacts,” Parker said in an email Tuesday.
Rep. Melanie Sachs, D-Maine, who is the sponsor of the state’s moratorium, said New York’s order addresses “the same core issue as my bill: the rapid and unchecked development of data centers and its impact on the environment, utility costs, and communities.”
These concerns are widespread across the country, Sachs added.
In Arizona, Democratic Gov. Katie Hobbs and lawmakers from both parties enacted a bill that would suspend tax incentives for data centers for three years, but failed to move other legislative regulations. A spokesperson for Hobbs declined to comment on New York City’s construction moratorium.
And Pennsylvania Gov. Josh Shapiro, a Democrat who has courted billions of dollars in investment from tech giants in his state, is facing pushback from his Republican opponent who supports a data center “pause.” Mr. Shapiro on Monday signed a state budget that includes some reporting requirements for data centers, but stopped short of imposing more sweeping regulations.
High-voltage power lines power data centers in Ashburn, Virginia, the world’s largest concentration of energy-intensive technology hubs. |Ted Shafley/Associated Press
In Virginia, the data center capital of the world, a months-long budget battle over data center subsidies brought the state to the brink of a government shutdown as Senate Democrats pushed to repeal the state’s sales tax exemption for the industry.
Congress ultimately compromised and kept the exemption, but created a new energy tax on data centers. Democratic Gov. Abigail Spanberger is now urging utility regulators to shift more transmission costs to energy-intensive sectors.
But she has pushed back against calls for a moratorium.
Earlier this month, he told the POLITICO Energy podcast that supercomputing hubs “have been part of the economy for some time,” so a moratorium is not appropriate for a state that already has nearly 700 data centers.
She instead urged local authorities to “do what is right and what is best for the community.”
“If we don’t do something, there will be riots,” said Chris Miller, CEO of the Piedmont Environmental Council, which has lobbied Virginia officials to suspend new data centers.
Spanberger spokesman Jack Bledsoe said in a statement Tuesday that the governor will continue to listen to the needs of communities and ensure data centers adhere to “strong standards,” but did not call for a statewide moratorium.
California Democratic leaders have also resisted calls for a moratorium.
Even though a small Southern California city last month overwhelmingly approved the first anti-data center ballot measure in the state’s history, Democratic Gov. Gavin Newsom has refrained from bashing the facilities. His office did not respond to a request for comment Tuesday.
California Sen. Steve Padilla, the Democratic author of two data center bills moving through Congress to establish energy and land use rules for data center facilities, argued in an interview that the state can “walk and chew gum at the same time.”
“We are trying to pass substantive legislation through the state of California,” Padilla said. “If no such law existed at all, if there were no guardrails, if no one was trying to put in place some kind of regulation that would protect the public interest, perhaps a moratorium would have been appropriate.”
political battle
Republican lawmakers in Republican strongholds like South Dakota and Oklahoma have also proposed moratoriums on data centers. But both efforts died in their respective chambers.
At least 20 Florida municipalities have passed temporary or permanent moratoriums on data centers, and Republican Gov. Ron DeSantis has defended communities opposed to data center expansion.
In Texas, Republican Gov. Greg Abbott changed his message for data centers after praising the state last year as an “epicenter” for AI development.
Facing growing pressure from local Republican lawmakers, Mr. Abbott has laid out a series of legislative proposals to regulate data centers and ordered the state’s power regulator to send a list of recommendations and actions by the end of the month.
Despite the potential political implications this could pose for Democrats, one of the party’s top leaders in Washington, Senate Minority Leader Chuck Schumer, on Tuesday stopped calling for a moratorium on data center construction.
“Our caucus has taken the position that data centers must pay their fair share and promote healthy communities. But we’re not saying don’t build data centers,” Schumer told POLITICO. “We know how important they are and we have heard that message loud and clear.”
Schumer added that data centers should be encouraged to use clean energy and union labor.
Despite issuing Tuesday’s executive order, Hochul has not yet indicated whether he will sign or veto a recently passed state bill that would impose a broader 12-month grace period on all data centers that consume more than 20 megawatts of electricity.
Hochul’s order sets the threshold at 50 megawatts.
Jason Plautz, Adam Aton, Gabby Miller, Josh Siegel, Ariel Wittenberg, Jacob Wendler and Noah Baustin contributed to this report.
