‘An imperfect solution’ gains traction in data center fight
Governors are turning to community benefit agreements as they scramble to address data center blowback without alienating tech giants.
By Kinnia Cheuk
(I don't want AI. I want a job that I like. I want to earn a living how I want. If AI takes your job and they say they will give you a basic salary, who decides that? How much will they give you? Will it force you into a slum, living in a housing project, eating crap food??? No one says anything about that. Why? * Not part of story)
Democratic governors have a new message for data center developers amid community backlash: Cut a deal.
Community benefit agreements are increasingly appearing in state strategies for handling the data center boom. In recent months, three Rust Belt governors — Pennsylvania’s Josh Shapiro, Illinois’ JB Pritzker and Michigan’s Gretchen Whitmer — have called on project developers to enter into legal agreements with communities that can cement pollution limits, hiring commitments and local investment promises.
“My message to data center developers is clear: if you can’t agree to our strict requirements and get the community where you want to build to say ‘yes,’ you’re not going to have the Commonwealth’s support either,” Shapiro said in a statement when he signed an executive order last month that features CBAs. “These are some of the biggest companies in the world — they can afford to be good neighbors, follow the rules, and do this right.”
CBAs first cropped up 25 years ago, when a coalition of Los Angeles community groups hammered out a deal with the developers of the Staples Center. That first-ever CBA traded promises of jobs and local investment for community support that helped secure city subsidies. Since then, communities across the U.S. have used versions of the legal agreement to secure economic benefits from a variety of developments.
Policymakers are now mulling mandates for such agreements. Shapiro signed an executive order last month ordering his state’s Department of Environmental Protection to only review permit applications for data center developers that have agreed to sign a CBA with their local community, among other requirements. Otherwise, DEP will not begin review until after all local approvals, including for zoning and land use, are secured.
The move was the latest sign that Shapiro, a likely 2028 presidential contender, has gone from a data center cheerleader to a vocal skeptic. He’s not alone. Both Democrats and Republicans are grappling with how to address a growing public backlash to the energy- and water-guzzling facilities, which are cropping up faster than political leaders and regulators can keep up.
CBAs appeal to moderate Democratic governors who are scrambling to address data center blowback without alienating the tech giants they hope can provide a much-needed boost to their local economies. But even progressives who support moratoriums on data centers, like Michigan Senate Democratic nominee Abdul El-Sayed, have referenced CBAs as a way to protect communities from data centers’ possible impacts.
Abre’ Conner, director of the NAACP’s Center for Environmental and Climate Justice, said organizers of the group’s Stop Dirty Data Centers campaign quickly realized that some projects can’t be stopped by advocacy efforts — no matter how fervently communities oppose them.
CBAs can be “a tool in communities’ toolboxes” during negotiations when data center developments turn out to be inevitable, Conner said.
Experts say that the legal agreements are far from a cure-all. So far, only one community seems to have cut a deal with a data center developer.
The Data Center Coalition also argues that the vast majority of its members— including the likes of Google and Amazon — have voluntarily invested in communities beyond the jobs they create, like filling school budget gaps. Mandating CBAs before zoning or permitting, as some states are considering, could create delays and drive developments away, said Brad Tietz, the group’s director of government affairs in the Midwest.
“We’re in uncharted territory,” said Tietz. “Mandating something legislatively is far different than it occurring naturally between the local government and the company.”
But some politicians see CBAs as a stop-gap solution, providing relief for communities and serving as a model for responsible developers before other regulations are set in stone. That’s the idea behind a package of bills that Michigan state senators unveiled in June. The legislation, backed by Whitmer, would require local governments to reach a CBA with developers before moving forward with zoning approvals.
“Community benefits agreements will not solve all of the problems, but if you can put it together with strong regulations on data centers and the entire regulatory framework, then I do think that we’re in a stronger position to have members of our community feel that they are being heard right now,” said Michigan state Sen. Darrin Camilleri (D), assistant majority leader and the package’s primary sponsor.
(Re)building trust
Data centers’ sky high unpopularity has given many communities the power to demand environmental standards and investments from developers.
“Two years ago, communities really didn’t have much leverage against a Google or a Meta. But now we’re starting to see so many data centers that are canceled because of public defense, and so now communities really have a lot more leverage than they had in the past,” said Dana Kuhnline, program director at regional coalition ReImagine Appalachia.
At least 20 proposed data center projects were canceled after local pushback during the first three months of 2026, accounting for more than $41.7 billion in investment and 3.5 gigawatts of electricity demand, according to data from Heatmap.
The opposition has prompted a wave of local moratoriums and restrictions: Virginia has enacted a new energy consumption tax and New York has paused new data center construction for a year. In Illinois, lawmakers have proposed the POWER Act, which would require data center developers to enter into a CBA with a coalition of community-based organizations or a community advisory board formed by the municipal government.
Meagan Niebler, program director at the nonprofit law firm Fair Shake Environmental Legal Services, said more communities want to stop data centers entirely instead of reaching a deal.
But if developments continue to move forward, communities will be thinking about how to hold companies legally accountable and ensure protections with CBAs, said Niebler, who has collaborated with Midwest communities to ensure environmental protections in data center development.
Pennsylvania’s regulations and proposed laws in Illinois and Michigan would mandate that companies negotiate with communities until both sides agree. But nonmandatory CBAs depend heavily on a developer’s good faith effort.
It’s “very hard” to get large companies to a table for open dialogue with communities, and locals often need a lot of organizing and legal leverage to even get their foot in the door, Niebler said.
“There’s a lot of things that make it an imperfect solution, but an imperfect solution is still better than nothing,” said Liza Paudel, senior program manager for tech equity at the nonprofit Greenlining Institute.
The data center industry says their key concern is timing. Delays can significantly derail a project if local governments are slow to appoint community members to an advisory board to discuss contract terms — like the Illinois proposal would require — or if negotiations are stretched out indefinitely, Tietz said.
“What if you have a local government who’s interested, but obviously opposition rises, and then you’ve spent 10, 12 months negotiating for the project that is not even going to advance?” Tietz said.
Developers would have more confidence in the project if permitting could occur while the CBA is being negotiated, Tietz said. That could mean, for example, requiring an agreement to be reached before construction begins — rather than before a permit is issued.
States could alternatively offer incentives — such as tax breaks — to developers who reach community benefit agreements, he said.
Past programs emphasizing community engagement have had mixed results.
In 2021, the Biden-era Department of Energy required all clean energy projects funded by the Inflation Reduction Act to submit community benefit plans detailing how developers would engage in the local workforce and benefit disadvantaged communities. But the plans were not negotiated — and many residents complained that the process left community members without a role in any talks.
Projects that won grants often fell short of true community engagement, according to a former senior DOE official under then-President Joe Biden who was granted anonymity because they were not authorized to speak by their current employer.
Many communities had “no idea” that any sort of benefits were promised to them, and the terms of the program were often drafted and implemented unilaterally on the developers’ side, the former official said.
“I never wanted it to be seen as the gold standard. We did a lot in a very constrained environment, but it wasn’t enough,” the official said.
For mandatory CBAs to work, they said, the community has to have the veto power to shut the project down.
Looking to Lancaster
You have to travel to the heart of Amish country to find the data center industry’s only CBA, according to research by the Sabin Center for Climate Change Law at Columbia University.
Chirisa Technology Parks and codeveloper Machine Investment Group have an agreement with the government of Lancaster, Pennsylvania, over two data center sites in the city, encompassing approximately 2 million square feet with at least 700 megawatts of planned capacity.
First proposed by then-mayor Danene Sorace, the agreement was formally executed in November. The company had already planned to adhere to certain environmental standards, so executives thought the CBA was a “great idea,” said David Kelly, chief technology officer at Chirisa.
Barry Handwerger, who drafted the agreement for Lancaster as city solicitor, said the city determined the bulk of the terms. Chirisa mainly met with the mayor’s office, though it held an open house for the community early on in the process.
The final agreement requires that Chirisa source all its power from clean energy sources, employ a closed loop cooling system that conserves water and adhere to a publicly disclosed municipal water use cap, noise limits and wastewater regulations. The company must submit annual environmental and operational reporting and make its power use public, said Handwerger. The agreement also holds Chirisa to investing $20 million into clean energy and sustainable development for the city.
If those requirements aren’t met, the company faces millions of dollars in penalties and permanent injunctions for breaches of nonfinancial commitments like noise limit violations.
Several state and local officials within and outside of Pennsylvania have reached out to City Council members to learn about the agreement, said Lancaster City Council President Ahmed Ahmed, who voted to pass the CBA.
The data center issue is a “very difficult topic” to discuss in the public forum, he said, but the CBA quelled residents’ anxieties on whether the project would use too much water or rely on fossil fuels.
The activist organization Lancaster Stands Up challenged the city’s approval of the Chirisa project, encouraging residents to express their concerns at City Council meetings. Some meetings drew 100 people to city hall, said Frank Arcoleo, a Lancaster resident and member of the group. Arcoleo appealed the zoning approval for the data centers in August but was ultimately unsuccessful.
The group also submitted detailed recommendations for the CBA, including requirements for renewable energy, noise limits and decommissioning. Arcoleo said nearly all of them made it into the final agreement.
“Had there been a little bit of public grousing and complaining about these data centers, but it went away, I think they wouldn’t have done anything,” he said.
Lancaster Stands Up, which is part of Pennsylvania Stands Up, has shared its documents and experience with other chapters of the organization, especially those involved in data center fights themselves, Arcoleo said.
“Where they’re winning, they’re stopping the data centers to begin with. Where they’re losing, they’re at least demanding that the community benefits agreement be at least as good as Lancaster’s,” he said.
Complementary solutions
CBAs are only one aspect of the major new strategies that states are rolling out for the data center boom.
Pennsylvania’s regulations, as well as the proposals from Illinois and Michigan, include provisions that protect ratepayers from bearing the cost of data center projects and prohibit developers from entering into certain nondisclosure agreements to maintain transparency.
Republican senators in Michigan say that the legislation is more talking points than substance. State Sen. Jim Runestad, assistant minority caucus chair of the Michigan Senate, has proposed a one-year moratorium on data centers. Absent a moratorium, developers may still be able to have their way over community’s needs, he said.
Mandating community benefits between local government and developers may mean that “some board, county board, city board, negotiates something for themselves, which may be a swimming pool close to the elected official’s backyard,” he said. “It’s all fluff.”
While CBAs can be valuable tools for some communities, blanket local zoning ordinances can provide many of its benefits, said Christina Libre, attorney at the Southern Environmental Law Center.
Zoning ordinances ensure that all baseline considerations are taken into account every time a data center application comes before the locality, rather than relying on the goodwill of any individual developer to negotiate an agreement with the community, she said.
Possible ordinances could require all data center developments get city council approval, she said, or mandate pollution limits.
Lancaster began drafting a data center zoning ordinance only after Chirisa proposed building its data centers last spring. The ordinance passed this July, mandating noise mitigation plans, air quality testing, and water and power use reporting. The law also limits data center development to land zoned for suburban manufacturing, reducing land open to data centers from 200 potential parcels to only 16.
But Christopher Delfs, Lancaster’s director of economic development, still sees a role for CBAs in the future.
“Zoning is about regulation and what you can’t do, but a CBA is more creative about what you want a data center to achieve, like finding other ways for the city to realize its sustainability plan by investments in renewable energy, and other funds like the economic development and innovation funds,” he said.
Chirisa is currently partnering with the nonprofit Economic Development Co. of Lancaster County to determine how the financial commitments from Chirisa will be used, said EDC Lancaster County President Ezra Rothman. He hopes that Chirisa’s data centers won’t just be “server rooms” for Lancaster, but can help drive how the city’s schools and companies prepare for an AI future.
“Hopefully the agreement is a start, and the partnerships in our community can really become a model for leveraging the physical construction of a data center to drive innovation,” he said.
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