New York blocked the construction of any new large data centers for up to a year on Tuesday while the state creates rules to protect the environment and the energy grid from power-hungry facilities that fuel artificial intelligence. Gov. Kathy Hochul signed an executive order 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 puts the state in the center of a national debate over how to regulate the AI industry, as concerns over rising electric bills and environmental risks collide with the need to stimulate local economies and foster the U.S. tech sector.
“It’s my responsibility to take action and lead,” Hochul, a Democrat, said in a statement.
In effect, the executive order s state permitting for new large data centers and direct state regulators to create standards that address environmental impacts, energy demand, water usage and other factors, the governor’s office said.
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.
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.
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.
New York, at this stage, has not been a destination for the biggest hyperscale data centers. Subscribe to Fortune Gulf Brief. Every Tuesday, this new newsletter delivers clear-eyed, authoritative intelligence on the deals, decisions, policies, and power shifts shaping one of the world’s most consequential regions, written for the people who need to act on it.