Six months ago, when a group of New York lawmakers began pushing for a moratorium on large-scale data centers, Gov. Kathy Hochul was unconvinced.
In May, the governor told reporters she wanted to take steps to ensure local communities benefit if they allow a data center in their backyard. But she said an outright pause wasn’t on the table.
“I'm not talking about a flat-out moratorium,” Hochul said at the time, adding that she doesn’t want to be “inhospitable” to a growing industry.
Just two months later, in July, the governor reversed course, announcing her own year-long moratorium on large-scale data centers. She has since made it a centerpiece of her reelection campaign.
Hochul said the pause — the first such data center moratorium in the country — would allow the state to craft a regulatory scheme.
Hochul said New York has 30 pending applications under consideration and the scale of the projects helped convince her it was important to “step back and let the state take control,” as she told ABC News. “New York doesn't just want to be first, we want to be the first to get it right.”
Hochul has put the moratorium, and bringing down costs for average New Yorkers, at the center of her closing pitch to New York voters ahead of Election Day, highlighting it in advertisements and using it to paint a clear line of demarcation between herself and her Republican opponent, Bruce Blakeman, who opposes the pause.
Hochul’s evolution tracks with the public’s souring on data centers, which use large amounts of water and electricity and have become especially unpopular across much of the country.
But Blakeman, the Nassau County executive, has accused Hochul of creating “a hostile atmosphere to businesses.”
Blakeman says the moratorium could stifle innovation in artificial intelligence – and end up costing New Yorkers. And while he acknowledges there are issues with data centers that have to be addressed, including water and energy supply, he faults Hochul for “saying no to the fastest-growing industry in the world.”
“ You put a ban in because you said that you needed time to figure it out,” Blakeman said during the debate. “What have you been doing for the last four years?”
Public polling suggests Hochul’s change of heart may be good politics.
A Siena University poll in August found voters supported her moratorium by a 2-to-1 margin, not long after Hochul put it in place.
The next month, 63% of voters said they wouldn’t want a data center near their area of the state after the moratorium expires, according to Siena.
But at the same time, few voters rank data centers as their top priority in the race. Just 2% of likely voters said AI data centers are the most important thing on their mind when choosing whether to vote for Hochul and Blakeman, according to a Quinnipiac University poll released last week. That’s compared to 22% who said the economy and 19% who said cost of living — two issues that arguably overlap with data centers.
At least 15 other states are considering a ban or moratorium of their own, according to the National Conference of State Legislatures.
Hochul’s moratorium, meanwhile, seeks to walk a fine line between satisfying the concerns of everyday New Yorkers without turning off the tech giants looking to build the facilities in the Empire State.
So far, it seems to be working. Julie Samuels, president and CEO of Tech:NYC, said the major tech trade group supports Hochul’s approach over a bill the state Legislature ultimately approved in June, which goes further than Hochul’s moratorium.
“The governor in this case took what I think is a pretty moderate position in trying to find a path forward,” said Samuels, whose group includes major players in the AI industry, including Anthropic, Meta and OpenAI.
The governor’s pause, laid out in an executive order, applies to larger data centers that can consume at least 50 megawatts of energy, which is enough to power upwards of 45,000 homes. It is meant to give the state time to craft a wide-ranging “environmental impact statement” that will assess a variety of issues associated with data centers, including energy demand, water use and noise levels.
The Legislature’s moratorium, by contrast, would apply to projects that consume at least 20 megawatts of power, including smaller or regional facilities. It would also require data centers to produce their own energy, with a certain percentage required to be renewable — a provision that isn’t in Hochul’s order.
Hochul has until the end of the year to sign or veto the Legislature’s bill, and she has yet to take a position. But Hochul said that whatever she does, she will ensure data facilities must “bring their own power” or pay a premium for electricity.
She also wants a policy in place that ensures that the local community gets “millions of dollars” worth of benefits, such as an investment fund that pays for infrastructure upgrades. The Hochul administration suggests local governments should get $1 million in benefits for each megawatt a data center demands, meaning a 50 megawatt facility should result in a $50 million benefit.
“ I'm trying to have a smart policy,” she said during the debate. “We are pro-technology, pro-innovation.”
Blakeman, meanwhile, said Hochul’s policy was too little, too late and has harmed the state’s standing with businesses looking to come to New York.
“Why didn’t you get all the stakeholders in the same room and figure it out, instead of saying no to the fastest-growing industry in the world?” he asked Hochul during the debate.
