New York’s Data Center Moratorium Is a Moratorium on Growth

This op-ed was originally published in National Review.

As data centers spread across the United States, some federal lawmakers are eager to hinder their development. But they cannot decide whether to do so through mandatory disclosures and other regulatory burdens, onerous taxation, or outright bans.

New York officials, however, did not wait for the federal government to act on these proposals. Displaying their usual aptitude for turning bad ideas into bad policy, they made New York the first state to impose a de facto statewide moratorium on large data centers. On July 14 — just six weeks after New York’s lawmakers introduced a moratorium bill — Governor Kathy Hochul signed an executive order pausing, for one year, the processing of state environmental permits for the construction or expansion of large data centers. Lost in their prejudices, New York politicians have proved themselves oblivious to the fact that data centers underpin the daily lives of their constituents.

Data centers are the physical foundation on which much of modern digital life rests. They enable everything from worldwide banking to Amazon purchases to cloud computing to artificial intelligence. Cloud computing allows billions of people to use services such as Instagram, Netflix, Zoom, and Gmail, while AI models such as ChatGPT and Claude assist millions with everything from quickly answering routine questions to performing sophisticated professional tasks.

To justify imposing the moratorium, Hochul’s executive order cites New Yorkers’ concerns about data centers. It orders a study “to assess the potential environmental impacts of the construction and operation of data centers in the State, including energy demand, water use and quality, air quality, disproportionate impacts on disadvantaged communities, and noise levels.”

But a moratorium is unnecessary because these concerns have already been largely investigated. For example, in response to concerns about noise caused by data centers, the Taxpayers Protection Alliance (TPA) notes: “Examining the empirical data and case studies, modern hyperscale data centers are fundamentally not all that loud compared to traditional heavy industries or standard urban or suburban infrastructure.”

Data centers’ electricity use, water consumption, and broader effects on air quality and the environment must also be compared with those of other resource-intensive economic activities and industrial facilities. Data centers produce far less air pollution than refineries, chemical plants, and steel mills and consume vastly less water than irrigation. TPA estimates that data centers in New York accounted for 0.2 percent of the state’s water consumption and 3.5 percent of its electricity consumption in 2025.

Data centers are not residential houses; their resource needs are substantial. But so is their economic significance. The industry contributed roughly $927 billion to U.S. GDP in 2024.

Despite the prevailing idea that data centers raise residential electricity bills, the data suggest nothing of the kind. Data centers do not regularly increase power bills in areas where they consume large amounts of electricity, and they have not historically been subsidized by residential customers. Moreover, from 2019 to 2024, New York and California experienced some of the largest electricity price increases in the country despite declining electricity demand. Texas and Virginia, meanwhile, experienced some of the largest increases in electricity demand — in part because of data centers — and some of the smallest price increases.

Concerns about the effects of data centers on “disadvantaged communities” are similarly dubious. Loudoun County, Va., the largest data center hub in the world, expects almost half of its property-tax revenue to come from the sector in fiscal year 2027. The county gains $26 in tax revenue for every $1 it spends providing services to data centers, and its real property tax rate has fallen by nearly 30 percent since 2016. Property and equipment taxes on data centers can provide valuable revenue for low-income localities, funding schools, police, parks, and other local services. A data center project can also create thousands of temporary construction jobs as well as permanent, high-paying positions.

New York’s data center moratorium reflects the state’s broader approach to technologies that bring about creative destruction. Rather than addressing the concerns that inevitably accompany technological progress, New York’s government aims to impede it. State officials have both the power to shape New York’s economy and the responsibility to exercise that power with circumspection. Their rush to halt the growth of data centers across the state represents the latest abdication of that responsibility.