NYS Gov. Hochul’s data center moratorium includes a new model for funding AI infrastructure 

“New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too,” said Gov. Kathy Hochul in a statement.

Hochul signed the executive order Tuesday morning, establishing the one-year moratorium in state environmental permitting in response to the growing public concern over rising utility costs and demand for energy and water resources. The temporary pause applies to data centers requiring 50 megawatts or more of power while the state develops a new regulatory framework. Data center projects that have already received permits are exempt from the order.

Also in the order is a special carveout: The creation of the New York Grid Acceleration Fund, a proposed fund that would require data centers to invest in the state’s aging grid infrastructure and energy needs. Hochul, in signing the order, directed the Department of Public Service (DPS) to consider creating the fund to help support the procurement of a clean energy supply and establish an insurance pool to protect against large loads. 

Hochul tasked DPS with several projects including the start of the Energize NY proceeding where data centers pay more for their energy or supply their own, keeping energy more affordable for New Yorkers. DPS must also develop an Environmental Impact Statement (EIS) to ensure these data centers are held to “consistent statewide standards” while evaluating their effects on water resources, electricity demand, land use, pollution, and other potential environmental impacts. 

“New York has always been at the forefront of innovation and change but we’ve also always guaranteed that New Yorkers benefit,” said Hochul in her announcement of the order Tuesday morning. “As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it’s my responsibility to take action and lead.” 

A rising tide against data centers

New York’s move comes as data center development accelerates nationwide and lawmakers in more than a dozen states consider similar restrictions—but none have so far issued a moratorium on all construction.

Maine Gov. Janet Mills agreed with a moratorium bill that passed her desk but ultimately didn’t sign it since it didn’t include an exemption for a $550 million data center redevelopment of a shuttered paper mill. Last month, Arizona Gov. Katie Hobbs signed a budget bill that imposes a three-year moratorium on new data center sales tax exemptions. 

Smaller cities have seen these effects like in Cheyenne, Wyoming where officials said Meta’s data center construction was responsible for the contamination of part of the town’s recycled water system.  

In Hochul’s executive order Tuesday, the governor directed Empire State Development to issue a Community Investment Framework within 60 days to help local governments negotiate benefits such as infrastructure improvements, workforce development, child care investments, and direct financial support. The framework will also include a formula to help communities figure out where to start investment negotiations.

The country’s first statement moratorium comes after President Donald Trump warned states against regulating AI, raising questions around how governments should capture the value created by the technology. Trump has separately pushed for a federal sovereign wealth fund, directing federal agencies to develop a plan for an investment vehicle designed to build long-term national wealth. He joins Sen. Bernie Sanders in that call.

While Trump’s proposal extends beyond AI, Hochul’s proposed New York Grid Acceleration Fund reflects a similar idea at the state level by requiring large data centers to invest in grid upgrades and other infrastructure needs. 

According to a recent Reuters/Ipsos poll, one-in-three Americans approve of the speed of data-center construction and most oppose building one in their own community. A recent poll also showed Americans overwhelmingly would choose to live near nuclear power plants rather than a data center. 

The AI boom isn’t slowing, but New York’s move suggests its infrastructure phase is entering a new era, where expansion comes with conditions, and resistance is becoming policy.