Governors pivot to community benefit agreements as data center backlash intensifies

Key points

• Pennsylvania Governor Josh Shapiro signed an executive order requiring data center developers to sign CBAs before the state Department of Environmental Protection will review permit applications.
• The order creates a two-tiered system: developers agreeing to 'GRID' standards (including clean energy and full cost responsibility) receive rolling permit reviews, while others must secure all local approvals first.
• Illinois and Michigan are considering similar mandates, with Michigan’s proposal requiring local governments to reach CBAs before granting zoning approvals.
• Lancaster, Pennsylvania, currently hosts the only executed CBA in the U.S., involving Chirisa Technology Parks and requiring $20 million in clean energy investments and strict water usage caps.
• At least 20 proposed data center projects were canceled in early 2026 due to local pushback, representing over $41.7 billion in investment and 3.5 gigawatts of demand.

Background

The rise of CBAs follows a period of rapid data center expansion that outpaced regulatory frameworks. Previous attempts at community engagement, such as the Biden-era Department of Energy’s clean energy community benefit plans, were criticized for being unilateral and lacking true negotiation. The current shift reflects a broader trend where local opposition has gained leverage, leading to cancellations and moratoriums in states like New York and Texas.

How outlets are covering it

Supporters, including Governor Shapiro and Michigan Senator Darrin Camilleri, view CBAs as a necessary bridge to ensure communities are heard and protected while balancing economic interests. However, industry representatives like Brad Tietz of the Data Center Coalition argue that mandatory CBAs create delays and could drive development away, preferring voluntary community investments. Critics, including Republican Michigan Senator Jim Runestad, dismiss CBAs as 'fluff' that may benefit local elites rather than residents, advocating instead for strict moratoriums. Legal experts note that while CBAs offer some protection, they are 'imperfect' compared to comprehensive zoning ordinances that apply uniformly to all developments.

Why it matters

The adoption of CBAs signals a shift from passive acceptance to active negotiation in data center development. As these facilities strain local water and power resources, the success of these agreements will determine whether communities can secure tangible benefits or merely delay inevitable construction. The outcome may influence future national regulations on AI infrastructure and environmental justice.

What to watch

Pennsylvania’s General Assembly is expected to debate bills in the fall that could codify Shapiro’s executive order into law, including provisions for local moratoriums and tax exemptions. The first court challenges to the executive order’s reliance on the Environmental Rights Amendment may provide clarity on the legal limits of state intervention in data center permitting.