No large data centers can be built in New York for up to a year under an executive order signed Tuesday by Governor Kathy Hochul, making the state the first in the nation to impose a statewide moratorium on the power-hungry facilities fueling the artificial intelligence boom.
According to the Associated Press, the moratorium pauses state permitting for new hyperscale data centers — massive facilities that house thousands of computer servers and require enormous amounts of electricity and water to stay cool. Hochul directed state regulators to develop standards addressing environmental impacts, energy demand, water usage, and other factors before any new permits are issued.
“The bottom line is that progress shouldn’t arrive with a higher utility bill, deleted water supply or noise pollution, so we have no choice but to address these challenges created by these massive facilities,” Hochul said at a signing ceremony in Brooklyn, according to the Associated Press.
The move places New York at the center of a raging national debate over AI industry regulation. Tech companies argue such measures hamper job growth and cede ground to China in the global AI race — a position echoed by President Donald Trump, who has warned states against regulating the sector. But concerns over rising utility bills and environmental risks are pushing states and municipalities to act.
For New York City’s real estate and tech sectors, the moratorium creates immediate uncertainty. Hyperscale data centers had been viewed as a growth opportunity for upstate communities, but the freeze means developers will need to look elsewhere. Dan Diorio of the Data Center Coalition, a trade association, warned that the moratorium “will ensure that those investments, jobs, and economic activity flow elsewhere rather than to New York.”
The political dimensions are significant. Hochul’s Republican opponent in the governor’s race, Nassau County Executive Bruce Blakeman, opposes the moratorium and argues local governments should decide. “The governor doesn’t work with local governments and business leaders to figure out how to get things done,” Blakeman said in a statement, pledging to “modernize our economy to bring costs down and create good jobs.”
State Sen. Kristen Gonzalez, a Democrat who sponsored moratorium legislation that the governor ultimately bypassed in favor of an executive order, joined Hochul at the signing. “If Big Tech is coming onto our turf, it should be on our terms,” she said.
The state Legislature had passed its own moratorium bill, but Hochul’s office described it as overly complex and in need of additional work. The executive order takes effect immediately, giving the state regulatory authority to block new large-scale data center projects while it drafts permanent rules.
New York, at this stage, has not been a primary destination for the largest hyperscale facilities — most have clustered in Virginia, Texas, and other states with cheaper power and fewer restrictions. But the moratorium signals that the state is willing to prioritize grid reliability and environmental concerns over the economic development promise of AI infrastructure.
For New York City’s business community, the moratorium raises questions about the future of AI infrastructure investment in the region. Companies that rely on cloud computing and AI services may face higher costs if data center capacity is constrained, while real estate developers who had eyed the sector as a growth market will need to pivot their strategies.
The governor also softened New York’s greenhouse gas reduction goals earlier this year, citing rising energy costs for consumers — a pragmatic shift that reflects the tension between climate ambitions and economic realities in an election year.
