The ‘Big Money Show’ panelists voiced New York Gov. Kathy Hochul’s concerns about the impact of data centers.
New York Gov. Kathy Hochul on Tuesday issued the nation’s first temporary ban on new AI data centers as critics have long warned it could drive away tech investment and jobs in New York.
The moratorium, which the Democrat signed as an executive order, will remain in effect for up to one year as the need for large data centers expands across the country.
Hochul said the plan would require large data centers to bear the infrastructure costs they create and is intended to protect New Yorkers from rising utility bills and other financial risks associated with the industry’s rapid growth.
“As data center development threatens to increase utility bills, deplete our natural resources and create uncertainty for New Yorkers, it is my responsibility to act and lead,” Hochul said during Tuesday’s signing and news conference announcing the suspension.
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Gov. Kathy Hochul issued the first order for the construction of new hyperscale data centers in New York. (Michael Nagle/Bloomberg via Getty Images, File/Getty Images)
Critics have long warned that the move could divert billions in AI infrastructure investment to competing states, robbing New York communities of construction jobs, tax revenue and the kind of land deals that have recently generated wind for rural landowners in places like Pennsylvania.
“The Hochul Government’s statewide moratorium on data centers will ensure that those investments, jobs and economic activity flow elsewhere rather than to New York,” Dan Diorio, senior vice president of state policy and government affairs for the Data Center Coalition, said in a statement to Data Center Knowledge.
Under Hochul’s plan, future data center developers would be required to generate their own electricity or pay higher rates to avoid shifting the cost of major grid development to residents.
The state is also proposing a fund that would require developers to help finance upgrades to New York’s aging electricity grid, invest in clean energy projects or contribute to insurance meant to protect consumers.
In addition, Hochul is pursuing legislation to end the sales tax exemption for large data centers.
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Rows of servers fill a large data center in Texas. (Paul Moseley/Fort Worth Star-Telegram/Tribune News Service, File/Getty Images)
Local governments will also get an improved playbook designed to help communities negotiate with tech companies looking to build nearby.
However, this announcement comes as other communities have reportedly benefited from the growth of AI infrastructure.
According to The Wall Street Journal, 96 Pennsylvania families collectively received more than $500 million after selling nearly 17,000 acres of rural land to QTS, a data center developer owned by Blackstone. Families sold their land for an average of $330,000 per hectare, earning about $5.5 million per person on average.
Data center in Ashburn, Va. (Lexi Critchett/Bloomberg, File/Getty Images)
During the one-year moratorium, New York will prepare a Generic Environmental Impact Statement (GEIS) to establish statewide standards for future AI data center development.
The study will examine issues including electricity demand, impacts on the power grid, water use and quality, air quality and other potential environmental impacts of construction.
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Once completed, new AI data centers will be required to comply with those environmental and public standards of the entire state before receiving approval.
While the review is ongoing, the state will not issue new optional environmental permits for integrated data center projects.
The Data Center Coalition did not immediately respond to FOX Business’ request for comment.
