Gov. Kathy Hochul signed an executive order Tuesday imposing the country's first statewide moratorium on hyperscale data centers, which house thousands of computer servers and require massive amounts of energy and a steady supply of water to keep cool.
The move pushes the state into a raging debate over how to regulate the AI industry, as concerns over rising electric bills and environmental risks collide with a desire to stimulate local economies and foster the U.S. tech sector.
"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 celebratory signing ceremony in Brooklyn.
President Donald Trump has warned states not to slap regulations on the AI industry, echoing tech companies in arguing such moves hamper job growth and cede ground to China in a race to lead in the rapidly growing field.
Earlier this year, Maine seemed poised to establish a similar moratorium. But the measure was vetoed by Democratic Gov. Janet Mills because it would have blocked a proposed data center in a town that has struggled after a mill closed.
Moratoriums have been proposed in at least a dozen states but have not gotten far, though some counties and municipalities have imposed their own temporary bans.
New York's executive order pauses state permitting for new large data centers and directs state regulators to create standards that address environmental impacts, energy demand, water usage and other factors, the governor's office said.
The decision in New York also carries political significance for Hochul's reelection campaign and the state's tight congressional races this fall, as Democrats move to address affordability concerns over high utility bills. In addition, the governor this year softened New York's ambitious goals to reduce greenhouse gases, citing rising energy costs for consumers.
Hochul's Republican opponent in the governor's race, Nassau County Executive Bruce Blakeman, opposes a statewide moratorium and says local governments should be allowed to strike deals with tech companies for data center projects that promise enough economic benefits.
In a statement Tuesday, Blakeman said the governor "doesn't work with local governments and business leaders to figure out how to get things done," while pledging to "modernize our economy to bring costs down and create good jobs."
The state Legislature this year approved its own moratorium bill, but Hochul's office described the legislation as complex and said it needed additional work. Instead, the governor opted for an executive order that would take effect immediately.
State Sen. Kristen Gonzalez, a Democrat who sponsored the legislation, joined the governor during the signing ceremony. "If Big Tech is coming onto our turf, it should be on our terms," she said.
New York, at this stage, has not been a destination for the largest hyperscale data centers.