New York Enacts First Statewide Moratorium on Data Centers
On July 14, 2026, through Executive Order No. 62, New York Governor Kathy Hochul imposed a temporary statewide moratorium on data center projects. Among other measures, the Executive Order directs the New York State Department of Environmental Conservation (DEC) to pause its review of incomplete permit applications for the construction or expansion of data centers that consume or can consume at least 50 megawatts of energy, while the Department of Public Service (DPS) develops a Generic Environmental Impact Statement (GEIS). The GEIS will be used to assess potential data center impacts under the State Environmental Quality Review Act (SEQRA).
New York is the first state to adopt a moratorium on large-scale artificial intelligence (AI) infrastructure. The moratorium reflects a growing concern among policymakers that data centers place significant demands on electric grids, water supplies, and local communities. According to the Governor's Office, the pause will allow New York to establish standards intended to protect ratepayers, environmental resources, and community interests before additional large-scale facilities move forward.
Creation of a GEIS for Data Centers
Under the Executive Order, DPS is required to develop a GEIS in coordination with DEC and other agencies. Agencies will use the GEIS in evaluating the potential environmental effects of the construction and operation of data centers, including potential impacts on energy demand, water use and quality, air quality, disadvantaged communities, and noise levels. DPS will provide opportunities for public comment on the GEIS.
While DPS creates the GEIS, DEC is to hold in abeyance most permit applications pending before the agency that were not deemed complete by July 14, 2026. The moratorium does not apply to permits or other permissions needed from local governments, or to data centers primarily used for manufacturing, research, education, or the provision of medical care. This requirement bars, at least temporarily, project-specific SEQRA reviews for data center applications.
Other Measures Affecting Data Centers
The Executive Order also imposes other measures affecting data centers. Empire State Development (ESD) is required to issue a Community Investment Framework by mid-September 2026. The Framework will provide guidance to communities for obtaining economic benefits and mitigating potential effects of data centers, including through local infrastructure improvements, workforce development, and investments in public services and energy affordability projects.
DPS must also form a Data Center Interconnection Working Group and consider measures such as investment in a New York Grid Acceleration Fund, to improve grid infrastructure and address energy needs. If adopted, the Fund could be funded through upfront capital contributions by data center applicants, which would finance grid improvements and other initiatives to support grid reliability. This effort builds on Governor Hochul’s Energize NY initiative, which will require data centers to pay more for their energy or supply their own energy to reduce costs.
Lastly, the Executive Order directs DEC to assess whether new or amended regulations, policies, reporting, or guidance are needed to address data centers’ water demands.
Looking Ahead
Companies with pending or planned data center projects should closely monitor New York’s implementation of Executive Order No. 62, provide public comment on the GEIS, and evaluate whether project schedules, permitting strategies, or facility locations warrant adjustment in light of the evolving regulatory landscape.
In addition, although the immediate impact of the moratorium falls on projects located in New York, the Executive Order carries broader implications for companies establishing AI infrastructure across the country. Other states are also considering temporary data center bans or drafting proposals, such as Texas’s August 3, 2026, moratorium pending a state audit. Data center developers and operators should expect increased scrutiny of issues that already feature prominently in permitting discussions, including electric demand, transmission capacity, water consumption, greenhouse gas emissions, noise, and community impacts. Utilities and independent system operators may also face increased pressure to demonstrate that they can accommodate new large loads without shifting costs to existing customers.
Beveridge & Diamond's infrastructure, project development, environmental, and energy lawyers help clients develop, permit, finance, and operate complex infrastructure projects while managing evolving regulatory requirements. Our New York office regularly advises clients on environmental permitting, energy regulation, land use, and emerging legal issues that affect data center development and AI infrastructure. For more information on this development, please contact the authors.
