New York Establishes First-in-the-Nation Moratorium on New Hyperscale Data Centers

New York Governor Kathy Hochul on July 14 signed an executive order establishing the nation’s first statewide moratorium on new hyperscale data centers, temporarily halting environmental permits for up to one year while state agencies develop a comprehensive regulatory framework for future projects. The action is intended to address the rapid growth of artificial intelligence-driven computing infrastructure while protecting electric grid reliability, controlling energy costs, safeguarding water resources and ensuring local communities benefit from large-scale developments.

The executive order follows a sharp increase in proposals for data centers that could require substantial electricity and water to power and cool thousands of servers. During the moratorium, the Department of Environmental Conservation will not issue discretionary environmental permits for projects that have not already completed the permitting process. At the same time, the Department of Public Service will prepare a Generic Environmental Impact Statement evaluating statewide impacts on electricity demand, water use, water quality and air quality. Once the review is complete, new projects will be required to meet uniform environmental standards before moving forward.

The action builds on the Energize NY proceeding launched earlier this year, which is examining ways to ensure large data centers either bear the full cost of their electricity demand or develop dedicated energy supplies rather than shifting costs to other consumers. DPS also will examine creation of a New York Grid Acceleration Fund that could require developers to finance grid upgrades, support new clean energy resources, deploy distributed energy and battery storage, and help manage risks associated with speculative large electricity loads.

Governor Hochul also directed Empire State Development to issue a Community Investment Framework within 60 days to guide local governments in negotiating community benefits from large data center projects. The framework is expected to address infrastructure improvements, workforce development, prevailing wages, project labor agreements, apprenticeships, local hiring and direct financial investments for host communities. State lawmakers also are considering legislation to eliminate sales tax exemptions for large data centers.

The initiative complements New York’s broader AI strategy, including Empire AI, the FutureWorks Commission, new online safety laws and the planned Office of Digital Innovation, Governance, Integrity, and Trust, which will oversee digital safety and regulatory standards while supporting responsible deployment of emerging AI technologies.