In New York surrogacy is illegal, or at least it is illegal "on paper".
You can read more about this here:
http://www.surrogacy.com/legals/article/nylaw.html
Recent decisions indicate that New York residents seem to be safe from the penalties of the New York surrogacy statute so long as they work with a surrogate or carrier from outside the state.
The law states that surrogate parenting agreements in New York are void, unenforceable and against public policy.
The statute defines surrogate parenting agreements as “an agreement, oral or written, in which (1) a woman agrees either to be inseminated with the sperm of a man who is not her husband or to be impregnated with an embryo that is the product of an ovum fertilized with the sperm of a man who is not her husband; and (2) a woman who agrees to, or intends to, surrender or consent to the adoption of a child born as a result of such insemination.”
Having said this there are two exceptions to the rule – one is for monies paid for artificial insemination or IVF and the other is for monies paid to women that are in keeping with the statutes that govern private adoptions in New York. Neither of these activities are illegal, nor are they subject to penalties or fines.