New York will stop issuing permits for new large-scale data centres in the state for one year, according to an order signed by the state's governor.
The pause will give the state time to develop regulation for the rapidly expanding sector, fired by growing demand for artificial intelligence.
Critics of data centres point to their high electricity consumption, which can strain local grids and inflate energy bills, as well as their heavy water use, noise generation and the relatively small number of jobs they create.
"New York has always been at the forefront of innovation and change but we've also always guaranteed that New Yorkers benefit," New York state Governor Kathy Hochul said.
"As data centre 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," she said.
"New York will lead the way in creating the strongest standards in the nation for data centre development, ensuring that when companies succeed because of New York, New Yorkers succeed too."
US data centre construction spending has surged in recent years, with tech firms pouring tens of billions of dollars into building out infrastructure.
A similar measure passed in Maine in April but was ultimately vetoed by the state's governor.
A June study by Allianz Trade estimated the centres emitted 286 million tonnes of carbon dioxide in 2025.
AI already accounts for between 15% to 20% of electricity consumption at data centres, and this share could climb to 40% by 2030, the report said.
Read more: Data centres may be leading to higher energy costs for households - report
