Governor Kathy Hochul of the State of New York has signed an Executive Order to create the nation’s first moratorium on new hyperscale data centers. The Governor is temporarily pausing State environmental permits for up to one year in order to build a regulatory framework that aims to protect ratepayers, the environment, the energy grid, and communities across the state.
The State of New York is experiencing unprecedented growth in demand for data center development driven by artificial intelligence and other computing operations. “The increase in demand has led to proposals across the state for the construction and operation of data centers that could require massive amounts of energy and water to run and cool thousands of computer servers,” said an official press release.
“New York has always been at the forefront of innovation and change but we’ve also always guaranteed that New Yorkers benefit. As data center 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,” Governor Hochul said. “New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too.”
The order aims to establish strong standards for data center development, and create a blueprint to support localities. Governor Hochul is also pursuing legislation to repeal sales tax exemptions for massive data centers across the state.
Build-up to the moratorium
Readers would recall that in February this year, New York State Senator Liz Krueger and Assemblymember Anna Kelles introduced legislation to impose a temporary, three-year moratorium on new data center construction across the state. The legislation was in response to growing public pressure since December 2025, when over 50 groups called for a moratorium, citing unsustainable resource use and rising utility costs.
Then, earlier this year, the Governor directed the Department of Public Service (DPS) to begin the Energize NY proceeding, which will require data centers to either pay more for their energy or supply their own, allowing the state to keep energy more affordable for New Yorkers.
As part of that proceeding, the Governor is now also directing DPS to develop a Generic Environmental Impact Statement (GEIS) for data centers to ensure new data centers coming online are being held to consistent standards. During the development of this GEIS, which will take up to a year, a moratorium will be in place and the Department of Environmental Conservation (DEC) will not issue any discretionary permits not already deemed complete. The state will use the GEIS to assess the potential environmental impacts of the construction and operation of data centers in the state, including their effect on energy demand, water use and quality, and air quality.
Once the State finalizes these standards, the moratorium will be lifted, allowing new data center projects to proceed as long as they follow state, zoning code and other local approvals.
Additionally, the Governor is directing DPS to consider creating a New York Grid Acceleration Fund to require data centers to invest in the state’s aging grid infrastructure and energy needs so all New Yorkers benefit from responsible development. The fund could support the procurement of new clean energy supply and establishment of an insurance pool to which developers may need to contribute to protect against speculative large loads that create uncertainty and increase costs. DPS will also consider approaches to require data centers to fund new clean electric generation dedicated to their operations, including but not limited to customer-sited distributed energy resources and battery storage.
Some media reports, citing officials in the governor’s office, said that the moratorium applies to hyperscale data centers with a capacity of 50 MW and over. But this number has not been mentioned in any official statements. Meanwhile, local public officials have expressed support for the move.
“With this Executive Order, Governor Hochul is protecting everyday New Yorkers with a first in the nation moratorium on new large data centers. By giving our State time to plan, we can ensure that development and innovation do not come at the expense of all of us,” said State Senator Kristen Gonzalez.
Assemblymember Didi Barrett said, “In the weeks since the Assembly and Senate both passed the Responsible Data Center Development Act at the end of the legislative session, New Yorkers across the state have spoken up in support of a data center moratorium. They want a pause in the building of large scale data centers — to better understand their impacts on our natural resources, our communities and our energy costs. They want protections and they want us to learn from the experiences of other states. Governor Hochul’s executive order, including a year-long moratorium, is a timely and important first step in addressing these concerns.”
Impact on local communities
The Governor also directed Empire State Development (ESD) to issue a Community Investment Framework (CIF) within 60 days, which will provide clear guidance to local entities to help them negotiate community benefits as part of any large-scale data center deal, including local infrastructure improvements, child care investments, and direct financial support for their community.
The CIF will also establish frameworks that provide organized labor a seat at the table and prioritize prevailing wage standards and project labor agreements for data center construction, local hiring, apprenticeships and workforce development to maximize economic benefits. This framework will additionally include a formula to help communities assess where to begin investment negotiations.