On July 14, New York Governor Kathy Hochul signed an executive order that became the first state-level moratorium in U.S. history on the construction of large data centers. This decision is not just a bureaucratic pause, but a deliberate step toward revising energy policy in an era of rapidly growing AI workloads.
The order introduces a ban on issuing new environmental permits for data centers with a capacity exceeding 50 MW for up to one year. The goal is to give authorities time to assess the impact of these facilities on electricity consumption, water resources, and the overall environmental situation. Notably, the threshold was raised from the previous 20 MW to avoid affecting smaller data centers serving hospitals and critical infrastructure.
Conditions for operators are becoming stricter
At the same time, a more stringent legislative initiative awaits the governor's signature. Hochul also instructed the Department of Public Service to develop a mechanism requiring data centers to invest in the state's energy infrastructure. Moreover, data centers with a load of 5 MW or more will need to obtain at least one-third of their electricity from renewable sources by 2030, two-thirds by 2035, and 90% by 2040.
Initially, lawmakers proposed a three-year moratorium, but after negotiations with stakeholders, the period was reduced to one year. Additionally, the governor announced plans to repeal sales tax exemptions for large data centers—an issue expected to be raised at the next legislative session.
Industry reaction: "the state is closed for business"
The Data Center Coalition (DCC)—a key lobbying group for data center operators in the U.S.—is strongly opposed. DCC Director of State Policy Kara Bender stated that the moratorium would undermine New York's economy, deter investors, and send a clear signal to businesses: "the state is closed for business." Vice President of the Business Council of New York State Ken Pokalski called the law's requirements "excessive and unviable," warning of a blow to the region's economic development.
The trend is gaining momentum
The Maine State Legislature passed a similar 18-month law in April 2026, but Governor Janet Mills vetoed it. According to the "U.S. Data Center Construction Moratorium Tracker," as of June 6, 127 moratoriums were in effect—compared to just 58 in April.
My expert opinion: New York is betting on sustainable development but risks losing its leadership in the race for AI infrastructure. If other states do not follow this example, we will see capital flow to regions with more favorable regulations—such as Texas, where cases of bypassing environmental controls have already been recorded. The question is not whether data centers are needed, but how to balance their growth with environmental and social responsibilities.