They're not dropping NY affiliates but just adding a clause to their terms:

"Good Afternoon,

You may have noticed we sent out a program update concerning our Terms & Conditions over the interface today.

The amendment to pay close attention to is 4.4:

4.4. If Merchant is based in New York State or has office(s) located within
New York State, Partner will only allow Merchant to promote Partner brand(s) and/or web site(s) via Partner's web site. Partner may not promote Merchant through any other marketing channel including, but not limited to: paid search marketing, e-mail marketing, lead generation, mobile marketing or telemarketing.

This amendment was instated following New York State passing a sales tax law requiring online retailers with affiliates located in New York to collect sales taxes on shipments to New York state residents. Note this law takes affect June 1st, 2008.

We value our relationships with our new York affiliates and rather than discontinuing business with them, we added the above amendment to our T&C's.

We look foward to continuing our relationship with you in the future and working together as we understand this tax law will affect your business as well."