Data Center Moratorium On Gov. Hochul's Desk Puts Dozens Of Projects In Crosshairs

New York has $10B of data center projects in the works, set to be delivered by 2030. Much of that investment could be stopped dead in its tracks with one stroke of a pen. 

The state legislature has passed what would be a first-in-the-nation data center moratorium, which would halt permit approvals for at least a year. It now sits on Gov. Kathy Hochul’s desk.

“The No. 1 critical issue is these all need to be built as quickly as possible,” Holland & Knight partner Graham Coates said. “Everyone is waiting with bated breath.”

Hochul has spent years subsidizing artificial intelligence, supercomputing and advanced technology infrastructure, but in that time, an opposition movement has been growing in communities across the country. The governor now has until the end of the year to decide if she will continue on her quest for economic growth or pull back to appease uneasy locals — a choice she weighs while up for reelection. 

A spokesperson for Hochul's office said she will review the bill but didn't provide additional insights into what her verdict may be.

Under Hochul, New York has aimed to establish itself as “a global chipmaking superpower,” hardware that is central to the data center build-out. 

In 2022, she signed the Green CHIPS bill to provide up to $10B in tax credits for semiconductor manufacturing projects over 20 years. The next year, she announced a $10B partnership to build a nanotechnology research facility in Albany. In last year's executive budget, Hochul included $90M in capital funding to advance AI research. 

Those investments have attracted data center developers looking to capitalize on a growing cluster of research, manufacturing and energy sources.

As of May, there were 51 large-load projects — which include data centers as well as other high-energy users like advanced manufacturing — seeking to connect to the state’s electric system by 2030, according to New York Independent System Operator. New demand totaled 12,670 megawatts, or more than twice New York City's consumption.

The vast majority of those projects are still in the approval process. Just one was under construction.

For comparison, NYISO has connected 106 projects to the grid, totaling approximately 14 gigawatts, since 2019. 

Several developments in the pipeline are considered to be hyperscale facilities, including the 500 MW Science, Technology and Advanced Manufacturing Park in Genesee County, a 300 MW data center in Onondaga County and the redevelopment of a Cayuga coal-fired power plant to a 138 MW campus that could scale up to 400 MW. 

The state moratorium, dubbed the Responsible Data Center Development Act, would halt new permits for data centers with a peak load of over 20 MW. Projects of that size would also become subject to a new electric and water rate class and be required to provide community benefits. 

“Twenty megawatts is actually a pretty low bar and would likely capture pretty much every data center development,” said Coates, who specializes in energy, environmental and public utilities. 

But the legislation goes even further. New energy-efficiency goals and labor standards, including prevailing wage requirements, would be imposed on data centers with a peak load of over 5 MW.

Plus, moving forward any project would require a public hearing within the community. 

During the moratorium period, the Department of Environmental Conservation would conduct an environmental impact report on data centers throughout the state to evaluate impacts like energy and water usage, pollution, and electronic waste.

Greenberg Glusker real estate and land use partner Sheri Bonstelle said in an email the proposed one-year pause “provides a reasonable break” 

“While everyone acknowledges the growth of AI, and the need for data centers, it is important to minimize the environmental impact, such as significant use of water and electricity, on residential communities,” Bonstelle said. “[The legislation] will give a voice to the residents to ensure that their neighborhoods are protected and preserved.”

Grid constraints and water usage have been at the forefront of concerns for residents. Despite being far from one of the leading data center markets, New York has the second-highest commercial electricity rate in North America, at 14 cents per kilowatt-hour, according to JLL. 

Opponents fear that more data centers coming online would further push up costs and that new developments would increase pollution.

But unlike many states competing for data centers on cheap power alone, New York has already been building a model in which AI infrastructure grows alongside clean energy. Multiple nuclear and hydroelectric projects are already underway — some of which have been backed by Hochul.

As of the second half of 2025, JLL estimated that at least 70% of New York’s electricity will come from renewables, in part due to investments by data center developers. 

Proposed by Stream Data Centers, STAMP is designed to be powered by clean energy created by Niagara Falls and includes plans for water recycling and wastewater treatment. The Cayuga power plant project, developed by TeraWulf, will build upon existing infrastructure and includes plans for an adjacent solar farm and a battery storage system. 

Hochul instructed the New York State Public Service Commission in February to review the interconnection processes, cost-allocation mechanisms and tariff structures relating to the integration of large energy users, especially data centers. The initiative seeks to make it easier for developers to connect to the grid, while keeping costs down for households.

“New York will continue to lead in attracting new technologies, but we must also grow responsibly, ensuring affordability comes first and those profiting from data growth pay their share,” Hochul said in a statement at the time.

Still, the conversation around data centers has become so contentious that some politicians have been forced to resign after coming out in support of the developments. 

An official in Prince William County, Virginia, did so in 2022 after it was revealed that he agreed to sell his home to data center developers. Another, who opposed regulation and moratorium efforts in Pulaski County, Arkansas, similarly decided to step away from a role he held for more than 20 years last week.

Earlier this year, the Saline Township, Michigan, treasurer quit after receiving death threats over a 1.4 GW data center project for Oracle and OpenAI.

In addition to economic growth, data centers have become a national security issue — adding another layer of complexity to lawmakers’ approach to the issue. On Tuesday, the Department of Justice intervened in a lawsuit against Elon Musk’s data centers near Memphis, Tennessee, arguing that shutting down the development would put the country’s military operations at risk.

Foreign powers, especially China and Russia, investing state resources to expand data centers has further put pressure on the federal government to compete in development.

Jason Bell, vice president in JLL’s Technology Services Group, called data centers “the plumbing” needed to support technological and manufacturing growth. 

“If we want to support the largest technology transformation of our lifetime, this has to happen,” Bell said. “If we prohibit the plumbing, we're gonna have some major issues.”

He added that he thinks the public is misinformed about resource consumption, sustainability and costs. 

Technologies have evolved to create closed-loop cooling systems that eliminate water needs. Direct power purchase agreements are becoming increasingly common to reduce strain on residential utilities. And battery energy storage systems are advancing to combat overheating and cut power costs.

“This is an industry that has been around for 15-plus years, so there's a mature look and feel towards the overall well-being of the community, which is not recognized,” Bell said. “We need to do a better job of basically [telling] the public of all the benefits.”