A Hyperscale Pause – July 27, 2026

Community opposition to data center development is growing–but is calling a halt the solution?

Gov. Kathy Hochul signed an executive order earlier this month establishing New York as the first state to impose a moratorium on hyperscale data center construction. The order pauses environmental permits for a year while the state develops a regulatory framework. Hochul has also asked Empire State Development, the state’s economic development arm, to issue a Community Investment Framework, providing guidance to local entities to help them negotiate community benefits as part of any large-scale data center deal. 

“Existing facilities will continue to operate,” Hochul wrote in an op-ed appearing in the Wall Street Journal. “Smaller projects can move forward. The pause will be lifted when we have clearer rules in place to protect New Yorkers. What we’re pausing isn’t innovation. It’s the rush to build first and answer questions later.” 

While New York is the first state to call a pause on data center development, it isn’t the first U.S. jurisdiction to do so. More than 75 municipalities have enacted moratoriums, an estimated $130 billion of projects were stalled by community opposition in the first quarter of 2026 alone, and datacenterbans.com reported that 18 states have either enacted or are considering legislation to curb development. Arizona’s legislature, for example, recently imposed a three-year pause on sales tax exemption applications for new data centers. Conversely, other states have failed to enact legislation, with Michigan Gov. Gretchen Whitmer calling a moratorium “an automatic non-starter.” 

Behind the pushback are several tangible, albeit not insurmountable, concerns, ranging from environmental worries to 24/7 noise levels. A key sticking point is a pocketbook issue: utility costs. In New York State, for instance, a study by the fiscally conservative Empire Center for Public Policy shows that energy bills have increased by 68% since 2019. 

“In reality, these rises can be attributed to a range of factors beyond data centers,” write analysts with data center market intelligence provider DC Byte. “Rising electricity prices reflect a convergence of long-standing systemic weaknesses, including inefficient infrastructure planning, misaligned utility incentives, slow permitting, supply chain blockages, inflation, and reactive climate risk management. Increasing electricity demand, or load growth, including from data centers, merely accelerates these pressures. 

“Nevertheless, despite many data center operators shouldering rising costs themselves and working hard to change perceptions, concerns continue to be raised,” the analysts write. 

Spectrum News Syracuse reported that in public opinion polling conducted by the Empire Center, 43% of 600 voters likely to vote in the 2026 general election want data centers to build their own power sources rather than draw electricity from the grid. Sixteen percent would allow partial grid access if data centers invested in local grid upgrades, and one-third don’t want data centers under any circumstances. 

Readers of the digital infrastructure coverage provided by Connect CRE and its sister websites, Connect Canada CRE and Connect Money, know that hyperscale data center developers and operators are mindful of the impact their facilities can make on local and regional power grids. One solution large-scale operators have implemented is providing their own power. 

It’s an initiative supported by the White House. Last week, President Trump reaffirmed the non-binding Ratepayer Protection Pledge he introduced in March. “We are the hottest in the world,” Trump said. “At the same time, we know the data centers and AI are dramatically increasing the demand for electricity. It’s only fair that the cost of building the new infrastructure required to meet this demand should be borne by the corporation themselves and not by the American consumers.” 

Meanwhile, hyperscale projects continue to move forward as demand for artificial intelligence continues to climb, although not without lawsuits filed to stop them. Datacenterbans.com concluded, “The overall trajectory points toward incremental ratepayer regulation, a widening wave of local pauses, and mounting utility-cost and environmental litigation — even as frontier AI construction sets new records.” In other words, there are no easy answers here, and that includes simply calling a halt until everything has been figured out.