It comes as concerns grow over the massive energy and water demands required to operate AI data centers, which house thousands of computers and servers.
"Artificial intelligence is changing the way we work, where we learn, the way we communicate, the way we do business," Hochul said. "And it has sparked a heated debate over the rapid construction of massive energy guzzling infrastructure that is needed to power the industry."
The move is unprecedented. New York is the first state in the nation to declare a moratorium on the construction of large-scale data centers.
Massive complexes, the size of several football fields, use massive amounts of electricity and water to run them and to cool them. Where hundreds of thousands of computer servers run 24/7 to power search engines and artificial intelligence.
The noise they generate and the resources they use have caused an uproar in many communities across the nation.
The governor's executive order imposes a one-year moratorium to establish a regulatory framework and to conduct environmental impact assessments to evaluate energy demand, water use, water quality, and air quality.
"This pause will remain in place for up to one year, while New York establishes the strongest possible framework to protect our communities," Hochul said. "Guardrails to reduce the risk to our energy grid, minimize land disruption, noise pollution, and protect our natural resources, especially our water supply."
Tech companies and other backers have argued moves to block the construction of data centers hurt job growth for local communities and cede ground to China in a race to lead in the rapidly growing AI industry.
Earlier this year, Maine seemed poised to establish a similar moratorium. But the measure was vetoed by the state's Democratic Gov. Janet Mills because it would have blocked a proposed data center in a town that has struggled following the closure of a local mill. 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 and other pocketbook issues. The governor this year softened New York's ambitious goals 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 is opting for an executive order that would take effect immediately once signed.
New York, at this stage, has not been a destination for the biggest hyperscale data centers.
Dan Diorio, Executive Vice President of State Policy and Government Affairs, Data Center Coalition released a statement saying in part:
"As hundreds of billions of dollars are being deployed to build out the nation's digital infrastructure, Gov. Hochul's statewide moratorium on data centers will ensure that those investments, jobs, and economic activity flow elsewhere rather than to New York - with impacts far beyond the data center industry," Diorio said. "The moratorium will also undermine New York's economy and send a signal that the state is closed for business. It risks creating tens of millions of dollars in stranded investment and depriving local communities of the opportunity to grow investment and jobs, while forcing New York to relinquish significant long-term economic growth, high-wage jobs, and critical tax revenue to neighboring states - tax revenue that can fund local priorities and reduce the tax burden on residents."
The Associated Press contributed to this report.
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