New York Governor Kathy Hochul's year-long moratorium on data center construction has drawn criticism from economic development advocates and tech industry leaders who warn it could further weaken the state's struggling upstate economy. The policy also places Hochul at odds with Ken Griffin, founder and CEO of Citadel, whose $6 billion development project in New York City may be jeopardized by political tensions.
National Security Concerns and Foreign Influence
Senator Tom Cotton (R-AR), chairman of the Senate Select Committee on Intelligence, urged the Justice Department in a June 10, 2026, letter to investigate potential foreign influence campaigns targeting U.S. AI infrastructure. "Alarming reports indicate that a network of foreign actors, led by the Chinese Communist Party, is attempting to manipulate U.S. policy and public opinion on data centers," Cotton wrote. "Maintaining America's AI advantage is vital to national security and economic strength." Justice Department officials have not publicly responded to the request.
Griffin warned during a July 9 Goldman Sachs podcast that delaying domestic data center construction risks dependence on foreign nations. "They're going to get built. Do you want them built here in America? Or do you want them built abroad?" he said. "Build that damn data center in America. It would kill me if we end up paying foreign countries tens or hundreds of billions of dollars a year."
Economic Impacts and Comparative State Policies
Critics argue New York's energy policies, including a 2019 climate law signed by former Governor Andrew Cuomo, have contributed to high power costs that now serve as a rationale for the moratorium. The law imposed renewable-energy subsidies and blocked new power plants, including the closure of the Indian Point nuclear power plant in 2021. Proposed natural gas pipelines like the Northeast Supply Enhancement and Constitution Pipeline have also faced delays, despite Pennsylvania's success in capitalizing on the Marcellus Shale reserves that span both states.
"Albany wants to talk about data centers because Albany doesn't want to talk about what actually sent electricity rates to the moon, its own policies," said Ken Girardin, a fellow at the Manhattan Institute. "The gas is being produced anyway, just across the border in Pennsylvania. It's not environmental protection; it's virtue signaling."
Labor and business groups have also denounced the moratorium. Mark McManus, president of the United Association of Union Plumbers and Pipefitters, called it "shortsighted," stating it "kills good-paying union jobs." Upstate United director Justin Wilcox added that the policy undermines local control and risks diverting investment to states like Virginia and Texas, which actively court data center projects.
Hochul defended the pause, citing grid capacity concerns and community impacts. "These hyperscale AI data centers consume enormous amounts of power, they're threatening to outpace our grid's capacity, and they drive up costs for local ratepayers," she said. The state plans to require data centers to fund grid upgrades and adhere to labor standards in exchange for operating permits.