New York City's leading business advocacy organization has voiced strong opposition to Governor Kathy Hochul's recent one-year ban on the construction of new high-powered data centers, labeling the move as detrimental to commerce and counterproductive.
Governor Hochul signed an executive order establishing a statewide moratorium on new "hyperscale" data centers requiring at least 50 megawatts of power. The governor stated the pause is necessary for the state to implement data center development with careful consideration.
However, Steve Fulop, CEO of the Partnership for the City of New York, which represents over 300 major city firms, including those in finance, contends that this decision will disadvantage New York in the burgeoning AI industry. "The signal when you put a moratorium on this sort of stuff … is that it becomes a riskier proposition to put your money into New York versus maybe another state," Fulop stated on the "Cats Roundtable" program.
He emphasized that other states, such as Pennsylvania, continue to expand their data center infrastructure by collaborating with communities to find solutions, while recognizing the importance of these facilities. Fulop criticized the moratorium as a delay tactic, stating, "A one-year moratorium accomplishes nothing. A one-year procrastination or delay doesn't solve anything."
Data centers, essential for storing, processing, and distributing digital information, are crucial for emerging technologies like artificial intelligence. Fulop highlighted their role in everyday digital interactions, noting the need for increased access to data.
Governor Hochul defended her executive order, asserting that local governments are not adequately prepared to negotiate with large technology companies on an individual basis. "The state has to take the lead. We have to get it right," she said on CBS News' "Face the Nation." She pointed to 30 pending applications for data centers, which she described as "flooding the zone," and expressed concerns about the significant strain on the state's energy grid. "I want to make sure the power is there for the large companies creating jobs," Hochul added, aiming to balance New Yorkers' desire for protection with companies' need for certainty.
Despite the governor's assurances that the moratorium is not anti-business, anti-union, or politically motivated, some critics argue it represents a concession to progressive elements within the Democratic party. State Senator Kristen Gonzalez, a member of the Democratic Socialists of America, has previously expressed concerns that data centers can strain the energy grid and increase utility costs. New York Republican gubernatorial candidate Bruce Blakeman accused Hochul of prioritizing political gain with the far-left over economic opportunities for New Yorkers, particularly in a climate of high taxes and utility bills.
Hochul's administration maintained that the decision was not influenced by political considerations or her re-election campaign.