On July 14, 2026, Governor Kathy Hochul issued an executive order (EO or Order) pausing the issuance of discretionary permits and similar forms of approval for the construction or expansion of data centers by the Department of Environmental Conservation (DEC) until the Department of Public Service (DPS) submits its report of the final Generic Environmental Impact Statement (GEIS) and associated findings statement. The Order responds to increasing scrutiny of the impacts associated with large-scale data center development. While the Order does not prohibit data center development, it signals a more structured regulatory framework for projects using 50 megawatts or more of electric power because of their potential to impose significant demands on the electric grid and natural resources.
For data center developers, utilities, municipalities, and large energy users, the Order identifies several issues likely to affect siting, permitting, interconnection strategy, and project economics in New York.
Note that the EO is separate from the data center moratorium bill passed by the Legislature, on which the Governor has not yet acted.
Data Center Discretionary Permitting Pause and GEIS
DPS has an open proceeding examining the projected electric demand from data centers and other large loads and how related grid costs should be allocated. The timeline in that proceeding requires a technical conference before Dec. 31, 2026, and a DPS Staff White Paper providing a comprehensive proposal to address the range of issues associated with large-load interconnection by Feb. 12, 2027. The EO directs DPS to examine impacts associated with the interconnection of data centers to the electric distribution network through the existing proceeding, and further directs DPS to solicit public comments and prepare a GEIS in accordance with the State Environmental Quality Review Act (SEQRA) to assess the potential environmental impacts of data center construction and operation in the state, including energy demand, water use and quality, air quality, disproportionate impacts on disadvantaged communities, and noise levels.
A key nuance is that, until the GEIS and findings statement are completed, DEC must hold in abeyance applications for discretionary state permits related to the construction or expansion of data centers that were not deemed complete before the Order was issued. The pause applies to DEC permits and approvals and does not extend to local government permits.
The Order excludes facilities primarily used for:
- Research, including quantum computing and biomedical research.
- Higher education research.
- Medical care.
- Empire AI consortium activities.
Community Investment Framework
The EO directs Empire State Development (ESD) to develop a Community Investment Framework within 60 days to assist local governments in negotiating benefits from data center projects. ESD has published a policy outline for the Community Investment Framework that would establish one of the most significant community-benefit frameworks for data centers in the country. Rather than focusing solely on jobs and tax revenue, New York is proposing that data center developers make substantial investments in infrastructure, housing, workforce development, public services, and other host-community priorities, with a suggested contribution level of $1 million per MW of power demand. ESD is soliciting public comments on the policy outline for 30 days.
The completed framework will be released by mid-September.
Grid Infrastructure Funding
The Order directs DPS to consider creating a mechanism, referred to as the New York Grid Acceleration Fund, supported by data center contributions, to help finance electric grid investments. DPS is directed to consider how data center contributions to the fund should be structured and allocated, how to coordinate with utilities and stakeholders to identify necessary grid improvements, and whether fund components should protect ratepayers from stranded costs caused by project delays, scope changes, or cancellations. DPS may also evaluate approaches that would require data centers to fund dedicated clean generation and/or battery storage, including customer-sited distributed energy resources, to the greatest extent feasible.
Interconnection, Reliability, and Cost Allocation
Within 60 days, DPS must establish a Data Center Interconnection Working Group to examine:
- Grid interconnection procedures.
- Reliability impacts.
- Cost allocation methodologies.
- Treatment of network upgrade and resource adequacy costs associated with large new loads.
DPS must convene the state’s transmission owners to review whether their practices for studying data center and other large-load impacts are sufficient to estimate and manage network upgrade and supply-related costs, and must report to the Commission within 90 days. Data centers may also be subject to future service classifications and requirements developed by DPS and established by the Public Service Commission.
Water Withdrawal Review and Report
The Order directs DEC to assess whether changes to its water withdrawal regulations, policies, reporting, or guidance under 6 NYCRR Parts 601 and 602 are necessary or appropriate to address the water demands of large users, including data centers, and to report its findings and any recommended regulatory, policy, or guidance actions within 12 months.
Takeaways
The Order reflects New York’s regulatory priorities with respect to data center development in the state. It pauses discretionary DEC environmental permitting to afford regulators time to conduct generic environmental review of concerns associated with data centers, including energy and water use, without creating a hard deadline for completion of that review. It also seeks to ensure that data center development does not result in increased costs for other ratepayers and establishes a framework for developing a formalized regulatory structure for environmental impact review. But while this action positions the governor as a national leader on the issue, it also threatens to chill development in New York and drive investment elsewhere. Whether state agencies will be able to meet the timelines established for completing the generic review and adopting a formal review process remains to be seen. Developers and energy users should monitor the DPS proceeding, forthcoming guidance on the Grid Acceleration Fund, and DEC’s water withdrawal review, and should assess the scope and applicability of the permitting pause. These developments may affect project economics, interconnection strategy, siting processes, community engagement, and permitting schedules.