Healey's New Data Center Rules Make Massachusetts A Tough Sell For Developers

Massachusetts Governor Maura Healey has signed an executive order establishing stringent new rules for data center developers in the state, a move likely to curb future growth in a region that has largely missed the data center boom. The order, unveiled Tuesday, mandates that data center projects of 25 megawatts or more must secure community benefit agreements with host municipalities before receiving state permits, effectively granting local communities veto power over developments. Additionally, developers will be required to cover the costs of necessary electrical grid upgrades or contribute to a ratepayer protection fund, addressing concerns about grid strain and utility bills.

Healey stated the measures are designed "to protect residents, to protect our ratepayers, and to block any irresponsible development." While not an outright moratorium, the order expands local oversight and prohibits nondisclosure agreements between state agencies and developers. This policy shift comes amidst a national trend of states regulating AI infrastructure due to community opposition over power consumption and environmental impact. Industry experts, like Gregory Sampson of Sullivan & Worcester, predict these new requirements will deter most large developers from pursuing projects in Massachusetts, citing the high burden on developers to present a "complete package" that addresses power and environmental concerns upfront. One large-scale project, a 10-building, 274 MW campus in Westfield by Servistar Realties, is currently in the planning stages.

Critiques suggest the order is politically motivated, with some observers, including Adam Waitkunas of Mildam Public Relations, noting it allows Healey to appeal to environmental and progressive voters without implementing a full ban. Concerns also remain regarding the precedent and potential restrictiveness of community benefit agreements, which lack clear guidelines in the state.