New York’s moratorium on data centers could serve as an opening salvo for leaders in other states looking to rein in tech infrastructure — as well as congressional Democrats hoping to seize on the issue in the November midterms.
The executive order that Democratic Gov. Kathy Hochul signed Tuesday marks the first state-level pause on data center construction, following dozens of municipalities in red and blue states that have passed similar moratoriums. But industry supporters and detractors alike say it’s unlikely to be the last, amid poll numbers showing growing public skepticism toward AI.
The moratorium also serves as a bridge of sorts between moderate Democrats such as Hochul and progressives like Sen. Bernie Sanders (I-Vt.) who have clamored for more restrictions on data centers and artificial intelligence. The party as a whole remains torn on how hard a line to draw against one of Silicon Valley’s top priorities, despite a trend of Democrats from Pennsylvania to California embracing the push for new guardrails on the sprawling, energy-hungry AI hubs.
Sanders told POLITICO on Tuesday that the concept of a moratorium, dismissed just months ago as a “radical idea,” is entering the mainstream.
“There is a growing understanding that maybe we better slow the process up in order to understand the extraordinary impact that AI is going to have on our economy, on our privacy rights, on the mental health of our kids, and existential threats as well,” Sanders said.
The senator introduced legislation with Rep. Alexandria Ocasio-Cortez (D-N.Y.) this year that would impose a nationwide pause 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 — endorsed a federal moratorium as well.
The moratorium call has yet to gain traction among congressional Democrats as a whole, but data center developers are expressing angst about where the trend is heading.
If a state as large as New York can put a pause on permitting, developers have to assume it could happen anywhere, said Joseph Hoefer, principal and chief AI officer at the Monument Advocacy lobbying firm.
“I wouldn’t call it panic, but the concern is real and it moved fast,” Hoefer said. “The real worry in the industry isn’t New York specifically, it is the precedent.”
Some Democrats remain unchanged in their opposition to a federal pause despite Hochul’s decision. Rep. Josh Gottheimer (D-N.J.), co-chair of the House Democratic Commission on AI, warned that a moratorium risks surrendering the lead in innovation to China.
“Just having a blanket moratorium saying we’re just going to pack up, go home, hand AI over to China and let them beat us makes zero sense to me,” Gottheimer told POLITICO on Tuesday.
There’s a similar vibe across the aisle, where Republicans are keen on protecting ratepayers from rising energy costs associated with data centers, but like Gottheimer don’t want to risk giving China an edge in the AI race.
Republican Rep. Nancy Mace expressed support for a data center pause in her state of South Carolina. But most in the party are unwilling to go that far, instead supporting the voluntary “ratepayer protection pledges” tech companies signed with the White House in March.
Those agreements task data center developers with buying, bringing or building their own power supply for the projects to ensure ordinary customers don’t bear the brunt of rising energy costs.
Rising opposition
Energy costs, water scarcity and general unease with AI are all contributing to a surge of frustrated constituents. But governors and state lawmakers in both parties have struggled to stake out a lane on data centers.
Lawmakers in 15 states have introduced legislation 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 — had bills reach the governor’s desk, and neither was signed.
State lawmakers have introduced more than 300 bills related to data center regulation overall this year.
Maine lawmakers voted in April to impose their own data center moratorium. It was vetoed by Democratic Gov. Janet Mills, who wanted to preserve one $550 million project already under development in Franklin County, where she said a mill closure created dire need for new economic investment. (The data center developer put the project on ice anyway.)
Both Republican and Democratic candidates to succeed the term-limited Mills say they would have signed that moratorium, citing environmental and economic concerns.
Even Mills would have signed it had it exempted the Franklin County project, her spokesperson Anna Parker said.
“She is confident that the Maine Data Center Advisory Council — which the Governor recently established by Executive Order — will help lawmakers responsibly balance the benefits of data centers, especially for economically disadvantaged communities, with the risks of higher energy costs and potential environmental impacts,” Parker said in an email Tuesday.
Democratic Maine state Rep. Melanie Sachs, the sponsor of her state’s would-be moratorium, said New York’s order responds to “the same core issues as my legislation: the rapid, unchecked development of data centers and their impact on the environment, utility rates, and communities.”
Those concerns, Sachs added, have gone nationwide.
In Arizona, Democratic Gov. Katie Hobbs and lawmakers in both parties enacted a three-year suspension of tax incentives on data centers, but failed to move other legislative restrictions. A spokesperson for Hobbs declined to comment on New York’s construction moratorium.
And Democratic Pennsylvania Gov. Josh Shapiro, who has wooed billions of dollars in investments by tech giants to his state, is facing pushback from his Republican challenger, who supports a data center “pause.” Shapiro signed a state budget on Monday that includes some reporting requirements for data centers but stopped short of imposing more sweeping regulations.
In Virginia, the data center capital of the world, a monthslong budget fight over data center subsidies threatened to shut down the government when Senate Democrats pushed to repeal the state’s sales tax exemption for the industry.
Ultimately, the legislature compromised and kept that exemption but created a new energy tax on data centers. Democratic Gov. Abigail Spanberger is now prodding utility regulators to shift more grid costs onto the energy-hungry sector, too.
She has pushed back, however, against calls for a moratorium.
Earlier this month, she told the POLITICO Energy podcast that moratoriums aren’t a good fit for the state, which is already home to nearly 700 data centers, because the supercomputing hubs “have been part of our economy for some time.”
She has instead argued for local officials “to do the right thing and the best thing by their communities.”
“You have to do something, or there’s going to be unrest,” said Chris Miller, CEO of the Piedmont Environmental Council, which has lobbied Virginia officials to pause new data centers.
Jack Bledsoe, a spokesperson for Spanberger, said in a statement Tuesday that the governor would continue to listen to communities’ needs and make sure data centers adhere to “strong standards,” but did not call for a statewide moratorium.
California’s Democratic leadership also has resisted calls to institute a moratorium.
Despite a small Southern California city last month overwhelmingly approving the state’s first-ever anti-data center ballot measure, Democratic Gov. Gavin Newsom has refrained from bashing the facilities. His office did not reply to a request for comment on Tuesday.
California state Sen. Steve Padilla, the Democratic author of two data center bills working their way through the legislature that would establish rules for the facilities’ energy and land use, argued in an interview that the state can “walk and chew gum at the same time.”
“We’re moving substantial legislation through California,” Padilla said. “If there were no such legislation at all, and there were no guardrails, there was no one working on trying to provide any kind of regulations that protect the public interest, then perhaps a moratorium would have been appropriate.”
Political scramble
Even Republican strongholds such as South Dakota and Oklahoma saw GOP lawmakers propose data center moratoriums. Both efforts died, however, in their respective chambers.
At least 20 municipalities in Florida have passed temporary or permanent moratoriums on data centers, and Republican Gov. Ron DeSantis has championed local communities opposed to data center growth.
In Texas, Republican Gov. Greg Abbott has changed his messaging on data centers after lauding the state as the “epicenter” of AI development last year.
Facing growing pressure from rural Republicans, Abbott laid out a set of legislative proposals to regulate data centers and ordered the state’s electricity regulator to send him a list of recommendations and actions by the end of the month.
Despite the potential political opening this offers Democrats, one of the party’s top leaders in Washington — Senate Minority Leader Chuck Schumer — stopped short on Tuesday of calling for a data center construction pause.
“Our caucus has taken a position that data centers must pay their fair share and promote healthy communities. But we have not said don’t build data centers,” Schumer told POLITICO. “We know how important they are, and we’ve heard the message loud and clear.”
Schumer added that data centers should be encouraged to use clean energy and union labor.
Even as she issued Tuesday’s executive order, Hochul has yet to indicate whether she would sign or veto a recently passed state bill that would impose a more expansive 12-month moratorium on all data centers that consume more than 20 megawatts of power.
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.
