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Why New York has banned AI data centers
15 Jul 2026

New York has become the first US state to ban the construction of new "hyperscaler" AI data centers.

The executive order, signed by Governor Kathy Hochul, prohibits facilities using 50 megawatts or more of power for a year.

"These hyperscale AI data centers consume enormous amounts of power, truly threatening to outpace our grid's capacity," Hochul said while announcing the order in New York City.

68% increase in electricity prices since 2019
Rising costs

The announcement comes as New Yorkers have witnessed a nearly 68% increase in average residential electricity prices since 2019.

This has led to public backlash against proposed facilities in towns like Lansing and East Fishkill.

The governor's decision is seen as a response to these concerns, with many state residents and environmental leaders criticizing hyperscaler data centers for their high power and fresh water consumption.

Environmentalists and community leaders back the decision
Support

The one-year moratorium has been welcomed by environmentalists and community leaders alike.

Laura Shindell, director of New York State's Food & Water Watch, said it is a major victory for communities fighting against massive data center proposals.

Senator Kirsten Gillibrand also backed the decision, saying "New Yorkers aren't convinced these massive facilities benefit them."

State Senator Kristen Gonzalez stressed that technology should improve lives, not harm resources or increase utility bills.

Concerns raised about impact on tech sector competitiveness
Opposition

Despite the support, some have raised concerns that the moratorium could hinder New York's competitiveness in a rapidly growing tech sector.

A Siena Research Institute poll from June found 46% of respondents thought a "one-year moratorium on new permits for large data centers in New York" would be good for the state, while only 21% said it would be bad.

Hochul to act on Responsible Data Center Development Act
Next steps

The Responsible Data Center Development Act, passed by the state legislature earlier this year, also includes a one-year moratorium on new data centers with a peak energy demand of 20 megawatts or more.

Hochul has yet to act on this bill but has said she will work with the legislature to "further review" its nature.

Her office has also said that she is actively "pursuing legislation to repeal sales tax exemptions for massive data centers across the state."