New York Becomes the First State to Impose a Moratorium on New Hyperscale Data Centers: What It Means.

Background

On July 14, 2026, Governor Hochul signed Executive Order No. 62 (“Executive Order”), to create the first state-level moratorium in the nation that effectively bans the development of new “hyperscale” data centers that use 50 megawatts (MW) and above of electricity.[1]  The Executive Order operates by temporarily pausing New York State environmental permits required for this type of development until the New York State Department of Public Service (“DPS”) submits a Generic Environmental Impact Statement (“GEIS”), which could take up to one year.[2]

New York, like other states, has experienced growth in the demand for data-center development that has largely been driven by the advent of Artificial Intelligence (“AI”) and other advanced computing processes.  The concern has been that data centers of such a large scale put a significant strain on the state’s water and energy resources to cool thousands of computer servers.  As cited by the Executive Order, as of May 2026, nearly 12 gigawatts of data-center load requests are in the NYISO interconnection queue.[3]

The Executive Order finds that New York’s existing regulatory frameworks are not yet adequately equipped to address the large-scale water withdrawals and wastewater demands associated with data centers.  It also recognizes that host communities may incur substantial infrastructure and environmental burdens while lacking sufficient guidance to secure meaningful economic and community benefits from developers.[4]

What Executive Order No. 62 Does

The Executive Order establishes a temporary hold on certain state-level permitting decisions for covered data centers (50 MW or above) while several state agencies develop a more comprehensive regulatory framework.[5]  The Order directs DPS to examine the distribution-system impacts of data-center interconnections through the New York State Public Service Commission’s (“Commission”) existing large-load proceeding, Case 26-E-0045.  DPS must also conduct a public process and prepare a GEIS under the State Environmental Quality Review Act.  The GEIS is to evaluate the potential effects of data-center construction and operation, including energy demand, water use and quality, air quality, noise, and impacts on disadvantaged communities.[6]

Until DPS submits its final GEIS and associated findings, the Department of Environmental Conservation (“DEC”) must hold in abeyance applications for discretionary state permits, approvals, or licenses relating to the construction or expansion of a covered data center when the application was pending or had not been determined complete as of the Executive Order’s effective date.  The hold does not apply to permits or approvals issued by local governments.  DEC may require applicants to disclose whether a pending application involves a data center.[7]

The Order also:

• Directs Empire State Development, within 60 days, to develop a “Community Investment Framework” that addresses community-benefit funds, local infrastructure investments, labor participation, prevailing wages, project labor agreements, workforce development, and transparency regarding the economic effects of data-center projects, particularly as applied to disadvantaged communities.[8]
• Directs DPS to consider a “New York Grid Acceleration Fund” or similar mechanism through which data-center developers could finance grid upgrades, support clean-energy procurement and demand-response programs, contribute to insurance against stranded assets, and help protect other ratepayers from project-related costs.[9]
• Requires DPS, within 60 days, to establish a “Data Center Interconnection Working Group” addressing large-load interconnections, grid upgrade costs, resource adequacy, and the principle that the cost-causing customer should pay.[10]
• Directs New York’s transmission owners to review their methods for evaluating data-center and other large-load impacts, with reporting to the Commission within 90 days.[11]
• Authorizes DPS and the Commission to develop new data-center-specific service classifications and requirements.[12]
• Requires DEC to review whether its water-withdrawal regulations, reporting requirements, policies, and guidance adequately account for large-use customers, including data centers, and to issue a report within 12 months.[13]

What This Means for Energy and Utility Companies Operating in New York

For electric utilities, the Order signals a more rigorous framework for serving hyperscale data centers and other large loads.  For example, DPS is directed to review utility study methodologies, convene the State’s transmission owners, and consider data-center-specific service classifications that could require upfront capital contributions, minimum-demand obligations, financial security, curtailment requirements, and other protections against stranded costs.[14]

The Executive Order also points toward a “cost causer pays” approach.  Data-center developers may be required to fund transmission and distribution upgrades, new generation or storage, demand-response programs, and other measures needed to serve their load without shifting costs to existing customers.  Energy developers, storage providers, and demand-response companies may therefore see new opportunities to support or directly serve large-load projects, although near-term development may slow while the State imposes the moratorium and simultaneously completes its environmental and regulatory review.[15]

For water utilities, the immediate obligations may not take shape until DEC first assesses whether existing water-withdrawal rules, reporting requirements, and guidance adequately address data-center demand.  That review could lead to more detailed peak demand and capacity analyses, conservation requirements, and greater developer responsibility for new mains, storage, treatment, pumping, or wastewater infrastructure.  Electric and water utilities should therefore expect greater coordination with state regulators and project developers, along with increased pressure to demonstrate that ordinary ratepayers will not bear the infrastructure and operational risks associated with hyperscale data centers. 

Footnotes

[1]      Press Release, Governor Kathy Hochul, First Statewide Moratorium on New Hyperscale Data Centers Launched by Governor Kathy Hochul (July 14, 2026), https://www.governor.ny.gov/news/first-statewide-moratorium-new-hyperscale-data-centers-launched-governor-kathy-hochul.

[2]      N.Y. Exec. Order No. 62, Establishing a Temporary Moratorium on Data Centers in New York While the State Develops Higher Standards for Data Center Development and Benefits Blueprint to Support Localities at 2–4 (July 14, 2026), https://www.governor.ny.gov/executive-order/no-62-establishing-temporary-moratorium-data-centers-new-york-while-state-develops [hereinafter Executive Order No. 62].

[3]      Executive Order No. 62, supra note 2, at 1.

[4]      Id. at 1–2.

[5]      The Executive Order does not impose an absolute prohibition on all data-center development.

[6]      Id. at 2; Case 26-E-0045 - Proceeding on Motion of the Commission to Address Interconnection Reforms for Large Loads, Order Instituting Proceeding and Soliciting Comments, at 3, 8–10 (N.Y. Pub. Serv. Comm’n Feb. 12, 2026), https://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId=%7BB040539C-0000-CB26-AEB3-8C865EF3724D%7D&DocTitle=Order+Instituting+Proceeding+and+Soliciting+Comments [hereinafter Large Loads Order]; N.Y. Env’t Conserv. Law art. 8 (McKinney 2026); N.Y. Comp. Codes R. & Regs. tit. 6, § 617.10 (2026).

[7]      Executive Order No. 62, supra note 2, at 2.

[8]      Id. at 2–3.

[9]      Id. at 3.

[10]     Id.

[11]     Id.

[12]     Id.

[13]     Id. at 3–4; N.Y. Comp. Codes R. & Regs. tit. 6, pts. 601–602 (2026).

[14]     Executive Order No. 62, supra note 2, at 3; Large Loads Order, supra note 6, at 8–10.

[15]     Executive Order No. 62, supra note 2, at 1, 3; Large Loads Order, supra note 6, at 2–3, 9–10.