New York pauses large data center permits until 2027

New York Gov. Kathy Hochul signed an executive order Tuesday pausing state environmental permits for large new data centers until July 2027. The order targets projects that need at least 50 megawatts of power, a threshold that covers hyperscale facilities tied to cloud computing and artificial intelligence.

Hochul’s office said the pause responds to concerns that rapid data center growth could raise utility bills and strain electricity and water supplies. Fortune reported that New York is the first state to impose a statewide moratorium on hyperscale data center development; projects that already have permits are exempt.

“New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too,” Hochul said in a statement.

New rules for power and environmental costs

The order gives state regulators one year to develop standards for the sector. Hochul directed the Department of Public Service to prepare an environmental impact statement covering water use, power demand, land use, pollution and other effects, according to the governor’s announcement.

Hochul also told the department to begin an Energize NY proceeding that would examine whether data centers should pay more for electricity or provide their own supply. The governor’s office said the goal is to keep energy costs lower for residents and businesses outside the data center industry.

The order also asks regulators to consider creating the New York Grid Acceleration Fund. Hochul’s office described it as a way to require data centers to help pay for grid upgrades, clean energy procurement and an insurance pool tied to large power loads.

“As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it’s my responsibility to take action and lead,” Hochul said in announcing the order.

Local benefits are part of the plan

The executive order directs Empire State Development to issue a Community Investment Framework within 60 days. Hochul’s office said the framework is meant to help local governments seek benefits from data center developers, including infrastructure improvements, workforce programs, child care investments and direct financial support.

The framework will include a formula for communities to use when they begin negotiations, according to the order. The proposal reflects a broader effort by the state to capture local value from facilities that can consume large amounts of electricity and land.

Other states weigh limits

New York’s moratorium comes as lawmakers in more than a dozen states consider restrictions on data centers, Fortune reported. Maine Gov. Janet Mills allowed a moratorium bill to pass her desk without signing it after it failed to exempt a $550 million redevelopment of a closed paper mill, according to Fortune.

Arizona Gov. Katie Hobbs last month signed a budget measure that creates a three-year pause on new sales tax exemptions for data centers, Fortune reported. In Cheyenne, Wyoming, local officials said construction of a Meta data center contaminated part of the city’s recycled water system, according to Fortune.

The order also lands amid federal debate over AI regulation. Fortune reported that President Donald Trump has warned states against regulating AI and has separately directed federal agencies to develop a plan for a sovereign wealth fund intended to build long-term national wealth, an idea also backed by Sen. Bernie Sanders.

Public skepticism has grown alongside the buildout. A Reuters/Ipsos poll found that one in three Americans approve of the current pace of data center construction and that most oppose having one built in their own community. Fortune also cited polling showing Americans would more often choose to live near a nuclear power plant than a data center.

This story draws on original reporting from Fortune.