In Defense of Data Centers

New York Enacts First Statewide Moratorium on Data Centers

New York became the first state to approve a moratorium on new data centers, with the measure focused on establishing updated permitting standards for large-scale facilities. The policy has prompted discussion across states about balancing electricity demand, water use, and local tax revenue with the infrastructure needs of computing growth.

Data centers require dedicated power infrastructure. Utilities constructing new transmission lines have authority to acquire easements, compensating landowners at fair market value and sometimes at a premium to limit eminent domain proceedings. In Georgia, state records show Georgia Power exercised eminent domain five times in the prior year, none involving residential homeowners, while separately purchasing private properties to support grid upgrades that include data center connections.

Electricity rate impacts vary by state policy. New York maintains higher residential rates than Virginia, in part due to its prohibition on in-state natural gas production, reliance on imported gas, and the closure of a nuclear generating station. National residential electricity rates increased 27 percent between 2019 and 2024, with larger increases recorded in states that restricted new generation capacity or added renewable mandates. In Georgia, where multiple data center projects are under development, Georgia Power has announced plans to reduce rates in the current year and hold base rates steady through 2028, contingent on completed capacity additions and regulatory approvals.

Water consumption figures differ by facility size and cooling design. Modern data centers often employ closed-loop systems that recirculate water with limited evaporation losses. Industry data indicate that large hyperscale installations can still require between one and five million gallons per day during peak operation, depending on location, ambient temperatures, and system configuration. Comparisons to golf course irrigation have been used in public discussion, though total daily volumes at individual sites remain subject to local permitting review.

Noise from cooling equipment and visual appearance of buildings have also drawn local attention. Project developers increasingly incorporate sound attenuation measures and architectural treatments intended to reduce visual contrast with surrounding areas.

Proponents of data center development cite employment during construction and operation, along with property tax contributions. In rural counties with limited industrial bases, a single facility’s tax payments can offset a substantial share of the local property tax levy for remaining residents. Virginia, Texas, and Georgia currently list hundreds of data center projects in various stages of planning or construction, while New York’s active count stands at six.

Critics of rapid expansion point to potential strain on existing grids and water supplies in specific watersheds. The New York moratorium applies to new permitting rather than an indefinite prohibition, allowing time for revised rules on interconnection, water sourcing, and noise standards.

Longer-term capacity questions have also surfaced. Historical overinvestment in fiber optic networks during the late 1990s produced excess infrastructure that later supported expanded internet use after initial project failures. Some analysts apply similar logic to current data center construction, noting that demand growth tied to artificial intelligence workloads remains uncertain and that excess facilities could be repurposed by subsequent operators.

States continue to differ in their regulatory approaches. Those expanding generation and transmission capacity have generally maintained lower average industrial power prices, while states emphasizing restrictions on new supply have recorded higher costs. The New York policy will be implemented through the state’s existing utility and environmental review processes.