New York State halts construction of all new data centers

On July 14, 2026, New York Governor Kathy Hochul signed an executive order immediately suspending the state Department of Environmental Conservation from approving new permits for data centers of 50 megawatts or more. The pause applies to all projects that have not yet completed the permitting process, potentially affecting a dozen or more large facilities under construction or planned. Hochul stated the pause will last until the state completes an environmental impact assessment of data centers, expected to take about a year.

Beyond the executive order, the governor's office is considering requiring data centers to pay into a state grid support fund and pushing legislation to bar hyperscale data centers from receiving tax breaks. At a press conference in Brooklyn, Hochul emphasized: 'Progress should not come at the cost of higher electricity bills, depleted water sources, or noise pollution. These data centers can only be built where communities are willing to host them, so they must not be exempt from local zoning and permitting.'

The executive order has resonated in the state legislature: last month, a bill to pause data center construction over 20 megawatts for one year passed committee review, while another bill proposing a three-year pause is still under consideration. New York thus becomes the first state in the nation to implement such a pause.

Just a few years ago, states were competing to attract data center projects for jobs and tax revenue. But now, public sentiment has shifted sharply. A Pew Research Center report shows that only 10% of Americans are more excited than worried about AI's use in daily life, and only 23% believe AI will have a positive impact on employment. More recent polls further detail specific concerns: about two-thirds of respondents worry data centers will raise electricity prices, and another survey found that people would rather have an Amazon warehouse in their backyard than a data center.

Resource strain is a core reason. Large data centers consume vast amounts of electricity and water, putting pressure on the grid and local water supplies. Counties in New York have already complained about data centers occupying farmland and precious water resources. Hochul's executive order directly addresses these concerns and attempts to balance AI infrastructure expansion with community interests through environmental reviews and payment mechanisms.

The rapid growth in data center size is a key backdrop for the pause. Data centers built in past years averaged below 100 megawatts, but driven by a surge in AI investment, new projects have dramatically increased in scale. According to BloombergNEF, by 2030 nearly a quarter of new data centers will exceed 500 megawatts. These 'hyperscale' facilities impact the grid far more than previous ones.

Hochul's executive order comes against this backdrop. She said the pause is to ensure environmental reviews can keep pace with technological development. Notably, similar discussions have emerged at the federal level: in December 2025, over 230 organizations called for a national moratorium on new data centers; Vermont Senator Bernie Sanders introduced a national pause bill but did not gain enough support. The Maine legislature briefly passed a pause bill, but it was vetoed by Governor Janet Mills.

New York's pause order may spark policy conflict with the Trump administration. The Trump administration has been actively supporting data center construction; last month, the Federal Energy Regulatory Commission (FERC) directed grid operators to create a 'fast track' for data center interconnection. Hochul's executive order emphasizes local control, stating that data centers must not be exempt from local zoning and permitting.

The effective timing of the pause order, the review results, and subsequent legislative direction will determine the future of the data center industry in New York. If the environmental review ultimately strengthens standards for emissions, water use, and grid connection, it could become a template for other states. Currently, New York has sent a clear signal: AI infrastructure expansion cannot come at the expense of communities and the environment.