Gov. Hochul’s Data Center Moratorium Veto Deliberations

Will she or won’t she? New York Governor Kathy Hochul is considering whether to veto legislation passed on June 4 that would effectively prevent New York from getting any new data centers and hamstring it in the AI economic boom.

Under New York law, Governor Hochul has until the end of the year to decide on the veto and, while expressing concerns about data centers, has not jumped on the state legislature’s data center-bashing bandwagon.

A native of Buffalo and from economically challenged upstate New York, Governor Hochul knows the state desperately needs AI and other tech investments that bring many construction and skilled trade jobs. She has poignantly spoken about this many times.

But the voluminous legislation she was handed, the Responsible Data Center Development Act (S/10642/A11560), applies the moratorium to all areas of the large, diverse Empire State. The moratorium is for a year, but with companies making major investment decisions now about AI, New York will be put at the back of the line for any future projects.

Through the moratorium and other provisions in the legislation, such as additional environmental studies amid New York’s already stringent requirements, the measure will chase away large investments.

Exhibit A is a planned $19.4 billion data center in Genesee County, just outside of Rochester. The Genesee County Economic Development Center found that the benefits of the project include $1.3 billion in new wages, $286 million in increased funding for municipalities and schools, and $268 million for electrical infrastructure improvements.

Among those strongly supporting the project is the International Brotherhood of Electrical Workers, which said, “This $19.4 billion investment represents a once-in-a-generation opportunity to create good-paying union jobs, strengthen local economies, and support long-term infrastructure improvements in Western New York.”

These are typical of the benefits that data centers provide nationwide. New York, with its cooler climate, ample open space, and skilled workforce, should be a go-to location for these facilities. Instead, few have been proposed so far, and the state legislation sends out a “Go away” message.

That message is at odds with what other Democratic governors are saying.

In April, Governor Janet Mills of Maine vetoed a data center moratorium bill. In her letter to the legislature explaining the decision, she cited that a planned facility in an economically hard-hit town would be closed.

Governor Mills said the proposed data center in Jay, Maine, “…is expected to create more than 800 construction jobs, at least 100 high-paying permanent jobs, and would contribute substantial property tax revenue to the Town of Jay.”

In his state of the state speech on February 3, Pennsylvania Governor Josh Shapiro said, “When it comes to innovation, no sector of our country’s economy is growing faster than datacenters and artificial intelligence … And under my Administration, we are delivering the speed and certainty in our permitting process these massive projects require.”

Governor Gavin Newsom on December 16 said, “California is at the forefront of AI technology … We’re not going to sit on the sidelines and let others define the future for us. But we are going to do it responsibly.”

The Legislature has dealt Governor Hochul a tough hand. She should respectfully but firmly veto the legislation, perhaps standing in Genesee County with the many labor union members whose lives will be dramatically improved by the project.