New York Data Center Moratorium: State Pauses Projects Over 50 MW
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New York Data Center Moratorium: State Pauses Projects Over 50 MW A new executive order pauses certain permits for new data centers above 50 MW as New York develops rules for grid costs, water use, and host communities. New York became the first US state to temporarily pause certain permits for new large data centers Tuesday after Gov. Kathy Hochul signed an executive order directing regulators to develop a statewide framework for grid connections, water use, and host community impacts. The order directs the New York Department of Environmental Conservation to pause applications for discretionary state permits for the construction or expansion of data centers consuming 50 MW or more, unless the applications had already been deemed complete before the order took effect. The pause remains in effect until the state completes a Generic Environmental Impact Statement or for one year, whichever comes first. Local government permits are not affected. The executive order comes as New York faces a sharp increase in proposed AI infrastructure. It says nearly 12 GW of data center load requests were in the New York Independent System Operator interconnection queue as of May, with more than 8 GW entering the queue during 2025. Grid Reforms for Data Centers Expanded Rather than launching a new regulatory process, the executive order expands an existing Public Service Commission proceeding on large-load interconnection reforms. The Department of Public Service will prepare a Generic Environmental Impact Statement examining the effects of large data centers on energy demand, water use and quality, air quality, noise, disproportionate impacts on disadvantaged communities, and other environmental issues through PSC Case 26-E-0045. The order also directs Empire State Development to publish a Community Investment Framework within 60 days to help local governments negotiate benefits agreements with developers. The guidance will cover community investment funds, infrastructure improvements, workforce development and project transparency. In addition, the Department of Public Service must consider establishing a New York Grid Acceleration Fund that could require data center developers to make upfront contributions for grid improvements, demand response, clean energy resources, and other measures intended to protect ratepayers from stranded infrastructure costs if projects are delayed, scaled back or canceled. The order also establishes a Data Center Interconnection Working Group to recommend reforms for connecting large new loads while maintaining "beneficiary pays" principles for network upgrades and resource adequacy costs. Industry Reaction to NY’s Data Center Moratorium Criticizing the move, the Data Center Coalition said the order would redirect investment, jobs, and tax revenue to neighboring states. “Gov. Hochul’s statewide moratorium on data centers will ensure that those investments, jobs, and economic activity flow elsewhere rather than to New York,” Dan Diorio, executive vice president of state policy and government affairs for the Data Center Coalition, said in a statement. The organization said data centers supported more than 227,000 jobs in New York, contributed $49 billion to the state’s gross domestic product and generated $5.1 billion in state and local tax revenue in 2024. It argued the order could discourage additional investment, create stranded investment and signal that New York is "closed for business." Neil Osnato, founder of Persistence Analytics Group, told Data Center Knowledge the pause could redirect some near-term investment to states with faster approvals, more available power or clearer utility pathways. But he said it could also become a model for states seeking a verification process before committing utilities and communities to large new electric loads. “Regulatory certainty now becomes another core site-selection variable,” Osnato said. Developers have long evaluated markets based on power availability, fiber, land, tax incentives, and permitting speed, he said. Clear regulatory standards can improve long-term investment decisions because “developers do not only need speed. They need rules that investors, utilities, regulators and communities can trust.” Narrower Than Legislative Proposal The executive order is narrower than legislation approved earlier this year by the New York Legislature. Lawmakers passed the Responsible Data Center Development Act, which would have imposed a one-year moratorium on new data centers above 20 MW while directing state agencies to study their effects on the electric grid, water resources and surrounding communities. Hochul instead limited the executive order to facilities consuming 50 MW or more. The order defines covered facilities as those with specialized cooling systems and continuous operations that consume or can consume at least 50 MW. It exempts facilities primarily used for manufacturing, research, education, including Empire AI and accredited colleges and universities engaged in academic research, and medical care. The executive order says infrastructure investments made in anticipation of projected data center demand create financial risks if those loads never materialize. It concludes that the state needs a more comprehensive framework for electric infrastructure, water use and community impacts before additional large projects move forward. Read more about: Policy Watch
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