New York becomes first state to freeze new AI data centers in move critics warn could drive away jobs

New York becomes first state to freeze new AI data centers in move critics warn could drive away jobs.

New York Gov. Kathy Hochul on Tuesday issued the nation's first statewide temporary ban on new AI data centers in a sweeping move critics have long warned could drive tech investment and jobs out of New York.

The moratorium, which the Democrat signed as an executive order, will remain in effect for up to one year as demand for massive data centers has surged across the state.

"As data center development threatens to hike up utility bills, deplete our natural resources and create uncertainty for New Yorkers, it's my responsibility to take action and lead," Hochul said during Tuesday's signing and news conference announcing the moratorium.

Critics have long warned the move could divert billions in AI infrastructure investment to competing states, depriving New York communities of construction jobs, tax revenue and the type of land deals that have recently generated windfalls for rural landowners in places like Pennsylvania. "Gov. Hochul's statewide moratorium on data centers will ensure that those investments, jobs and economic activity flow elsewhere rather than to New York," Dan Diorio, executive vice president of state policy and government affairs for the Data Center Coalition, said in a statement.

However, the announcement comes as some communities have reportedly profited from the AI infrastructure boom. According to The Wall Street Journal, 96 Pennsylvania households collectively received more than $500 million after selling roughly 17,000 acres of rural land to QTS, a data center developer owned by Blackstone. The families sold their land for an average of about $330,000 per acre, receiving roughly $5.5 million each on average.

During the one-year moratorium, New York will prepare a Generic Environmental Impact Statement (GEIS) to establish statewide standards for future AI data center development. While the review is underway, the state will not issue new discretionary environmental permits for covered data center projects.