Key facts
- Democratic governors in Pennsylvania, Illinois, and Michigan are promoting community benefit agreements (CBAs) for data center developers.
- CBAs aim to secure pollution limits, hiring commitments, and local investment promises from data center projects.
- Pennsylvania's Governor Josh Shapiro signed an executive order requiring CBA agreements for data center permit applications.
- The Data Center Coalition warns that mandated CBAs could lead to project delays and drive development away.
- At least 20 proposed data center projects were canceled in early 2026 due to local opposition.
Governors are increasingly turning to community benefit agreements (CBAs) as a strategy to manage the growing backlash against data centers, which are criticized for their high energy and water consumption. States like Pennsylvania, Illinois, and Michigan are urging data center developers to negotiate these legal agreements with local communities to secure commitments on pollution limits, local hiring, and investment.
Pennsylvania Governor Josh Shapiro has made CBAs a condition for permit reviews, stating that developers must agree to strict requirements and gain community support to receive state backing. This approach reflects a shift from earlier enthusiasm for data center development to a more cautious stance amid public opposition.
CBAs, which originated 25 years ago with the Staples Center development in Los Angeles, have historically been used by communities to negotiate economic benefits. Policymakers are now considering mandating these agreements, with Michigan proposing legislation that would require CBAs before zoning approvals.
While proponents see CBAs as a way to protect communities and ensure developers are good neighbors, industry groups like the Data Center Coalition express concerns that mandatory agreements could cause significant project delays and deter investment. They argue that voluntary community engagement and existing regulations should suffice.
Despite these concerns, public opposition to data centers is growing, leading to project cancellations and moratoriums in states like Virginia and New York. Community organizers view CBAs as a crucial tool when stopping developments entirely is not feasible, providing a mechanism for legal accountability and environmental protections.