New York has become the first US state to impose a temporary halt on new data centre construction, as Governor Kathy Hochul signed an executive order on Thursday that blocks approval of permits for projects of 50 megawatts or larger. The move, which affects more than a dozen planned facilities, is driven by mounting public concern over the environmental and economic impact of the AI-powered building boom.
“Progress shouldn’t arrive with a higher utility bill, deleted water supply, or noise pollution,” Hochul said at a press conference in Brooklyn. “These data centres can only be built, should only be built in places that want them.” The order means that for now, large-scale data centres will not be exempt from local zoning and planning approvals, and the state is considering requiring operators to contribute to a fund supporting the electrical grid.
The decision reflects a sharp shift in public sentiment. Just a few years ago, states competed to attract data centres as engines of economic development. Now, with AI driving facilities to surpass 500 megawatts, two-thirds of respondents in a recent poll said they were worried about rising electricity prices. A separate survey found that people would rather have an Amazon warehouse in their backyard than a data centre.
For the UK, the move carries significant implications. The Information Commissioner’s Office (ICO) and the government are grappling with similar tensions as data centre demand surges, particularly in regions like the South East and the Thames Valley. The EU AI Act also sets new transparency and energy-efficiency requirements for high-impact AI systems, which could affect how UK-based operators plan capacity. “The New York moratorium is a warning shot for UK policymakers,” said Dr. Helena Grant, a digital infrastructure analyst at the Centre for Policy Studies. “Without clear national guidance on grid capacity, water usage and local consent, we risk either a construction free-for-all or a public backlash that stalls investment.”
Hochul’s order could also set up a clash with the Trump administration, which has pushed for faster grid connections for data centres. Last month, the Federal Energy Regulatory Commission told grid operators to create ‘fast lanes’ for data centre interconnections. Meanwhile, legislation in New York’s state assembly would pause projects above 20 megawatts for one year, and another bill proposes a three-year moratorium. The UK’s own energy regulator, Ofgem, is expected to watch these developments closely as it considers how to balance AI-driven demand with net-zero targets and consumer bills.