The order exempts data centers that already hold state approvals and smaller facilities serving financial services, hospitals, and universities. Hochul justified the move by citing threats to utility rates, natural resource depletion, and community stability. The executive order also requires future data centers to contribute to a state fund for electrical grid improvements. The threshold of 50 megawatts represents a compromise from the legislature's original proposal of 20 megawatts in the Responsible Data Center Development Act.
Attorneys should monitor this closely. The moratorium creates immediate uncertainty for over 20 proposed projects statewide and signals a potential shift in how states regulate AI infrastructure. Similar legislation is advancing in Georgia, Maryland, Vermont, and Virginia, suggesting a bipartisan movement to slow data center expansion. The regulatory framework New York develops over the next year will likely influence how other jurisdictions approach the same tension: balancing AI development against environmental and energy concerns. The ban also raises questions about whether state-level restrictions will survive legal challenges from affected tech companies or federal preemption arguments.