New York Enacts First-in-the-Nation Statewide Data Center Moratorium

As of May 2026, nearly 12 gigawatts of data center load requests were in the New York Independent System Operator interconnection queue, with more than two-thirds of capacity requests entering the queue in 2025 alone. On July 14, 2026, in response to concerns over this rapid growth, Governor Kathy Hochul issued Executive Order No. 62 (the “Order”) imposing a temporary moratorium on data centers in New York State. Among the concerns cited in the Order are the cost burden on ratepayers associated with transmission upgrades required to accommodate large loads, potential environmental impacts, and large-scale water use.

The moratorium is intended to halt activities while the state government develops a comprehensive legal framework for data center development. While dozens of municipal and county-level moratoriums are in place throughout the U.S., and while the legislatures of several states, including Maine, have proposed moratoriums, the Order is the first statewide moratorium to be enacted nationally.

Key Directives

Governor Hochul has issued directives to a number of state agencies to initiate processes to aid in the development of what is intended to be a robust regulatory framework. A summary table of these agency directives, including key timelines, is included below.

The Department of Environmental Conservation (DEC) has been directed to hold pending discretionary permits, approvals, licenses and other permissions for the construction or expansion of a data center in abeyance.

Additionally, DEC has been directed to assess whether new or amended regulations, policies, or guidance are necessary to accurately reflect the water demands of data centers.

The Department of Public Service (DPS) has been directed to examine the impacts associated with the interconnection of data centers to the electric distribution network and to initiate a formal public process to create a Generic Environmental Impact Statement (GEIS) under SEQRA.

DPS has been further directed to consider the development of a “New York Grid Acceleration Fund”. It is noted in the Order that data centers may be required to make upfront capital contributions to finance grid improvements, participate in demand response programs, support procurement of new clean energy supply, and establish an insurance pool as part of the Fund. These contributions would be intended to minimize the costs to general ratepayers of integrating new large loads.

DPS has also been directed to convene transmission owners operating in New York to review the process for studying system impacts of data centers and to form a Data Center Interconnection Working Group. The latter is intended to identify and resolve issues related to the interconnection of data centers and other large loads to ensure compliance with the “beneficiary pays” approach to upgrades. Finally, Empire State Development (ESD) has been directed to create a Community Investment Framework to assist localities in maximizing local economic benefits and mitigating potential consequences of hosting data centers. This “community benefits” approach is similar to what has been seen in other large infrastructure projects in New York in recent years, including offshore wind projects.

Summary Table of Directives

Conclusion

The regulatory environment for data centers is rapidly evolving, with authorities exhibiting a focus on energy and water consumption and grid impacts. Stakeholders should identify opportunities to participate in current and future proceedings and public hearings related to regulatory frameworks to ensure that the “rules of the road” under development address the key objectives and critical concerns of all interested parties.

Sheppard will continue to monitor developments affecting data center development in New York and other jurisdictions.