New York State has suspended pending applications, as of July 14, 2026, for discretionary permits handled by the state Department of Environmental Conservation (DEC) for large data centers capable of consuming more than 50MW of power. Executive Order No. 62, signed by Governor Kathy Hochul that same day, marks the first statewide data center moratorium in the United States. However, it is not an order that bans construction outright. While the review process is paused, the state will decide how to allocate the costs of grid expansion, water usage, and community benefits among operators.
The order responds to roughly 12GW of data center demand that has piled up in the interconnection queue of the New York Independent System Operator (NYISO). More than 8GW of that was added in 2025 alone. Even as the state continues to attract AI computing infrastructure, it must figure out how to avoid a situation in which transmission equipment is built for projects that never materialize, with the costs then falling on ordinary ratepayers. New York State is attempting to address this issue on two fronts: permitting and electricity rates.
Even Above 50MW, Only Incomplete State Permits Are Frozen
The executive order applies to data centers that consume, or are capable of consuming, 50MW or more of power. Clusters of facilities on the same site or adjacent sites are counted together as a single unit. Facilities whose primary use is manufacturing, research, or education and healthcare are excluded, as is Empire AI, the state's own AI research infrastructure.
What is being suspended are applications for discretionary permits, approvals, and licenses handled by the DEC that had not been determined "complete" as of July 14. The order does not apply to permits issued by municipalities. State applications that had already been deemed complete are not halted under this provision. Nor does the order suspend construction that is already underway.
This delineation is narrower than the impression given by headlines suggesting "a complete halt to all large-scale construction statewide." Facilities under 50MW are not covered, and there is no provision for aggregating power demand across separate, non-adjacent sites. It has not been determined that the order will encourage developers to split up sites into smaller facilities, but how cumulative impacts should be handled when facilities are divided remains an issue for the final environmental standards to address.
The state government describes the grace period as "up to one year." However, the text of the order itself only stipulates that permits will remain suspended until a final Generic Environmental Impact Statement (GEIS) and findings statement are submitted—it does not specify a deadline for submitting the impact statement itself. The one-year figure is the administration's projected timeline, not a legally fixed end date.
How 12GW of Applications Is Reshaping Grid Cost-Sharing
The roughly 12GW cited in the executive order represents data center load requests submitted to NYISO as of May 2026. Not all of this represents confirmed demand that will proceed to construction. Rather, the challenge lies in how to account for duplicate applications from the same operators, along with plans that may be scaled back or canceled, within long-term grid planning.
Transmission lines and substation equipment require upfront investment based on interconnection applications. If a planned project falls through, the costs of that equipment cannot be recovered and risk being passed on to the general electricity ratepayer. The New York State Public Service Commission has already begun the Energize NY Development proceeding, reviewing interconnection processes, cost allocation, and rate structures. The executive order effectively gives this work a deadline and an implementing body.
The Department of Public Service (DPS) will establish a Data Center Interconnection Working Group within 60 days and report on transmission operators' impact-assessment methodologies within 90 days. The guiding principle under consideration is "beneficiary pays"—the operators who benefit should bear the costs of grid expansion. Options on the table include requiring data centers to secure dedicated power sources or battery storage, reducing usage during periods of peak grid stress, and having operators bear withdrawal risk through long-term contracts.
Industry groups are wary of capital flight. The Data Center Coalition told the Associated Press that the moratorium would push investment and jobs out of the state. As the state moves forward with new rates and interconnection conditions that increase the burden on operators, it will also face the question of how quickly it can allocate interconnection capacity to the most viable projects.
From Environmental Review to Community Benefits: Building the Rules During the Grace Period
The centerpiece of work during the grace period is the Generic Environmental Impact Statement (GEIS) being drafted by the DPS. It will examine power demand and water usage, and assess air quality and noise as well. The statement will also verify, at a statewide level, whether impacts are disproportionately concentrated in communities already bearing heavy environmental burdens. Drafting the GEIS requires a public comment period and hearings, with participation from state agencies including the DEC. The goal is to standardize review criteria that previously varied from project to project.
Economic benefits for local communities have also been folded into this process. Empire State Development (ESD) will publish a Community Investment Framework within 60 days of the order. This framework will serve as a guide for municipalities negotiating with operators, indicating how much funding should be sought for transmission and distribution infrastructure, water and sewer systems, childcare, and public education. The framework itself does not mandate payments but is intended to establish a common starting point for negotiations.
The DPS is further considering the creation of a New York Grid Acceleration Fund. Under this proposal, operators would prepay grid-expansion costs and contribute to an insurance pool designed to cover situations where equipment becomes idle due to project delays or cancellations. Separately, the state will also evaluate options requiring operators to build dedicated clean power sources and battery storage. The fund does not yet exist, and contribution amounts and allocation methods have yet to be determined.
Regarding water usage, the DEC will compile proposed revisions to water withdrawal regulations and reporting requirements within 12 months of the order. The elimination of the sales tax exemption for data centers, which Governor Hochul has also proposed, is not a measure enacted through the executive order—it remains a legislative matter that will require approval from the state legislature.
Bridging the Gap with the 20MW Bill
On June 4, the New York State Legislature passed the Responsible Data Center Development Act (A11560/S10642) in both chambers. This bill defines "large-scale data centers" as those consuming 20MW or more, and establishes a one-year permit suspension along with dedicated electricity and water rate classifications. It would make community hearings mandatory and would write requirements for renewable energy procurement and community benefits directly into law. As of now, the bill has not been signed by the Governor.
| Comparison Point | Executive Order No. 62 | A11560/S10642 Bill |
|---|---|---|
| Primary threshold | 50MW or more | 20MW or more |
| Process immediately halted | DEC discretionary permits not completed as of July 14 | New DEC permits suspended for one year after enactment |
| Main exemptions | Facilities primarily used for manufacturing, research, education, or healthcare | Renewals of existing permits and facilities that broke ground before enforcement |
| Permanent framework | Agencies design GEIS, interconnection/cost allocation, community investment guidelines, etc. | Statutorily mandates dedicated rate classifications, hearings, environmental reporting, and renewable procurement |
| Current status | Took effect July 14 | Passed both chambers, not yet signed |
The executive order puts the brakes on new and expanded projects of 50MW or more, buying time for agencies to develop rules. The 20MW bill would expand the scope of coverage and lock rate structures and environmental standards into state law. Whether the two measures coexist, or whether the Governor requests amendments to the bill, will significantly determine the reach of the eventual regulatory framework.
The first checkpoints to watch are the community investment guidelines due within 60 days of the order, and the report on transmission operators' assessment methodologies due within 90 days. After that will come the question of how specifically the final GEIS defines conditions for resuming permits, and how the Public Service Commission translates cost allocation into actual rate structures. What will ultimately determine the scale of AI infrastructure construction is not the length of the pause, but the total costs that operators take on for power generation and transmission once permits resume—along with the costs tied to water usage and community measures.