New York’s First-in-the-Nation Data Center Moratorium May Not Be the Last

New York State’s one-year moratorium on construction of new data centers, announced Tuesday (July 14) by Gov. Kathy Hochul, could prove a turning point for U.S. development of the facilities, according to an analysis by Foley & Lardner. President Donald Trump wants to stop it in its tracks.

“New York State has made a terrible decision,” Trump wrote in a Wednesday (July 15) Truth Social post. “Data Centers are tremendous WINS for the States and Communities that are lucky enough to get them. New York should change its Policy, IMMEDIATELY.”

The moratorium, unveiled in an executive order, is the first state-wide ban on new data center construction in the nation. The Maine legislature previously passed a state-wide ban but the bill was vetoed by Gov. Janet Mills. According to law firm Foley & Lardner, Minnesota, Michigan, Pennsylvania, South Carolina, New Hampshire and Virginia are currently considering similar legislation.

“If additional states follow suit, New York’s decision could become the beginning of a broader regulatory trend rather than an isolated event,” the law firm’s analysis said.

Hochul’s executive order directed state officials to develop a Generic Environmental Impact Statement to ensure that new data centers coming online are held to “consistent standards,” as well as examine the ​potential environmental impacts of the construction and operation of data centers in the state, per Reuters.

“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,” Hochul said in announcing the ban, adding she would ​also pursue legislation to repeal sales tax exemptions for large data centers.

Such a change could “significantly affect project economics,” Foley & Lardner said.

In his Truth Social post, Trump warned that the ban could cause the U.S. “to lose Data Centers, AI, and all of this incredible new Technology, to China, and other countries!”

Hochul fired back in her own post on X. “We hit pause because the communities powering AI should share in its success,” she wrote. “Maybe that’s a novel concept in Washington. We call it doing our job.”

According to Foley & Lardner, the immediate impact of the New York moratorium is likely to be minimal.

“Despite the attention surrounding the moratorium, New York has not been among the most active markets for new hyperscale data center development in recent years. As a result, the direct effect on overall U.S. data center growth may be relatively modest,” the firm wrote. Nevertheless, the analysis added, “industry participants—from hyperscalers and AI firms to developers and investors—are likely viewing the development as an important signal. The greater concern may not be the New York market itself, but whether other jurisdictions adopt similar policies that could influence future site selection decisions and infrastructure planning.”

Looking ahead, Foley & Lardner wrote, “New York’s moratorium may not dramatically alter the trajectory of U.S. data center growth on its own, but it represents an important milestone in the evolving regulatory landscape surrounding AI infrastructure. As states balance economic development opportunities with energy, environmental and community concerns, industry stakeholders should expect heightened scrutiny of future data center projects.”