New York Gov. Kathy Hochul has imposed a one-year moratorium on new hyperscale data centers that require more than 50 megawatts of electricity. It is the first statewide moratorium of its kind in the country, and a serious strategic mistake.
The concerns are legitimate. Data centers consume enormous amounts of electricity and water. Their construction can raise utility costs, strain local infrastructure, and burden communities with projects that create relatively few permanent jobs. New Yorkers should not subsidize hyperscalers, and every operator should pay the full cost of the energy, water, and infrastructure it uses.
But those are arguments for better rules, not a statewide stop-work order.
New York could require data centers to generate or procure additional power. It could establish a separate utility rate class, mandate infrastructure investments, impose environmental standards, and give local communities approval authority. In fact, several of those ideas are already under consideration elsewhere.
Instead, New York has told the companies building the infrastructure of the AI economy to wait while the state figures out what it wants.
They will not wait. They will build in Pennsylvania, Ohio, Texas, Virginia, or anywhere else with available power and predictable permitting. Data centers are not portable after construction, and the surrounding investments (including fiber, energy generation, engineering talent, suppliers, and research partnerships) tend to follow them.
The velocity of data is increasing and will always increase. There is no version of the world where there will be less data tomorrow than there is today. Information is not knowledge. Data needs to be processed in order to make it actionable.
New York says it wants to lead in AI. It has invested hundreds of millions of dollars in the Empire AI consortium and aggressively promoted the state as a technology hub. You cannot credibly pursue AI leadership while prohibiting the infrastructure required to support it.
New York absolutely needs to protect ratepayers and natural resources, but the right policy is to make ’em pay, not make ’em go away.
Every company needs a Claw strategy. Do you have one?
Author’s note: This is not a sponsored post. I am the author of this article and it expresses my own opinions. I am not, nor is my company, receiving compensation for it. This work was created with the assistance of various generative AI models.
About Shelly Palmer
Shelly Palmer is the Professor of Advanced Media in Residence at Syracuse University’s S.I. Newhouse School of Public Communications and CEO of The Palmer Group, a consulting practice that helps Fortune 500 companies with technology, media and marketing. Named LinkedIn’s “Top Voice in Technology,” he covers tech and business for Good Day New York, is a regular commentator on CNN and writes a popular daily business blog. He's a bestselling author, and the creator of the popular, free online course, Generative AI for Execs. Follow @shellypalmer or visit shellypalmer.com.