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New York Becomes Sixth State to Propose Moratorium on Data Center Construction

By  |  February 9, 2026
Big Tech, AI

California may have led other states in regulating aspects of AI and AI companies, but New York is catching up. Having passed the Responsible AI Safety and Education (RAISE) Act establishing state oversight of AI models, and a separate bill requiring disclosure of AI elements in advertising, lawmakers in Albany are now eying a measure to impose a three-year moratorium on new AI data centers.

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    The bill, introduced by Sen. Liz Krueger, would prohibit the issuance of permits for new data centers; requires the public service commission to issue an order or orders to minimize the impact of new data centers on electricity and gas rates for residential, commercial, and industrial users.

    The announcement makes New York the sixth state, both Republican and Democratic-controlled, to introduce bills to limit data-center development in just the past few weeks, after Maryland, Georgia, Oklahoma, Virginia and Vermont. A Republican legislator in Michigam — where dozens of local governments have already passed moratoriums — has said she’ll introduce a statewide measure there, as well, per Politico, while a Democratic candidate for governor in Wisconsin has also called for a moratorium.

    WHAT’S NEXT IN ANTITRUST AND TECHNOLOGY REGULATION™

    AI data centers have become the focus of a growing consumer backlash around the country over rising electricity bills driven in part by increased demand for power. According to the U.S. Entergy Information Administration (EIA), electricity rates spiked 13% nationwide in 2025, a steeper rise than in any year for more than a decade.

    “Massive data centers are gunning for New York, and right now we are completely unprepared,” Krueger said in a statement. “It’s time to hit the pause button, give ourselves some breathing room to adopt strong policies on data centers, and avoid getting caught in a bubble that will burst and leave New York utility customers footing a huge bill.”

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    The New York measure has the backing of environmental groups, including Food and Water Watch, who view the power-hungry centers as driving increased fossil fuel use. Food and Water Watch was among more than 230 environmental groups to sign a letter to Congress in December seeking a nationwide moratorium on new approval and construction of data centers.

    “The rapid, largely unregulated rise of data centers to fuel the AI and crypto frenzy is disrupting communities across the country and threatening Americans’ economic, environmental, climate and water security,” the letter said.

    Assemblymember Anna Kelles (D-Ithaca), lead sponsor of a companion measure to Krueger’s bill in that chamber, told Politico, “This is the time to take a pause and set up strong regulations that ensure protections for New Yorkers from carrying the economic burden of the high energy demands of data centers and minimize environmental harms of water, noise, light, and air pollution.”

    The growing backlash to the data centers has scrambled normal political calculations within states. In Pennsylvania, Democratic Governor Josh Shaphiro has swung from aggressively seeking to attract AI development to the state to proposing new restrictions on the centers to shield residents from higher utility prices. In Arizona, Governor Katie Hobbs (D) reversed her support for tax breaks aimed at attracting data centers to imposing new water use fees on the industry.

    Last month, New York Governor Kathy Hochul (D) announced a new initiative called Energize NY Development, which her office said would both modernize the way large energy users (i.e., data centers) would connect to the grid while also requiring them to “pay their fair share.”