Executive order requires data centers to get local approval

Gov. Maura Healey signed an Executive Order yesterday to halt the state permitting process for any proposed data center that doesn’t have local approval.

Data centers will need a community benefits agreement with the host community that meets state standards before moving forward with any state permitting processes.

The governor also directed state agencies to require data centers to comply with her data center framework, including bringing their own clean energy supply, protecting water resources, and engaging transparently with surrounding communities.

The executive order establishes a dedicated Ratepayer Protection Fund, to which data centers that do not bring their own clean energy will be required to pay a fee that will be returned to ratepayers.

“A data center should invest in Massachusetts — bringing new clean energy and paying for the infrastructure to get it there,” said Energy and Environmental Affairs Secretary Rebecca Tepper. “We’ve seen ratepayers in other states foot the bill for data centers. That won’t be acceptable in Massachusetts.”

The governor’s data center framework, issued in late June, outlines expectations for data center developers, including that they must fund the full cost of the energy infrastructure and clean energy supply needed to support the project; protect the surrounding environment, water systems, and public health and safety; and ensure that local businesses and residents can benefit from job creation and other investments.

The framework also paused the acceptance of applications for data center sales and use tax exemptions.

The new executive order directs the state’s permitting agencies, including the Department of Environmental Protection, Energy Facilities Siting Board, and Massachusetts Environmental Policy Act Office, to require proposed data center projects with peak electricity demand exceeding 25 megawatts to demonstrate they are in compliance with the data center framework before granting their permits.

Reflecting recent public pushback, the order notes that “data centers are energy- and resource-intensive facilities which can require substantial investments in electric grid infrastructure and power generation resources and can affect energy affordability and reliability, air quality, water resources, noise levels, land use, public health, and the environment, if not appropriately planned and regulated.”

It also notes that host communities should “share in the benefits of economic opportunity, job creation, strengthened infrastructure, and additional local tax revenues.”

The executive order prohibits the use of non-disclosure agreements between state agencies and data centers to ensure a transparent and fair approval process.

The order calls for the Executive Office of Energy and Environmental Affairs, in coordination with the Executive Office of Economic Development, to publish a municipal guidance document for data center development by the end of the year. The guide would support municipal leaders and staff, community-based organizations, residents, and other local stakeholders as they evaluate proposed data center projects and engage with developers.

In developing the guide, the state agencies are directed to engage a broad range of stakeholders, including municipalities, regional planning agencies, utilities, water resource agencies, organized labor, environmental justice and community-based organizations, businesses, the Attorney General’s Office, and the public.

Prior to filing a community benefit agreement, any data center applicant is required to consult with the Office of Environmental Justice and Equity to confirm that it conducted “meaningful engagement” as outlined in the standards and guidance.