National Review Online
Thursday, July 16, 2026
The governor of New York, Kathy Hochul, has issued an
executive order that places a one-year moratorium on the construction of data
centers that use more than 50 megawatts of power to operate. Signing the
instrument — which is the first of its kind in the United States — Hochul said
that it was her “responsibility to take action and lead.” Indeed, it is. But
this, alas, is not leadership.
Two elements of Governor Hochul’s approach are
defensible. She has requested legislation that would repeal New York’s generous
sales and use tax exemption for internet data centers, a subsidy from the early
2000s that is unfair to taxpayers and that has no place in a competitive free
market. And she has demanded that the owners of new facilities contribute to a
state fund that will be used to improve the electrical grid — an ask that,
depending on the details, may be necessary to offset the increase in prices
that can result from a sudden spike in demand.
The moratorium, by contrast, is a concession to Luddism and
hysteria. It is one thing for a state to establish a set of working regulations
or to insist that the cost of innovation must be borne by its beneficiaries. It
is quite another to use government power to strangle a new market in its crib.
Explaining her position on MS NOW, Governor Hochul made it sound as if the
State of New York were a tiny island and she a dictator who had been charged
with allocating its meager assets. “I have limited resources here in the
state,” she said, “that I’m trying to preserve for the real innovation economy
— the jobs like the Microns.”
One has to wonder what this can possibly mean. Micron,
which is currently busy building a large manufacturing plant just outside
Syracuse, N.Y., makes computer memory — a product that, at present, is
primarily being bought by . . . data centers. Those Micron “jobs” that Hochul
likes to tout — which are being heavily subsidized with federal and state
grants and tax credits in exchange for company handouts to voters in the
surrounding districts? They are the direct result of skyrocketing demand for
Micron’s high-bandwidth memory hardware from the very cloud processing
facilities that she is trying to keep out of New York. On MS NOW, Hochul tried
to draw a distinction between the “real innovation economy” and the data
centers she disdains. But this is absurd; they are one and the same. Logically,
Hochul’s position is the equivalent of insisting that one is keen to attract
the makers of tires, but that one doesn’t want to see the construction of any
of those pesky car factories.
Why has Hochul taken this silly approach? Presumably, for
the same reason that many other politicians have: because, over the last couple
of years, tens of millions of people in the United States have been captured by
a moral panic about “data centers” that is almost completely divorced from
reality. The rise of artificial intelligence will certainly present some
challenges, and we regret that its architects have sometimes been blasé about
that or even played up potential disruptions. But data centers, which represent
the building blocks of the internet as it exists right now, have been a
mainstay of American life for nearly three decades. In many cases, the
newer models are bigger. But the complaints that attend this are mostly myths.
Data centers do consume large amounts of electricity, just as factories, steel
mills, and aluminum smelters do, but utilities have long planned for the arrival
of energy-intensive industries. They do not “produce nothing”; they provide the
computing power that underpins banking, communications, streaming, cloud
computing, e-commerce, and, increasingly, government. As for water? If this
were the test, America’s irrigated farms, golf courses, and manicured suburban
lawns would attract far more outrage than data centers. That they do not is
telling.
True, not every place is ideally suited for building a
data center — Manhattan or Brooklyn, for example. But Upstate and Western New
York have plentiful water, lots of cheap land, and communities desperately in
need of economic growth to hold off decades of declining population and
prosperity. Hochul, who hails from Buffalo and presides in Albany, ought to
remember that she is the governor of the state, not the mayor of New York City.
Earlier this year, Governor Hochul complained that
Americans were moving out of New York to states such as Texas, Tennessee, and
Florida, and taking billions of dollars in tax revenue with them. Her
short-sighted executive order, placing a stop on one of America’s
fastest-growing industries, suggests that she has not yet worked out why.
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