New York to enact nation’s first statewide moratorium on AI data centers

New York Gov. Kathy Hochul announced plans on Tuesday to impose what she described as the nation’s first statewide moratorium on new “hyperscale” AI data centers.

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“Massive data centers are being built across our state and our country,” Hochul said in a video posted to X. “The scale and speed of this development has put unprecedented demand on energy and water resources and threatens to drive up utility costs.”

The Democratic governor added, “Before it goes any further, I need safeguards in place to protect New Yorkers. That’s why I’m signing the country’s first moratorium on new hyperscale AI data centers, giving us the time to establish the nation’s strongest protections for ratepayers, our communities, and our energy grid.”

Shares of data center companies including Digital Realty Trust, Vertiv Holdings, and Equinix dipped on the news, falling as much as 2% early Tuesday.

Hochul said New York wants AI companies to invest and grow in the state, but not at the cost of its communities and infrastructure.

“When you benefit from the talent and energy of New York, we expect you to protect our resources and give back to our communities,” Hochul said. “This is a critical moment, and New York is going to take the time to get it right.”

Hochul is expected to sign an executive order on the matter Tuesday.

Hochul’s announcement comes as tech giants race to build massive data centers across the US to power AI technologies such as large language models.

The rapid buildout of these data centers has become a flashpoint nationwide, with critics sounding the alarm over energy demand, water consumption, and the strain on local infrastructure.

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