Sherrill unveils statewide plan to regulate data centers in New Jersey

Environmental groups say the proposal does not go far enough and are calling for a moratorium on new facilities

Gov. Mikie Sherrill on Wednesday announced a statewide plan aimed at addressing the growing impact of data centers on New Jersey’s energy grid, water use, and local communities, while positioning the state to compete in artificial intelligence innovation.

Sherrill said the plan would establish new guardrails for the rapidly expanding data center industry, which has become one of the largest drivers of rising electricity demand and energy costs nationwide.

“Data centers are among the biggest drivers of energy costs, which I am working tirelessly to bring down,” Sherrill said in a statement. “While many states are approaching this issue piecemeal, this is the first comprehensive plan to tackle it holistically.”

The plan includes four major components focused on energy infrastructure, transparency, community protections, and labor standards.

Under the proposal, data centers would be required to help bring new clean energy online and contribute to upgrades needed for the electric grid infrastructure that supports their operations. The administration said the goal is to shift costs away from residents and ratepayers.

The plan would also require reporting on energy and water use by large-scale facilities to increase public transparency about their environmental and infrastructure impacts.

Another pillar of the proposal would establish statewide standards for Community Benefits Agreements and provide municipalities with state resources to help negotiate with developers. According to the administration, those agreements would address concerns including light, noise, and pollution while ensuring local investments in host communities.

The administration also said the proposal would require data centers to use local trades and pay prevailing wages to support “good-paying jobs.”

Sherrill framed the proposal as part of a broader affordability agenda focused on lowering energy costs for New Jersey residents while managing demand growth on the electric grid.

The governor pointed to Executive Orders No. 1 and 2, issued on her first day in office, which she said froze rate hikes and sought to expand power generation in New Jersey.

Since then, the administration said it has approved six large-scale solar and battery storage projects, announced an expansion of community solar to 3,000 megawatts, and signed legislation intended to accelerate battery storage deployment and end the state’s 50-year moratorium on new nuclear energy.

“By establishing these guardrails, we will hold data centers accountable, ensure they contribute their fair share, and make sure our communities not only benefit from the AI innovation happening in our state, but have a real hand in shaping it,” Sherrill said.

Business groups largely welcomed the administration’s approach.

Michele Siekerka, president and chief executive officer of the New Jersey Business & Industry Association, said the organization has been studying both the challenges and opportunities data centers could bring to the state and plans to release data in the coming weeks.

“NJBIA appreciates the Sherrill administration proactively addressing the opportunity for data center development in New Jersey. This is a signal that this growing and critical industry is welcome in the Garden State,” Siekerka said. “Like all development, opportunities and challenges are presented, and getting the right balance to move projects forward is significant. The governor’s parameters and expectancy of transparency are some first steps in establishing a process to get the ball rolling. Details on how these parameters are more deeply defined are yet to come.”

But environmental groups said the plan does not go far enough and renewed calls for a moratorium on new data centers.

“Governor Sherrill’s half-hearted attempt to rein in the increasingly out-of-control data center industry is entirely inadequate,” said Matt Smith, state director of Food & Water Watch. “The only proper solution to addressing this emerging statewide crisis is to put a full moratorium on the construction of any new AI data centers in order to give communities and state officials the time needed to sufficiently consider and address the wide range of inherent hazards these monstrous facilities bring.”

Smith questioned whether the data center industry can operate in a sustainable and responsible way in New Jersey.

Opposition to large-scale data center development has been growing across the state. Last week, representatives from 60 organizations sent a letter to Sherrill calling for a three-year moratorium on new data centers larger than 20 megawatts. A recent Stockton University poll also found that 56% of voters would support banning data centers in their own municipality.

Environmental activist and Jersey Vindicator columnist Jeff Tittel said stronger regulations should be in place before more data centers are built in the state.

“Right now, New Jersey has virtually no real regulations on AI data centers. Gov. Sherrill has announced important first steps on regulations. We need to have a moratorium on data centers until we get those laws and regulations in place,” Tittel said. “Otherwise, big tech companies can still come into communities, strain our electric grid, use massive amounts of water, use toxic chemicals and PFAS, create nonstop industrial noise, and pollute neighborhoods with little oversight. The governor needs to pull back the $250 million in EDA monies to subsidize data centers. Her plan is a very good first step, but we need to do a lot more.”

Tittel called for a moratorium on new data centers until the full environmental and infrastructure impacts are understood and new laws and regulations are adopted. He also urged the state not to fast-track permits or weaken environmental reviews for projects.

Among the measures he proposed were bans on new fossil-fuel plants built to power AI facilities, restrictions on siting data centers in environmental justice communities and environmentally sensitive areas, strict limits on water use and wastewater discharge, bans on PFAS and other toxic chemicals, and full public disclosure of energy, water, and pollution impacts.

Tittel also called for requirements that new facilities run on new renewable energy rather than drawing from the existing grid, impact fees to cover infrastructure upgrades, stricter pollution standards, phase-outs of diesel backup systems, and incentives to redevelop brownfields and contaminated industrial sites instead of undeveloped land.