New York, a state without nearly any data centers, becomes first to ban their construction

New York Governor Kathy Hochul signed an executive order imposing the nation's first statewide moratorium on hyperscale data centers, halting new construction for up to a year while the state develops environmental and energy grid regulations. The move places New York at the center of a national debate over balancing AI industry growth with environmental and affordability concerns.

New York blocked the construction of any new large data centers https://apnews.com/article/ai-data-centers-environment-climate-footprint-a792f184a9f2833b5388dbae8b41ca95 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 https://apnews.com/article/data-centers-ai-artificial-intelligence-renewable-energy-7995717f506914fc181a07d32d1867a5 . Gov. Kathy Hochul https://apnews.com/hub/kathy-hochul signed an executive order imposing the country’s first statewide moratorium https://apnews.com/article/data-center-moratoriums-maine-janet-mills-352ad4fbd531d905b9415258692b318f 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 https://apnews.com/article/data-center-heat-wave-lowell-5607b4ea8ef9776b28268561060752a8 over how to regulate https://apnews.com/article/ai-data-centers-mayors-london-climate-week-37df5184ad4f28ea084082563182e1ea the AI industry, as concerns over rising electric bills and environmental risks https://apnews.com/article/data-centers-ai-artificial-intelligence-renewable-energy-7995717f506914fc181a07d32d1867a5 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 pauses 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 https://apnews.com/hub/donald-trump has warned states https://apnews.com/article/trump-artificial-intelligence-chatbots-ai-23a0e44ab05402ddfe9cdfd0bffa0ade 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 https://apnews.com/article/data-centers-moratoriums-maine-artificial-intelligence-ai-aa63ba087d5ad53ab0735893646e7357 to establish a similar moratorium. But the measure was vetoed by Democratic Gov. Janet Mills https://apnews.com/hub/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 https://apnews.com/article/affordability-climate-change-clean-energy-goals-democrats-1780f09228246dee569c3b63d70bd014 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.