Kathy Hochul Signs First Statewide Moratorium on Data Centers

New York Gov. Kathy Hochul is implementing the country’s first statewide moratorium on the construction of new, large-scale data centers, she announced Tuesday.

Hochul, a Democrat running for reelection this year, said the temporary, one-year freeze was necessary while state lawmakers draft regulations to protect energy resources. Data centers have stored computer systems in physical buildings for decades, but the growth of artificial intelligence has led to the rampant construction of controversial facilities that require large amounts of electricity and water for their cooling systems.

“We want AI companies to invest here, grow their businesses, and do well,” Hochul said in a video posted to X on Tuesday. “But when you benefit from the talent and energy of New York, we expect you to protect our resources and give back to our communities. This is a critical moment, and New York is going to take the time to get it right.”

The executive order immediately pauses the construction of new data centers that plan to use more than 50 megawatts of power. It also orders the creation of a “Community Investment Framework,” which instructs the Empire State Development to create guidelines for local communities to receive economic benefits from data centers.

Hochul said she also intends to pursue legislation that repeals sales tax exemptions to data centers.

There are at least 133 data centers in New York, according to Data Center Map, an industry database. Virginia and Texas have the most data centers in the country with about 637 and 504, respectively.

New York’s state legislature passed the Responsible Data Center Development Act in June, which proposes a one-year moratorium on new permits, the creation of a separate utility rate for data centers, establishes energy efficiency goals for the facilities and the formation of a community benefits program. Hochul has not yet signed the bill.

Hochul’s executive order touches on elements of the legislature’s measure but is ultimately less aggressive than the bill, which would implement a year-long ban on centers using more than 20 megawatts.

Hochul’s office said in a press call that the governor’s executive order allows for immediate action while further regulation is under review, Axios reported.

Forty-six percent of respondents to a state Siena Poll conducted in June said a one-year moratorium on new permits for large data centers was good for New York communities.