At the end of the 2026 legislative session, the New York State Assembly and Senate passed the “Responsible Data Center Development Act” (S.10642/A.11560), an expansive framework to regulate the development of data centers in the state. The bill also included a moratorium on the issuance of new permits for data centers for at least a year. On July 14th, Governor Hochul issued Executive Order 62 (EO 62), a narrower framework imposing a similar moratorium. Governor Hochul is holding out the moratorium as a one-year pause. The legislation has not been delivered to or acted upon by the Governor yet (and it is unclear what her position is), but EO 62 is effective immediately, creating the first such moratorium in the country.
The Governor’s press release addressed balancing the incredible increase in demand for the construction of data centers (nearly 12 gigawatts of data center load requests are currently pending in the NYISO interconnection queue) with her concerns regarding the impact such facilities have on the state’s power grid, water supply, environment, and local communities. In particular, the Governor expressed that costs associated with serving new data center loads should not be shifted to existing New York utility customers. The Governor also announced her intention to pursue legislation to repeal sales tax exemptions for data centers across the state.
The moratorium applies to the issuance of discretionary permits, approvals, licenses, and similar authorizations by the Department of Environmental Conservation related to the construction or expansion of data centers 50 megawatts or more in size but does not generally apply to approvals “deemed complete” by DEC before July 14th. Moreover, it does not apply to approvals at the local level.
EO 62 exempts facilities that are “primarily used for manufacturing, research (including but not limited to quantum computing research or biomedical research), education (including but not limited to such facilities used by accredited colleges and universities in New York State, to the extent such colleges and universities are engaging in academic research, and the Empire AI consortium, or the institute, as defined in section three hundred sixty-one of the Economic Development Law), or the provision of medical care.”
EO 62 imposes the moratorium until the Department of Public Service (“DPS”) submits a Generic Environmental Impact Statement and associated findings. This submission will include a formal public comment and hearing process, and it will “assess the potential environmental impacts of the construction and operation of data centers in the State, including energy demand, water use and quality, air quality, disproportionate impacts on disadvantaged communities, and noise levels.” This will be folded into an existing proceeding before DPS related to the creation of new rates and interconnection rules for data centers to ensure that these facilities do not worsen affordability concerns for New Yorkers. The Governor has called this effort the “Energize New York” initiative.
As a part of this, the Order also directs DPS to consider the development of a New York Grid Acceleration Fund to require data centers to invest in the state’s grid infrastructure. The Fund could require data centers to make upfront capital contributions for this purpose. It could also require developers to fund an insurance pool, to support the procurement of new clean energy supply, and participate in demand response programs. DPS will also take into consideration the development of a process to identify critical infrastructure needs. DPS will also form a Data Center Interconnection Working group within 60 days to address interconnection costs and issues related to large load new customers, and DPS, with the Public Service Commission, may develop new service classifications for data centers.
Another component of EO 62 directs Empire State Development (“ESD”) – within 60 days – to create a Community Investment Framework to “assist localities across New York in analyzing and attaining local economic benefits and mitigating potential negative effects of serving as a host community for a data center.” The framework will provide local entities guidance regarding negotiations with data centers related to the following:
- Creation and maintenance of a community investment fund into which data center developers or operators provide capital that can be used for energy affordability efforts and enhancements to public services such as child care, K-12 programming, or public infrastructure.
- Investments in local infrastructure such as local energy distribution systems, broadband or irrigation systems or wastewater treatment plants
- Establishment of frameworks that provide organized labor a seat at the table and prioritize prevailing wage standards and project labor agreements for data center construction, local hiring, apprenticeships and workforce development to maximize economic benefits.
- Transparency through reporting requirements or other means so that communities understand many of the key economic metrics associated with data center development.
ESD has provided additional clarity on the intention and design of this framework through a Policy Outline for the New York State Data Center Community Investment Framework. The Community Investment Framework is intended to provide local governments and developers with a consistent basis for negotiating community benefits. The Framework will include (1) good neighbor commitments, (2) labor commitments; (3) community investment fund to support items like public infrastructure improvements, community anchor institutions, housing initiatives, workforce development and training, childcare facilities, broadband expansion, public safety initiatives, school facility and educational enhancements, blight remediation, and other energy affordability and community development priorities; and (4) transparency. Under the policy outline, ESD proposes that the baseline for negotiations will be a $1 million in data center contribution per 1 megawatt of anticipated utility demand per project. ESD is accepting comments on the community investment framework for the next 30 days.
EO 62 also directs DEC to create a report analyzing whether any new or amended policies should
be implemented regarding water withdrawal program requirements for large use customers, including data centers. DEC must deliver this report within 12 months.
The Governor’s Executive Order differs from S.10642/A.11560 in several material respects. That legislation creates a moratorium at the state and local level for at least a year’s time and does not distinguish between discretionary and ministerial approvals. It applies to data centers larger than 20 megawatts (as opposed to EO 62’s 50MW definition). It also requires a detailed local hearing process for the construction of data centers. Finally, the legislation includes firm renewable energy standards that data centers must meet, with at least 1/3 of its electricity derived from renewable sources between 2030-2034, 2/3 of its electricity from renewable energy between 2035-2039, and 90% of its electricity from renewable energy from 2040 and beyond (as well as addressing the creation of energy consumption and efficiency goals).
S.10642/A.11560 has not yet been delivered to the Governor, and it is unclear her position on this much broader piece of legislation. The bill must be sent to the Governor to review before December 31, 2026. Once sent, the Governor will have 10 days to sign the bill into law, negotiate amendments to the bill, or veto the bill. This summary provides a high-level summary of EO 62 and provisions in S.10642/A.11560.
If you would like to discuss any of this in additional detail, or if you have additional questions about this update, please reach out to a member of the Harter Secrest & Emery Environmental or Government Affairs practice groups for assistance.