July 14 (Reuters) - New York became the first U.S. state on Tuesday to halt construction of large new data centers, imposing a one-year moratorium as concerns grow that the facilities driving the artificial-intelligence boom are raising power costs, straining water supplies and burdening local communities.
The moratorium positions New York at the forefront of a growing national debate over how to manage the infrastructure needed to support artificial intelligence. While technology companies are racing to build new data centers, lawmakers and regulators in dozens of states are weighing measures to limit their effect on electricity grids, utility bills and local communities.
"As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it's my responsibility to take action and lead," said Hochul, who said she will also pursue legislation to repeal sales tax exemptions for large data centers.
The construction ban will apply to data centers that use 50 megawatts or more of power, officials in the governor's office said.
During the moratorium, the state's Department of Environmental Conservation will not issue any discretionary permits not already deemed complete, the governor's office said.
Instead, Hochul directed state officials to develop a Generic Environmental Impact Statement (GEIS) to ensure that new data centers coming online are being held to "consistent standards," as well as examine the potential environmental impacts of the construction and operation of data centers in the state.
The ban will be lifted once the state finalizes those standards, according to Hochul's office.
DATA CENTERS SPARK BACKLASH
New York's legislature last month passed a bill meant to impose guardrails on data centers, but it has not yet been sent to Hochul's desk for signing. Officials in her office described the bill as complicated, adding that "it's going to take some time to work through" with the state legislature.
The expansion of data centers in the U.S. is driving up power demand — and electricity bills — in large swaths of the country, drawing local and political backlash.
Only one-in-three Americans approve of the fast pace of data-center construction and most would oppose building one in their own community, according to a recent Reuters/Ipsos poll.
Dozens of state legislatures have introduced bills to rein in the effects of data centers on power bills and the environment. New York is the first to enact a full moratorium.
In April, Maine Governor Janet Mills vetoed a bill that would have imposed a similar freeze on those facilities.
As of May, there were more than 12 gigawatts of very large energy-using loads, including data centers, in line to connect to the state's grid, according to a recent report by the New York independent grid operator. The state has the eighth-most expensive retail price for residential electricity in the country, according to U.S. Energy Department data.
(Reporting by Jasper Ward in Washington; Additional reporting by Laila Kearney, Courtney Rozen, and Valerie Volocvici; editing by David Gaffen)
