New York Governor Kathy Hochul on Tuesday issued an executive order imposing a moratorium of up to one year on construction of the state's largest data centers. Artificial intelligence companies can look elsewhere for now, but opposition to new AI infrastructure is growing.

Hochul's order bars companies for up to one year from constructing "hyperscale" data centers that draw at least 50 megawatts of power. Those are the facilities favored by AI companies and cloud providers because they supply the enormous computing power needed to train models and answer users' queries. For example, a Genesee County, N.Y. data center project that Barron's wrote about earlier this month would draw 500 megawatts.

In the announcement, Hochul said that some data centers drove up electric bills, caused disruptive noise, and hurt the environment. She said the moratorium would give the state government time to come up with a regulatory framework for data centers.

"This pause will remain in place for up to one year, while New York establishes the strongest possible framework to protect our communities, guardrails to reduce the risk to our energy grid, minimize land disruption, noise pollution, and protect our natural resources," Hochul said.

Hochul said that the moratorium will be lifted once the regulatory framework is in place. The New York state legislature earlier this year passed a bill that would have enshrined a moratorium into law, and Hochul had been under pressure to sign that bill. The executive order allows her to push off that decision for now.

New York is just one state, but AI companies' problems are getting worse. A recent Reuters/Ipsos poll showed only 14% of Americans are in favor of building a data center in their local community versus 57% who oppose it. Some states such as Texas have traditionally been welcoming to data center development, but Texas Gov. Greg Abbott recently called for a ban on new data center construction in rural Texas neighborhoods.

The anti-data center tide "has become a tsunami," wrote analysts at Beacon Policy Advisors in a research note on Tuesday.

A number of factors are lining up against AI companies and data center developers if the trend continues. The White House has sought to encourage data center development in the U.S., but in this case, local and state officials have substantial power to stop development in their own communities.

President Donald Trump in March brought to the White House executives from OpenAI, Alphabet's Google, xAI, Amazon.com, Oracle, and Meta Platforms to pledge to build, buy, or secure all the power needed for their data centers. That voluntary action hasn't allayed communities' concerns.

AI companies are spending millions of dollars on political action committees and lobbyists to try to influence politicians on the issue. Such tactics worked well for crypto companies, with Congress now considering passing a bill that the industry has tried to get for years. But unlike with crypto -- which most Americans don't have a strong opinion about -- data center construction has inspired grassroots protests across the country. With the November midterm elections looming, data centers are unlikely to find many supporters in the near term.

In New York, AI companies can at least be happy that Hochul did not sign a moratorium into law. But political trends suggest it could become much more difficult for AI companies to build the computing infrastructure they need in the years ahead.

Write to Joe Light at joe.light@barrons.com

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July 14, 2026 12:28 ET (16:28 GMT)

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