New York pauses big AI data center permits for up to a year

New York has become the first state to halt AI data center construction by formal order. Governor Kathy Hochul signed Executive Order 62 on July 14. It suspends permits for up to a year for centers that can draw at least 50 megawatts of power. In Washington, two lawmakers want to go further with a national freeze.

What changed

A data center is a building full of servers. The ones built for AI use power on an industrial scale. A megawatt (MW) measures that power, and 50 MW can supply about 40,000 American homes. During the pause, the state environmental and public service agencies will draft new rules.

Some projects are exempt. Applications already declared complete go ahead, as do facilities meant for manufacturing, research, education or health care. Small and midsize campuses fall below the threshold. Still, it is the first time a state government has stopped AI construction this way. President Trump called it a "terrible decision." Hochul said communities that power AI should share in its rewards.

The federal push

Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez introduced a federal moratorium on March 25. It would halt new data centers of 20 MW and up, and expansions of existing ones, until Congress passes national AI rules. Some Democrats object. Senators John Fetterman and Mark Warner argue it would help China. Senator Elizabeth Warren wants a stop only until builders cover the full costs to the power grid and water supply.

An NBC poll found 57% of voters think AI risks outweigh the benefits, against 34% who disagree. The Trump administration wants Congress to clear obstacles instead. It offers developers a voluntary pledge on utility bills.

Who it affects

• Residents near proposed sites: voters decided 41 local data center questions in 10 states on Nov. 3, leaning toward bans or financial guarantees.
• Lawmakers in 15 states have filed moratorium bills.
• Investors: UBS estimates about 30% of new U.S. data center capacity expected for 2028 is at risk.
• Wedbush's Dan Ives says 10% of 800 to 1,000 projects could fall off the schedule, which would delay sales for Nvidia, AMD and Micron.

What happens next

Texas is the key test. Governor Greg Abbott asked state regulators in September to issue no new data center permits for now. Gina Hinojosa, who won the governor's race on Nov. 3, promises a freeze until the legislature passes safeguards. She takes office January 19, and the legislature convenes in January. It is still Republican-controlled, so a freeze is not automatic.

In Washington, a national moratorium would likely face a Trump veto. Overriding one takes two thirds of both chambers. Hearings and investigations need no presidential signature, so AI companies may face questions in 2027. Whether any federal limit becomes law is not known yet.