Governor Kathy Hochul signed an Executive Order on July 14, 2026, establishing what her administration describes as the nation's first statewide moratorium on new hyperscale data centers, pausing state environmental permits for up to one year while regulators develop a comprehensive framework governing how such facilities are built and operated in New York.

What the Moratorium Covers

The Executive Order directs the Department of Environmental Conservation to halt the issuance of discretionary permits for new hyperscale data centers that have not already been deemed complete.

The pause will remain in effect for up to one year, during which the Department of Public Service will develop a Generic Environmental Impact Statement, known as a GEIS, for data centers statewide.

The GEIS is intended to assess the potential environmental impacts of data center construction and operation, including effects on energy demand, water use and quality, and air quality.

Once the state finalizes those standards, the moratorium will be lifted, and new data center projects will be permitted to proceed, provided they comply with state regulations, zoning codes and other local approval processes.

The Scale of Data Center Growth Driving the Action

New York State is currently experiencing what the governor's office characterized as unprecedented growth in demand for data center development, driven by artificial intelligence and other computing operations.

That surge has produced proposals across the state for facilities requiring massive amounts of energy and water to run and cool thousands of computer servers.

Hochul's administration said those proposals carry significant risks for utility customers, natural resources, the energy grid, and local communities.

Earlier this year, Hochul had directed the Department of Public Service to begin a proceeding called Energize NY, designed to require data centers to either pay more for their energy or supply their own, with the stated goal of keeping energy more affordable for New Yorkers. The GEIS development is now being folded into that existing proceeding.

Community Investment Framework to Follow Within 60 Days

Alongside the moratorium, Hochul directed Empire State Development to issue a Community Investment Framework within 60 days.

The framework is intended to give local governments and communities clear guidance on how to negotiate benefits from large-scale data center development deals.

Those benefits could include local infrastructure improvements, child care investments, and direct financial support for communities. An outline of the framework is currently available on Empire State Development's website, and the public has been invited to submit feedback.

The framework will also establish structures giving organized labor a seat at the table in data center negotiations and will prioritize prevailing wage standards and project labor agreements for data center construction.

Local hiring, apprenticeships, and workforce development programs are also identified as priorities under the framework.

Grid Acceleration Fund Under Consideration

The governor also directed the Department of Public Service to consider creating what the administration is calling a New York Grid Acceleration Fund.

Under the proposal, data centers would be required to invest in the state's aging grid infrastructure.

The fund could support the procurement of new clean energy supply and could establish an insurance pool to which developers may be required to contribute, aimed at protecting against speculative large energy loads that the administration said create uncertainty and increase costs for existing ratepayers.

The Department of Public Service will also consider approaches that would require data centers to fund new clean electric generation dedicated entirely to their own operations. Possibilities mentioned include customer-sited distributed energy resources and battery storage.

Sales Tax Exemptions Targeted for Repeal

In addition to the regulatory measures outlined in the Executive Order, Hochul announced she is pursuing legislation to repeal existing sales tax exemptions for large data centers across the state.

The administration did not provide additional detail in its announcement about the timeline or specific structure of the proposed legislation, but the repeal was framed as part of a broader effort to ensure that data center operators contribute meaningfully to the state rather than extract benefits from it.

How Hochul Framed the Decision

In announcing the Executive Order, Hochul said the scale of proposed data center development required direct action to prevent utility bill increases, natural resource depletion, and broader uncertainty for residents.

"New York has always been at the forefront of innovation and change, but we've also always guaranteed that New Yorkers benefit," Hochul said.

"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."

The governor framed the regulatory pause not as opposition to the data center industry but as a condition for its continued growth in the state.

"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," she said.

Context Within Hochul's Broader AI Policy

The moratorium arrives as Hochul's administration has simultaneously sought to position New York as a national leader in artificial intelligence development.

As part of her fiscal year 2025 budget, Hochul launched Empire AI, described as a nation-leading initiative to advance AI research for the public good.

This year, she also launched the FutureWorks Commission, a body composed of policy experts, workers' advocates and business leaders, charged with advising the governor on policy and private sector actions related to AI's effects on workers and the broader economy.