Artificial intelligence has rapidly transformed from a futuristic concept into an everyday reality. Every AI search, cloud-based application, streaming service, and online transaction depends on one thing that most people never see: data centers. These facilities, often warehouse-sized buildings filled with thousands of computer servers, have become essential infrastructure for the digital economy. As demand for computing power has accelerated, so has the demand for new data center development.
New York recently responded to that trend in an unprecedented way. On July 14, 2026, Governor Kathy Hochul issued Executive Order No. 62, establishing what is believed to be the first statewide moratorium in the United States specifically targeting certain new data center projects while the state develops a more comprehensive regulatory framework.
The Executive Order is noteworthy not only because it temporarily pauses certain large-scale data center projects while New York develops a comprehensive regulatory framework. But also because it signals that the state views these facilities as presenting planning and infrastructure challenges distinct from traditional commercial or industrial development.
Why Data Centers Have Become a Major Land Use Issue
Modern data centers are unlike many conventional commercial developments. While they may generate relatively little daily traffic or noise compared to shopping centers or manufacturing facilities, they often require extraordinary amounts of electricity, substantial water supplies for cooling, extensive utility infrastructure, and large sites capable of accommodating highly specialized buildings.
The Executive Order cites the rapid growth in demand for artificial intelligence, cloud computing, and digital services as driving unprecedented interest in data center development throughout New York. According to the Order, nearly 12 gigawatts of data center load requests were pending in the New York Independent System Operator’s interconnection queue as of May 2026—a level of demand that has raised concerns about electric system capacity and infrastructure planning.
Large data centers can also present issues familiar to local land use boards. Depending on the project, municipalities may be asked to evaluate impacts involving:
- Electric transmission and utility infrastructure;
- Water consumption and wastewater capacity;
- Backup power generation;
- Building size and visual character;
- Lighting and noise;
- Stormwater management;
- Environmental review under SEQRA; and
- Compatibility with surrounding land uses.
As more communities receive proposals for these facilities, local officials increasingly face questions that existing zoning regulations were not necessarily designed to answer.
What Does the Moratorium Actually Do?
The Executive Order is not a permanent prohibition on data centers. Instead, it temporarily suspends approvals for projects meeting the criteria established by the Order while multiple state agencies study the issue and recommend a regulatory framework.
The Executive Order directs several state agencies, including the Department of Environmental Conservation (DEC), the Department of Public Service (DPS), and Empire State Development (ESD), to evaluate issues such as:
- Electric grid impacts;
- Water use and water conservation;
- Environmental impacts;
- Community benefits;
- Infrastructure planning; and
- Appropriate standards for future development.
The agencies are also directed to consult with other entities, including NYSERDA, the Department of Health, the Long Island Power Authority, and the New York Independent System Operator.
Rather than creating an entirely new permitting system immediately, the state is using the moratorium period to determine what that future framework should look like.
Why Is This Significant?
New York has long regulated land use primarily through local governments, with municipalities exercising broad authority over zoning and site plan review. Environmental review under the State Environmental Quality Review Act (SEQRA), together with various state permits, already provides multiple layers of oversight for major development projects.
The Executive Order reflects the state’s conclusion that existing regulatory tools may not adequately address the cumulative impacts associated with large-scale data center development.
Specifically, the Order identifies concerns regarding statewide electric demand, infrastructure investment, water availability, utility planning, and the possibility that utilities could invest in infrastructure for projects that ultimately are never built.
Rather than focusing solely on individual projects, the state is evaluating the cumulative impacts of large-scale data center development on energy, water, and infrastructure systems. As a result, New York is signaling that data centers may warrant specialized statewide standards.
What Does This Mean for Developers?
For developers pursuing qualifying projects, the most immediate consequence is uncertainty.
Projects subject to the moratorium may experience delays while the state completes its review and develops permanent standards. Developers considering future investments in New York will likely monitor the rulemaking process closely, since the eventual standards could influence project design, utility planning, environmental review, and site selection.
At the same time, the Executive Order may provide greater predictability over the long term. Rather than evaluating projects under a patchwork of evolving expectations, developers may ultimately benefit from clearer statewide guidance regarding issues such as energy sourcing, infrastructure responsibilities, and environmental performance.
What Does This Mean for Municipalities?
Municipalities may find themselves in a unique position during the moratorium.
Many communities have already begun considering whether their zoning codes adequately address data center development. Some local governments have adopted temporary moratoria or initiated zoning updates in response to increasing interest in these projects.
The state’s Executive Order does not eliminate the importance of local land use authority. Instead, municipalities may use the moratorium period to evaluate whether their zoning regulations clearly address issues such as permitted locations, building design, buffering, infrastructure requirements, emergency power systems, and compatibility with surrounding neighborhoods.
Local officials should also closely monitor whatever statewide standards ultimately emerge, as those standards could influence future local review processes.
What Can Businesses and Residents Expect?
Although few people interact directly with data centers, demand for digital infrastructure means more New York communities are likely to see proposals for these facilities in the coming years. While the moratorium is in effect, businesses considering data center investments or property acquisitions should account for the possibility of evolving state requirements and project timelines.
For residents, the Executive Order does not immediately change local zoning or property rights. Instead, it provides the state with an opportunity to evaluate how future data center projects should be planned and reviewed. The regulatory framework that ultimately emerges could influence where these facilities are located, how they are designed, and what infrastructure and environmental protections accompany their development.
Looking Ahead
Executive Order No. 62 represents more than a temporary pause on certain data center projects—it reflects New York’s recognition that the rapid growth of artificial intelligence and cloud computing presents unique land use, environmental, and infrastructure challenges. Whether the state ultimately adopts new permitting requirements, siting standards, or utility planning measures remains to be seen, but developers, municipalities, utilities, businesses, and residents should closely monitor the agencies’ recommendations. The framework developed over the coming months is likely to shape how large-scale data centers are planned and approved in New York for years to come.
Jacob H. Zoghlin is a Partner in Underberg & Kessler LLP’s Litigation department and chairs the firm’s Environmental & Energy and Municipal Law practice groups. His practice focuses on environmental, land use, energy, and municipal law. He regularly represents towns, developers, and community members in matters involving SEQRA, zoning, permitting, and land use litigation. You can reach Jacob at (585) 258-2834 or jzoghlin@underbergkessler.com.
