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New York has enacted the first statewide data center moratorium in the US after Gov. Kathy Hochul signed an executive order halting the issuance of new permits.
The executive orderthat Hochul signed Tuesday morning, directs the state Department of Environmental Conservation to halt the distribution of environmental permits to hyperscale data centers for up to a year.
While that freeze is in place, Hochul directed the state Department of Public Service to create a generic Environmental Impact Statement for data centers, which aims to hold developing data centers to consistent standards, according to the announcement.
As it stands, data centers that have received all the necessary permissions will not be shut down. The moratorium applies to projects that use 50 megawatts of power or more and still require DEC permit approval.
“As data center development threatens to increase utility bills, deplete our natural resources and create uncertainty for New Yorkers, it is my responsibility to take action and lead,” Hochul said in a news release detailing the order.
The moratorium is another step in the state government’s ongoing debate over what to do with data centres. The state Legislature last month approved a broader scope bill that would apply to constructions of 20 megawatts or more, but it has not yet been sent to Hochul’s desk, according to Reuters.
Builder reactions
Construction organizations denounced the moratorium.
“It effectively closes the door on these projects, and it sends a hell of a message to people who want to make big investments in New York that maybe they should look twice,” Mike Elmendorf, president and CEO of the Associated General Contractors of New York State, told Construction Dive.
Carlo Scissura, president and CEO of the New York Building Congress, said the move will wreak economic havoc on New York.
“This data center moratorium will harm our state’s economy, its workforce and our competitive position in tomorrow’s industries – plain and simple,” Sciccura said in a statement emailed to Construction Dive. “And our message is simple: A blanket moratorium is the wrong tool for a real-world problem that requires careful consideration.”
Elmendorf added that the moratorium puts members of his association who have taken on data center work but not yet received permits in a difficult spot.
“These are huge, complicated projects,” Elmendorf said. “Not only do you see that opportunity very likely going away, but these companies have stopped looking for other opportunities because they’ve been getting ready to build a data center. So it’s very disappointing.”
Brian Sampson, president of the Empire State Chapter of Associated Builders and Contractors, said the development puts his state at a competitive disadvantage.
“This moratorium is another missed opportunity for New York. Data centers create high-quality construction jobs, strengthen our economy, and attract the kind of long-term private investment that all states should be competing for,” Sampson wrote in an email to Construction Dive. “Instead, New York has chosen to hit the pause button, sending another signal that companies looking to invest and grow may be better off doing so elsewhere. This is the wrong message at the wrong time.”
Data center projects have been the golden goose of the construction industry in 2026. Over the past year, these megaprojects have increased while most other areas of the construction industry have faltered. Outside of the data centers themselves, utility and specialist companies have also seen success creating the related infrastructure for these mega-projects.
Community retreat
While data centers have been a boon for the construction industry, communities across the country have he fought fiercely against the rise of the hyperscaler in their yards. Questions about access and price of energy, drinking water and other impacts on the community have dominated the debates.
“Technology should improve our lives, not pollute our water, strain our energy grid or raise our utility bills,” New York State Senator Kristen Gonzalez said in Hochul’s press release.
Indeed, access to energy in New York has become a major issue. The state’s aging power grid, along with already strict environmental policies, has it made building the data center a bit difficult in the state
Hochul also directed DPS to consider a mechanism to offset higher utility costs by having data centers pay for network improvements, participate in demand response programs, support clean energy and establish an insurance pool to which developers would contribute.
This approach would echo actions that some construction professionals have already called for to avoid the push for moratoriums. Earlier this year, panelists at the New York Build conference recommended that data center projects develop a community benefits plan to help ease public repression.
In a precursor to reactions to today’s news, the panelists saw then that blanket moratoriums could throw the baby out with the bathwater.
“When you say no, the industry will move on,” Rob LoBuono, principal of San Francisco-based design firm Gensler, said during the panel. “We should say yes, but with the right requirements.”
