Sherrill expands ‘guardrails’ for data center development with latest bill signing, guidance for municipalities

Gov. Mikie Sherrill traveled to South Brunswick on Thursday, Aug. 27, for a bill signing and update tied to her plan to manage the impact of new data center development in New Jersey. — Photos by Tim Larsen / Courtesy: Governor’s Office By Joshua Burd Gov. Mikie Sherrill has made good on a pledge to manage data center growth in New Jersey, signing a bill tied to the facilities’ energy and water use while announcing guidance for towns that are weighing new development. The law, S3379/A4096, requires data center owners and operators to submit semiannual reports to the New Jersey Board of Public Utilities to provide greater transparency into their demands on the state’s resources, Sherrill’s office said Thursday. That includes total energy consumption, energy used for cooling and information technology equipment, peak daily water use, water sources and on-site and backup power supplies. Concurrently, the governor’s team has issued formal guidance to municipalities on how to leverage so-called community benefits agreements with data center companies — namely, to help mitigate their impacts, share in the economic benefits of the projects and secure meaningful investments for their communities. The statewide framework, distributed this week by the Department of Community Affairs, is meant to improve local officials’ negotiating position with data center developers over proposed projects. Sherrill announced in late May that she would establish “strong guardrails and hold data centers accountable,” as the artificial intelligence boom continues and a fast-growing number of towns look to ban new facilities. That gave way to legislation last month that requires operators to bring their own clean energy and establishes a separate rate class for the projects — protecting residents from rising utility costs — along with the steps announced Thursday. “I am laser focused on driving down costs and making sure our state is more affordable,” she said. “When it comes to data centers, we’re doing that by putting power back in the hands of communities and ensuring data centers play by our rules — paying their fair share for energy and contributing to the grid, being transparent about their energy and water usage, making meaningful investments in communities and bringing good union jobs when they are building.” Sherrill on Thursday also signed a law to defund a lucrative tax credit program for data centers and other artificial intelligence projects. Enacted last year by former Gov. Phil Murphy, the subsidy was available thanks to $500 million that had been pulled from the well-known Aspire and Emerge programs. The state subsequently awarded half the allocation to CoreWeave for its $1.8 billion data center project in Kenilworth, but the new End Data Center Tax Credits Act has returned the remaining $250 million to the original programs. The guidance issued this week provides key considerations for evaluating impacts on local infrastructure and resources, assessing emergency response and infrastructure needs and negotiating tangible community investments, the governor’s office said. That includes public infrastructure improvements, blight remediation, schools and workforce development programs. It also outlines state labor standards, including prevailing wage and project labor agreement requirements. The state Economic Development Authority, meantime, has established a resources and technical assistance online hub for communities in need of support. The BPU and DEP have also established technical assistance teams. Sherrill traveled to South Brunswick for Thursday’s bill signing, where she was flanked by local officials as well as many of the state’s elected leaders. “Today, we are putting power back in the hands of communities and giving places like South Brunswick a real say in what comes next,” said Charlie Carley, the township’s mayor. “Community benefit agreements offer us the tools to hold data centers accountable and protect our residents, while ensuring our community isn’t left out of the innovation and economic opportunity they can bring. And with South Brunswick situated near some of the world’s leading academic and research hubs, these guardrails give us greater control over how that growth happens and position our community for long-term success. Under Governor Sherrill’s leadership, municipalities across the state will be prepared to adapt to an ever-changing world.” Data centers: Sherrill eyes plan to manage energy costs, community concerns while promoting AI growth