NY Governor Kathy Hochul on Her One Year Data Center Moratorium

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1:30Tracy Alloway:Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. So Tracy, big news in New York State today. We know there's been a lot of AI politics, a lot of data center backlash. I wasn't really expecting it, but New York's New York state becoming the first state to institute a formal data center moratorium, at least for one year. Yeah. So this is really interesting. Governor Kathy Hochul just announced this and it comes hot on the heels of there was another attempt in Maine to do something similar, but that ultimately got vetoed by the governor there.

2:06So it's really interesting that New York is, I guess, like stepping up and maybe trying to create a template for other states to do this.

2:14Tracy Alloway:Yeah. And it's interesting because like the one question is, does this become a ban? Right. Because we know there are a lot of people that would just like to see like anti data center politics is very popular. On the other hand, you know, it's interesting. I saw a story. I saw a headline recently, you know, in some states there are still tax breaks. Like they're trying to invite data center companies. New York still has tax breaks too. And so, yeah, and it's so it's interesting because we see all these stories about like, oh, there's a compute scarcity, et cetera. And yet evidently there's still this competition.

2:46Tracy Alloway:But basically data center politics are like really in flux. Absolutely. Also, one of the rare areas of bipartisan agreement nowadays it seems. If you're in the AI industry, you have to be kind of concerned that like there doesn't seem like they have any friends. Everyone hates you. Yeah. I mean, the ratings are negative. But anyway, of course, data center politics gets into so many other things, you know, the anxiety about job loss. Energy policy. Energy policy, water policy, et cetera. And it's sort of this litmus test, I guess, because, like, no one really knows. Like, no one knows whether their AI is going to be good or not.

3:26Tracy Alloway:Right. Like, will this be a great thing for the world or will this disrupt the world in ways that we can't possibly fathom and, you know. But also, if you agree that AI is going to be important in some way in the future, then it seems reasonable to want to design some sort of framework for how data centers should actually get built out. I imagine different states, different cities, different municipalities will have different ideas for exactly how to do that. But it's interesting to see people start to grapple with those requirements. So, you know, do you have to have a closed loop system for water?

4:02Right. Does the company have...

4:04Tracy Alloway:Bring your own power. Right, exactly. Like, what are these requirements? What's the optimal data center going to look like in the future? Totally. Well, there are a lot of big questions that this touches on. Big, like, just sort of in the macro sense, like, what are we building? What is the government's attitude towards building things, period? And I'm very excited to say we literally have the perfect guest, Governor Hochul. Thank you so much for coming on Odd Lots. Delighted to join both of you. All right. So the big news came out this morning, a one-year moratorium on big new data centers in New York State.

4:39Tracy Alloway:Why now? What was the catalyst for this particular decision today? Well, there's been really what I call flood the zone. There's been a lot of companies that may have been contemplating putting in plans for data centers, massive data centers around the country. But all of a sudden, it seemed like there's been a surge. And I have to respond to that. My main challenge is in the state of New York, making sure we keep the lights on and making sure that people can afford to keep the lights on. And so the challenges that I have to deal with in this environment where everything we want to do for clean energy, renewable energy, or my all-the-above approach are under attack from Washington.

5:15So I have to make sure I'm managing our resources. So when you have a huge company that wants to come in, even on the somewhat smaller side, 50 megawatts of power required, that's 50 ,000 homes. that all of a sudden are competing with that consumption of energy. So on that front, it was important to me. But also, I've been studying this around the country. A lot of communities are deriving substantial benefits from these companies, and they're willing to pay for it. But I realized I used to represent a very rural area of upstate New York in Congress. These communities do not have the sophistication.

5:50They don't have the planning staff, the staff that would know to say, we wanted you to give$1 million per megawatt. We want you to make sure that you're investing in the grid, all these other things that could be doing, but they're not being asked. And I think the companies are willing to do that. So I want to make sure that we take the time to have a community investment framework to give to localities. But also, you have to be able to power yourselves. You want to come in. I said this in my state of the state back in January. I launched the Public Service Commission to start this process. They'll be done within this year of the moratorium so we can have certainty for businesses.

6:26But you come, you bring your own power source or you have to pay a premium to use our grid. And those are the basic foundations of what we're doing with this moratorium. It is not a ban. It is simply saying, step back, take a breath and get it right. Businesses want that knowledge of what the rules of the road are. We've actually had some interesting tweets from the builders of these facilities who are now saying, hey, just tell us the rules. Tell us the regulations. We're OK with that. And that's exactly what we're doing. but also responds to a lot of frustration from these communities, from people who don't think that they're paying their fair share, that they're just coming in and just start forcing themselves in.

7:06And that's really annoying to people. It's just they've had enough. Americans have had enough. So this is the U.S.'s first statewide moratorium on data centers, which means inevitably this is going to be seen as a test case or an experiment. When you think about this, what exactly is it you're trying to, I guess, prove or disprove or achieve? Like, what are you looking for here? What should the outcome of the moratorium actually be? Very specific goals. My Public Service Commission will take this year to devise a plan where we figure out how to make sure that they bring their own power or that they're substantially contributing to the grid.

7:43Secondly, I want them to contribute. This takes time for government to get this right. I'm establishing a larger grid resiliency fund. I want them to make major contributions so I can invest in the energy grid, the transmission lines, and everything else that has been ignored for so long. That's one of the reasons why our energy infrastructure is crippled. The investments were not made. So you're going to contribute to the locality. You're going to contribute to bring your own power and also this larger dynamic. So that's what we're looking for. Those are very specific. I have agencies all working on them now.

8:18about seven or eight agencies dedicated to this. I'll put the person power behind this, and we will be a template for doing it right. Right.

8:26Tracy Alloway:We know in some instances, I think I've seen headlines like in Louisiana, for example, the big meta campus, not campus, data center. It's like there's going to be, you know, payments to teachers in the area. The idea, I suppose, is, okay, any place that's open for data center business, let's make sure that we get these, you know, the same agreements that are being put in place elsewhere to benefit the community. How should we, like, moratoria can become bands, right? Something is like, we're going to put this in place for one year, and then it's two years, we're still working out the rules of the road, then it's five years, and then you never have them.

9:01What sort of, like, are you actively trying

9:06Tracy Alloway:to avoid this becoming a band? I'm not expecting the need for a band. I want them to work with us. No, I understand how important AI is. We are in a revolution. This is the winds of change are coming in at hurricane force. And it's disruptive, but it also can be very positive. And I'll tell you my commitment to AI goes back years when I launched the first in the nation development of a supercomputer. The largest outside any private company is being built in New York for public good. What does that mean? All of our universities can tap into power, computing power that is unavailable to them otherwise.

9:44We are innovating new therapies in cancer, working on it right now up in Buffalo. We are also trying to solve some of other society's other problems and even weather forecasting. I mean, you would not believe the disasters I have to deal with as governor. You know, heat waves, blizzards, floods, storms. And so there's all kinds of positive ways we can use AI. And I'll tell you what I just launched, and I'm very excited about this. I'm using AI to analyze every single rule, regulation, policy, see whether it's antiquated, outdated, too many fees. We just finished this. It would have probably taken five years at the staff level.

10:22Did it in a couple of months. And I have over 4 ,000 recommendations from the public who want us to look into things. Plus, I have all my agencies now using this list that they were given. Okay, get rid of these regulations. So I understand. Do you find wacky old school stuff about horses allowed on the streets and things? Yeah, everything has to be sent in many rules by telegram. Not telegram. No, seriously. It's on the books. A lot of people have been in violation of law for a while. I think pregnant women have to have a special permit to be able to work after midnight. No, there's, you know, the fees that you have to pay$25 to bring your dog hunting in the state, like inane things.

11:07Tracy Alloway:And these were things that you like basically put the New York City, the New York State legal code base into AI and said, find the crazy stuff? Dump it in. And my team was like, you sure? And I said, no, we're going to do this because I want to rethink government. I want a government that's not on your back but on your side. And using AI has been powerful to do that. And I think every level of government should use this. So this is going to go on for a little while, but I'm going to make dramatic changes using the power of AI. So my point is we are open to this innovation. It's what defines New York, which is why we're so spectacular.

11:40Why so many tech companies are leasing space at record levels coming to New York? Why recent college grads, this is their number one destination. So I want to capitalize on that. When I talk about those college grads, I also have to mention something else. AI and the uncertainty around this is causing enormous anxiety because young people don't know where they fit in the future with AI. Will they lose their job? Will they be displaced? Will the skills that they thought were so important are now irrelevant? So last week I had launched this a few months ago. We had our first meeting with really substantial business leaders, leaders in tech people from academia labor gathered them together along with my team and i said we are now called the future works commission we are studying the positive benefits of ai what we need to do to make sure that our students are ai competent so they can take the jobs but also how we deal with the disruptive forces the forces that drove i'm from buffalo drove everybody i knew out of a job when Bethlehem Steel left and, you know, automation replaced jobs in our factory.

12:49So I saw that happen as a young girl and as a child. I also want to make sure that we're ready for it this time. So I'm trying to deal with that anxiety that people are feeling, trying to deal with our energy demand, making sure the decisions are responsible. And we'll get through this, but we embrace AI in this state.

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14:22Tracy Alloway:Start your day with Bloomberg Daybreak, the podcast with a global view on the stories that matter. I'm Nathan Hager. And I'm Karen Moscow. Join us each morning for curated stories on current events, politics, business, and foreign relations. Plus one conversation on the day's biggest developments, all in just 15 minutes. Subscribe to Bloomberg Daybreak for a precise, thoughtful take on the stories that matter. Listen to Bloomberg Daybreak each morning on Apple, Spotify, or anywhere you listen. So given that you recognize the importance of AI and you do want data centers in the state in the right way, but that's inevitably going to require additional rules.

15:02Maybe it'll make the data centers more expensive. And ultimately, New York is competing against other states when it comes to attracting these projects. How do you actually, you know, how do you encourage data centers to come in with additional restrictions once this moratorium is over? That'll be up to them. It's also up to localities. I mean, they should not go anywhere. They're not welcome. I spent 14 years in local government, and I believe that the localities should be the deciders whether they want this. But let me tell you the larger picture. Whether they come here or not is up to them.

15:37What I'm spending my energy on is focusing on the large, massive producers of the elements to support AI. What am I talking about? Semiconductors. Just last week, less than a week ago, I was with the CEO of Micron. One of my proudest accomplishments was landing Micron to come to New York, not another state where they're looking seriously. $100 billion of investment, largest private sector investment in American history. They will be creating 10 ,000 direct and 40 ,000 indirect jobs. Now, I will say, I will work with you to get the power you need. And I've structured arrangements with the New York Power Authority.

16:17And they're also helping me with my effort to bring more nuclear to New York. We're waiting for the Trump administration to hopefully greenlight us on my massive expansion of nuclear that I want to do. I want to build more nuclear in New York than the entire country has in 30 years. That's how ambitious I am about powering our future of innovation. But if I have to choose between powering a largely vacant data center with the same amount of power, I can have a micron with a thousand jobs, I can tell you right now where I'm going. So they can come under the conditions we lay out, but I'm also going to be investing a lot of my energy on the good paying jobs that will be there for the long term.

16:56Tracy Alloway:When we talk about AI labor market disruption, like everyone's anxious about this right now all across the economy. And we're like waiting, right? Like we don't really know what's going to happen to work. However, there's one area with AI specifically where we know that there's – where we can already see the rubber hitting the road quite literally. And that is in driverless cars, which is AI. And we know that like Waymo had a trial here in New York state and then New York put a pause on it. And of course, there's going to be human drivers interrupted. Can you tell us about why Waymo couldn't move forward and what that says about your office's framework for managing this disruption?

17:42I will say I'm very interested in Waymo. I've been in the vehicles. They're amazing. They're fine. Yeah, they're fine. but this is where I want to get ahead of this. Before we have these disruptive effects, what is the alternative for the people who now are the ones we're counting on to drive us in person? You have to have a plan B. This is what we did not have with the industrial revolution and all these other, the automation revolution. That's why so many people were so discouraged when they lost their jobs, whether it's overseas or as I said, automation, because government didn't step in and work with industry and prepare people for this.

18:17That's what I'm trying to do. And if the people that are currently driving vehicles, are they able to get some basic AI competency program that we put forward? And they might get a job that pays even more. Let's make there be a positive impact to this. So that's the strategy I'm using. What is the alternative for people? How do we manage this? How can we get this to all work out? And so I just want to be thoughtful about it. Again, coming from the world I come from, where my hometown was basically a ghost town when all the businesses left, Going out of business, last one here, turn out the lights.

18:49That's the world I grew up in. And I'm so hardwired to protect the people of this state and these young people. And I gathered 10 of them in my office the other day. I invited people who had lost their jobs. Literally, the boss had said, you're losing your job because of AI. Now, some of them had been studying computer science, coding. They did everything we told them to do their entire lives. I can't tell you about a young people I've said. Go into STEM. You'll have a job forever. And those people, and especially women, are in the jobs that are most vulnerable. I cannot have this disruption without saying we did everything we could to mitigate it.

19:23Tracy Alloway:But just going back to the Waymo thing, for example, because I do think it's instructive about what's going to come for a lot of different industries. Like the number of people who would theoretically be a passenger in any car is far larger than the number of people who drive cars professionally. And you mentioned the Industrial Revolution, et cetera, and extraordinarily wrenching. But most people would say we came out on the other side as a richer, more advanced society. And so, like, I'm curious, like, you know, how do you balance the interests of all the people who aren't drivers that would like a clean ride, that would like a safe ride, that would like a modern ride, a ride that potentially could reduce congestion, which I know is a thing you care about.

20:07Tracy Alloway:and historically it's like there are costs, but then you come out on the other side better. How do we get over that? You're absolutely right. But you're looking at the societal costs as being greater at the end. I'm looking at the collateral damage of the people before it gets there. I'm the first governor to say I grew up in a world where no one cared about the people and the displacement and why a lot of people had to leave the state because their jobs were gone, lost to foreign comp and lost to automation. I'm just trying to fight to not let that happen. I have to help them reimagine life without the current job they have, whether it's the people that are driving vehicles or whether it's the young students who did everything we asked them to do.

20:48They got a good degree. They went to college. They're trying to build a life. And now they're told, well, we don't need any more paralegals anymore. We don't need people to do back office. We don't need administrative jobs. You're gone. I can't let that happen without saying, but here's how we can get you a better future. Here's how I can put you on a path. So then we can try to dial back some of this anxiety and fear of AI because I can't have companies be successful but leave – they can be successful but leave everybody else behind. That's not how we do things in New York. We lift everybody up.

21:21Should tech companies have to contribute directly to, I guess, managing the labor market disruption? So, for instance, paying higher taxes to fund reskilling programs or things like that? They should be involved. You know, I have a hostility toward raising taxes in New York. I've shown that I'm going to stand firm because I happen to embrace people that are successful in businesses here in New York because they're the ones who are creating the jobs. They are the ones who are already driving the tax revenues that allow us to have universal child care and invest more in housing and to deal with this energy challenge we're facing.

21:59So I want to make sure that we're smart on that front. So, you know, there's a lot of ways to look at it. And I have to make sure that, again, New York has always looked at it as a leader. I'm very cognizant of the fact that what I do will have a ripple effect. But that's why everything we do is so thoughtful. I did not wake up one day and say we should do this. I talked to industry experts. Can you manage this? Are you going to be able to get through this? And what they're telling me is just tell us the rules. So technology companies have a role to play. And if they want to be supportive of the entire workforce, help us retrain people.

22:33Let me just tell you, I mentioned Micron before. Micron, when I was trying to recruit them, said they needed 9 ,000 engineers and tens of thousands of people in the construction trades. And I said, I'll get that done for you. I promise. So when I'm working with Micron and our teachers, our teachers unions, we've now changed the curriculum in the nine counties surrounding Micron to teach them basic skills that they would use if they were hired by Micron. Now, this is like a 30-year proposition. You know, kids in kindergarten may not take a job there until they're 25 or 30. This is what industry can do to make us more competitive internationally, but I don't have to tax them to do it.