Healey Signs Order Requiring Local Approval for Massachusetts Data Centers

Massachusetts Governor Maura Healey enacted an executive order on Tuesday, significantly altering the regulatory landscape for data center development in the state. The order now requires all proposed data center projects to secure local community approval and establish community benefits agreements that meet state standards before they can proceed with state-level permitting. Additionally, it prohibits the use of non-disclosure agreements between state agencies and data centers, aiming to enhance transparency in the approval process. Governor Healey stated, "Unless a community says yes to a data center, we're saying no," emphasizing the renewed focus on local control.

This new directive builds on previous actions by the Healey administration, including a pause on applications for data center tax incentives implemented earlier in the summer. The administration's framework, which underpins the executive order, mandates that new data centers with peak electricity demand exceeding 25 megawatts must either procure or develop their own energy resources to avoid burdening the electric grid and raising costs for ratepayers. Furthermore, data centers are expected to be sited in areas with adequate water and wastewater infrastructure, minimize air emissions, and ensure meaningful community involvement in their planning. The order also establishes a "Ratepayer Protection Fund," into which data centers must contribute if they fail to immediately generate sufficient clean energy, with payments being credited back to ratepayers. The Massachusetts Department of Environmental Protection is tasked with developing an alternative compliance payment mechanism by December 31 for facilities that do not meet clean electricity procurement standards.

The new regulations come amidst growing concerns about the energy demands of the artificial intelligence boom and rising utility bills across the state. While 15 other states are considering data center moratoriums, Governor Healey indicated that Massachusetts is prioritizing establishing clear rules and community oversight instead. The state Senate has also adopted similar guardrails through an amendment by Sen. Vanna Howard of Lowell in its energy affordability bill, though the legislation is currently in conference committee. This issue has been brought to the forefront by controversies like the Lowell data center, where residents reported significant increases in electricity bills, noise pollution, and exhaust issues. Lowell residents recently filed a lawsuit against the Massachusetts Department of Environmental Protection over the approval of a "flawed air quality plan" for the Markley Group's data center, which includes plans for 27 diesel generators. A Middlesex Superior Court judge has since temporarily blocked the installation of four new generators. Governor Healey acknowledged that the executive order aims to empower communities and ensure their support for data center projects.