“The Big Money Show” panelists unpack New York Governor Kathy Hochul’s concerns about the impact of data centers.
New York Gov. Cathy Hochul on Tuesday issued the nation’s first statewide ban on new AI data centers, a sweeping measure that critics have long warned could draw tech investment and jobs out of New York.
The moratorium, signed by Democrats as an executive order, will be in effect for up to a year as demand for large data centers surges across the state.
Hochul said the initiative requires New Yorkers to shoulder more of the infrastructure costs generated by large data centers and is aimed at protecting New Yorkers from rising utility costs and other financial risks associated with the industry’s rapid expansion.
“At a time when data center development threatens to raise utility bills, deplete natural resources, and create uncertainty for New Yorkers, it is my responsibility to take action and lead the way,” Hochul said at a signing and press conference announcing the moratorium on Tuesday.
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Governor Kathy Hochul has issued New York State’s first-ever statewide moratorium on new hyperscale data centers. (Michael Nagle/Bloomberg via Getty Images, File/Getty Images)
Critics have long warned that the measure could divert billions of dollars in AI infrastructure investment to competing states, depriving New York communities of construction jobs, tax revenue and the kinds of land deals that have recently brought windfalls to rural landowners in states like Pennsylvania.
“Governor Hochul’s statewide data center moratorium will ensure that these investments, jobs, and economic activity will flow elsewhere and not to New York,” Dan Diorio, the Data Center Coalition’s executive vice president of state policy and government, said in a statement to Data Center Knowledge.
Hochul’s plan would require future data center developers to generate their own electricity or pay higher rates to avoid passing on the costs of major grid upgrades to residents.
The state also proposes creating a fund that would require developers to help finance the replacement of New York’s aging power grid, invest in clean energy projects and contribute to insurance to protect consumers.
Additionally, Hochul is pushing legislation that would eliminate the sales tax exemption for large data centers.
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Servers are lined up in a large data center in Texas. (Paul Moseley/Fort Worth Star-Telegram/Tribune News Service, File/Getty Images)
Local governments will also receive a state-developed handbook designed to help communities negotiate with technology companies that want to build in their neighborhoods.
However, the announcement comes as some communities are reportedly benefiting from the AI infrastructure boom.
According to the Wall Street Journal, 96 Pennsylvania families received a combined total of more than $500 million after selling about 17,000 acres of rural land to QTS, a data center developer owned by Blackstone. The families sold their land for an average of about $330,000 per acre, and each received an average of about $5.5 million.
Data center in Ashburn, Virginia. (Lexi Critchett/Bloomberg, File/Getty Images)
During the one-year moratorium, New York State will prepare a General Environmental Impact Statement (GEIS) to establish statewide standards for future AI data center development.
The study will examine issues such as electricity demand, grid impacts, water use and quality, air quality, and other potential environmental impacts of construction.
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Once completed, new AI data centers must comply with statewide environmental and community standards before they can be approved.
While the review is ongoing, the state will not issue new discretionary environmental permits for eligible data center projects.
The Data Center Coalition did not immediately respond to FOX Business’ request for comment.
