Tipsheet

New York Just Became the First State to Pass an AI Data Center Moratorium

Dmitri Bolt
Dmitri Bolt  |  July 15, 2026 12:15 PM

New York just became the first state to legislate a complete moratorium on AI data centers, a glimpse into the future of what Democrats would do to America if they ever regain federal power.

The legislation, signed into law on Tuesday, is a one-year pause on permitting and construction of new “hyperscale” (larger than 50 megawatts) data centers, facilities that power large AI systems, while the state develops stricter rules on energy use, environmental impacts, local control, and rules on mitigating AI's effect on jobs.

"These hyperscale AI data centers consume enormous amounts of power, truly threatening to outpace our grid's capacity, and they drive up costs for local ratepayers," Gov. Kathy Hochul said on Tuesday.

"I refuse to let those costs be passed on to New Yorkers who already pay too much for their utility bills."

The legislation follows widespread fearmongering about AI data centers, including concerns about their water and energy usage that have been massively overblown. 

For example, few people know that all current AI data centers combined use less than 0.5 percent of the United States’ freshwater for cooling. Typically, even a large data center uses less fresh water than a single square mile of farmland. 

Another common concern, what I’d call a myth, is the power usage of AI data centers. While they are massive consumers of electricity, that’s simply a reason to build more power generation. And so far, data centers have failed to drive residential price increases on any scale larger than your average Democrat-driven climate policy, according to groups like the Manhattan Institute. Other critics have likened the concern about power usage to halting the construction of computers because they use electricity. 

In other words, to ensure that water, power, and other concerns are no longer an issue, we must let those driving the push for technology innovate to a point where these data centers become more efficient. Bolster the infrastructure, don’t halt innovation. Rely on the free market, not government legislation, or bureaucrats who don't know what they are doing, especially when it comes to technology.

As a final note, the global epicenter of data centers is Loudoun County, Virginia, the wealthiest county in the country. While people around the U.S. are looking to halt AI data center construction, the wealthy appear to be embracing it. In Loudoun County, tax revenue generated by AI data centers covers nearly 50 percent of local taxes and has significantly reduced property taxes. It has also driven home valuations up and, so far, has had no measurable effect on utility costs, even in a county that hosts nearly 200 data centers. 

AI is coming regardless of how many people try to get in its way. We can decide whether to share in its benefits, or play catch-up decades into the future.