New York has recently enacted a moratorium halting certain permits for new data centers that exceed 50 megawatts (MW) in power consumption. This executive order, signed by Governor Kathy Hochul, aims to establish guidelines for grid connections, water usage, and the impact on host communities.
The directive pauses applications for discretionary state permits for constructing or expanding these large data centers, specifically those that are 50 MW or more, unless they have been completed prior to the issuance of the order. This freeze will remain in place until the state completes a Generic Environmental Impact Statement or for a year, whichever comes first. It’s important to note that local government permits are not affected by this moratorium.
The need for this executive order arises amid a significant surge in proposed AI infrastructure, with nearly 12 gigawatts (GW) of data center load requests in the New York Independent System Operator interconnection queue as of May. Over 8 GW of these requests entered the queue during 2025.
Expanded Grid Reforms
Instead of initiating a new regulatory process, the executive order broadens an ongoing Public Service Commission initiative focused on large-load interconnection reforms. The Department of Public Service is tasked with preparing a Generic Environmental Impact Statement to assess the environmental effects of large data centers, including their influence on energy demand, water usage, air quality, noise pollution, and impacts on disadvantaged communities.
Additionally, the order directs the Empire State Development to produce a Community Investment Framework within 60 days. This framework will assist local governments in brokering benefits agreements with developers encompassing investment funds, infrastructure improvements, workforce development, and project transparency.
The Department of Public Service may propose the establishment of a New York Grid Acceleration Fund. This fund could require developers of data centers to make initial contributions toward grid enhancements, demand response efforts, and clean energy resources. These measures would aim to safeguard ratepayers from financial losses if projects face delays or are ultimately canceled.
Industry Response
The Data Center Coalition has criticized the moratorium, asserting that it will lead to the loss of investments, jobs, and tax revenue for New York as developers look to neighboring states for opportunities instead. They quoted data indicating that data centers contribute significantly to the state’s economy, supporting over 227,000 jobs and generating approximately $5.1 billion in state and local tax revenue in 2024.
Experts suggest that while this pause may redirect investments temporarily, it could also serve as a precedent for other states wanting to ensure a more systematic approach to large electric load commitments. Regulatory stability is becoming increasingly crucial in the decision-making process for infrastructure developers.
Legislative Context
The executive order is more focused compared to a broader legislative proposal earlier this year which sought to impose a one-year moratorium on data centers over 20 MW. The new order applies only to facilities consuming 50 MW or more and excludes those primarily dedicated to manufacturing, research, education, and medical care.
The executive summary clarifies that investments made in anticipation of data center demand pose financial risks if those projected needs do not materialize. Therefore, a more comprehensive regulatory framework regarding electric infrastructure, water use, and community impacts is deemed necessary before proceeding with additional large projects.
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