Gov. Kathy Hochul (D-NY) recently signed an executive order placing a one-year moratorium on all new data center developments. As someone from Oswego, New York, a small, historically underinvested Rust Belt community upstate, Hochul’s moratorium ensures that the benefits of the artificial intelligence boom in my hometown are dead on arrival.
In addition to New York’s executive order, more than 10 states have proposed bills tantamount to a complete moratorium. Locally, municipalities are acting even faster, with at least 116 local moratoriums imposed across the country. There is also a growing appetite to get involved at the federal level, with Sen. Bernie Sanders’s (I-VT) AI Data Center Moratorium Act.
These moratoriums are a logical political response to built-up resentment from deindustrialization in the 1990s. Barren brownfields and empty warehouses remain as painful physical reminders of a time when life felt more prosperous in many small towns.
It makes sense that the same people who lost their livelihoods due to a major economic realignment would be skeptical of a new one.
Data center growth has prompted questions about electricity demand, water use, and the number of permanent jobs they create. These questions deserve serious discussion.
In most cases, higher electricity costs are caused by outdated infrastructure and barriers to expanding the power grid, not by data centers alone. Modern data centers also choose locations based on local conditions and use technologies that reduce water consumption. In many regions, they use less water than golf courses.
Critics also point out that most construction jobs are temporary. The fact is that every major infrastructure project creates temporary construction jobs before producing long-term economic benefits. The argument also ignores the fact that a data center creates a massive tax base for any municipality, in addition to knock-on effects for local businesses after construction.
Ignoring these benefits not only harms potential host communities but also undermines U.S. competitiveness with China in the AI race, where our cloud computing advantage is one of our last remaining strongholds.
Perhaps most importantly, unlike the robber barons of the past, the stewards of American industry today are making a concerted effort to give back to the communities where they develop. Looking locally reveals the true picture of what the data center build-out can mean for everyday people.
In Richland Parish, Louisiana, a Meta data center development has created life-changing benefits for local teachers. Through a $22.4 million tax payment made by Meta directly to the parish and a doubling of the parish’s sales and use tax revenue within the first nine months of the fiscal year, teachers will receive bonuses of up to $50,935. Some could stand to make double their salary for an entire year in one check.
Across Madison, Warren, and Hinds counties in Mississippi, Amazon has committed $25 billion in investment, with plans to create 2,000 high-skilled jobs across its data center operations there. These investments have benefited local businesses immensely, with more than 75 Mississippi companies contributing to the project in Madison County alone. Local business leader Jeff Cox, president of Birdsong Construction, has attested to this, saying, “It’s brought more work to this area than we’ve ever seen.”
Amazon is also addressing what many have cited as a primary concern: electricity rates. Like many other data center developers, it has committed to covering 100% of the costs of the improvements necessary for its data center campuses. This has equated to a $300 million commitment to an infrastructure build-out that will deliver long-term improvements and reduced costs for ratepayers in Mississippi.
HOUSE REPUBLICANS JUST FELL FOR THE LEFT’S AI TRAP
For those skeptical of the long-term benefits of data center investment, they need look no further than Quincy, Washington. One of the original data center boomtowns, Quincy has been fundamentally transformed since Microsoft and Yahoo opened their data centers in 2007. In that time, from 2012 to 2023, the poverty rate dropped from 29.4% to 13.1%. With data centers now paying 75% of the tax revenue, the town was able to renovate its high school, open a new medical center, library, and fire station.
Just these few cases show how blanket data center moratoriums can undermine the very communities they claim to protect. Not only are they harmful to American competitiveness in the AI race against a rapidly advancing China, but they also prevent the very infrastructure, energy, and economic redevelopment that communities like mine in upstate New York need. It is critical to think about the benefits and necessity of reindustrialization before we outlaw it.
Quinten Denkenberger is a policy fellow at NetChoice.