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Massachusetts has largely sat out the data center building boom that has swept across much of the country. An executive order signed by Gov. Maura Healey this week ensures that, for better or worse, the commonwealth will remain on the sidelines.
Gov. Maura Healey at the Tuesday press conference on data center rules – Credit: Flickr/Maura Healey/Emily Boyle
The Healey administration unveiled an executive order Tuesday that puts up new hurdles for developers looking to build data centers in Massachusetts. While stopping short of an outright moratorium, the order requires developers to reach agreements with local communities before obtaining state permits and imposes a series of new requirements intended to limit impacts on the electrical grid and environment.
Healey said at a press conference that the measures are meant “to protect residents, to protect our ratepayers, and to block any irresponsible development so that our communities and our state are in a good place.”
The order comes as data centers emerge as a hot-button political issue and as states increasingly seek to regulate the expansion of artificial intelligence infrastructure.
But while data center construction has boomed elsewhere, Massachusetts has seen almost none of this growth, with just one large-scale project in the planning stages. Industry leaders say Healey’s action is likely to further entrench this trend, effectively ensuring that few, if any, developers will be looking to move data center projects forward in the commonwealth.
“There’s a high burden for developers to meet,” said Gregory Sampson, a partner with Sullivan & Worcester who leads the firm’s permitting and energy and infrastructure practices. “In the short run, this is going to keep most big developers out of the state.”
The executive order applies to data center projects of 25 megawatts or more and is designed to give municipalities veto power over new data center developments and limit projects’ impact on the state’s already strained electrical grid and high utility bills. It comes months after the Healey administration stopped accepting applications for the state’s data center sales tax exemption.
According to the order, developers will now be required to cover the costs associated with delivering the massive amounts of power they require. Failing that, they will be required to pay into a ratepayer protection fund intended to prevent the cost of grid upgrades from being passed along to other electricity customers.
The order also significantly expands local oversight. State agencies are prohibited from issuing “permits or authorizations” for data center projects unless the developer can negotiate a community benefit agreement with its host municipality. The order also bars nondisclosure agreements between state agencies and data center developers.
“We’re giving communities full voice in the process,” Healey said Tuesday. “Unless the community says yes to a data center, we’re saying no.”
Healey is one of many governors responding to a swell of community opposition and concern over the industry’s impact on power grids, natural resources and quality of life in surrounding communities. Data center development is proving to be deeply unpopular with voters from both parties, and it is becoming a national political issue that could sway the balance of power in November’s midterm elections.
New York Gov. Kathy Hochul signed a statewide data center moratorium in July, the first in the country. Last month, Pennsylvania Gov. Josh Shapiro signed an executive order restricting data center development in the state, while Texas Gov. Greg Abbott mandated a pause on all data center grid connections. State legislatures from Maine to Virginia have considered similar measures in recent months.
These other initiatives have largely come in states experiencing a surge in data center construction or project proposals. That isn’t the case in Massachusetts.
Once considered a “primary” data center market, Boston has become a hinterland in the data center landscape. While the market has a modest inventory of older data centers clustered near Boston, little capacity has been added in recent years as developers have gravitated toward places with cheaper, more abundant power.
According to Digital Realty, the Boston market has less than 90 megawatts of capacity — less than the size of individual data centers being built in many other markets. By comparison, Atlanta added more than 1,800 MW in the first half of this year alone, according to CBRE.
Only one large-scale project is even in the planning stages in Massachusetts: a 10-building, 274 MW campus in Westfield proposed by developer Servistar Realties.
While acknowledging that Massachusetts isn’t a data center hotbed, Healey framed her executive order as an effort to get out ahead of the data center problems plaguing other states.
“Massachusetts doesn’t have many large data centers that they have in other states,” Healey said. “But that’s exactly why we need to act now, before these projects become widespread and before it becomes far harder to protect our communities, our electric grid and our environment.”
But others have framed the governor’s order as more a product of politics than policy. Michael Minogue, Healey’s Republican opponent in November’s gubernatorial election, has taken an even stronger anti-data center stance.
Adam Waitkunas, co-founder of Massachusetts-based data center PR firm Mildam Public Relations, said Healey’s executive order walks a political tightrope: allowing her to tout progressive bona fides while not alienating the business community with an outright data center moratorium.
“Politically speaking, I think she’s just checking off a box to solidify her base as we head into the November elections,” Waitkunas said. “This gives her some cover with the business community too. … It allows her to not completely ban data centers.”
Still, the practical implications of the order are that it will further limit the number of projects developers try to advance in Massachusetts, Sampson said. To move projects forward, developers will have to come in with “a complete package,” with issues around power and environmental concerns solved before they step foot in the state.
Sampson said he is generally supportive of the executive order, seeing it as an appropriate measure given Massachusetts’ energy affordability challenges and constrained power supply. However, he said that questions remain, like how the rules will apply to existing data centers seeking to expand their capacity.
He also has concerns over the requirement for community benefit agreements. He said this has little precedent in the state and has the potential to be overly restrictive by allowing local municipalities to make unreasonable demands.
“The community benefits agreements haven’t been well vetted yet,” Sampson said. “There’s a good reason for some of this stuff, but as a land use attorney working in cities and towns across the commonwealth, I get a little concerned about how you possibly ever negotiate these effectively for a client.”
