The negative impact of data centers on energy demand, resource use, and local communities is being wrangled by New Jersey Gov. Mikie Sherrill with new legislation designed to hold the companies accountable.
The statewide plan will require data centers to pay for the electricity they use and to report how much power and water they consume, according to the governor’s office. The measures were devised to help hold data centers accountable while positioning New Jersey to lead in AI innovation.
“Data centers are among the biggest drivers of energy costs, which I am working tirelessly to bring down. While many states are approaching this issue piecemeal, this is the first comprehensive plan to tackle it holistically. At the same time, New Jersey will take a thoughtful approach to harnessing investment, lowering costs for ratepayers, and leading on AI innovation,” said Sherrill.
“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,” the governor added.
Four Point Plan
As the demand for data centers continues to escalate, the state said this plan will “establish strong guardrails to protect communities, strengthen transparency, ensure these facilities invest in New Jersey’s energy infrastructure, and deliver good-paying jobs.”
The plan includes four central anchors:
- Establishing fair-share rules. A policy framework designed to distribute costs and resources, these fair-share rules would ensure that data centers in New Jersey bring new clean energy online and contribute to the grid infrastructure. The actions would shift costs from residents and ratepayers to the data centers.
- Improving transparency. The first steps towards greater public transparency would be to require data centers to report on energy and water use. The goal is to give the public greater visibility into the impact of large-scale facilities, according to a state press release.
- Developing state standards for Community Benefits Agreements (CBAs). A legally binding contract negotiated between a project developer and local community groups or municipalities, N.J. is aiming to develop a statewide standard for CBAs and provide state resources. The goal is to ensure municipalities can “negotiate from a position of strength and to make certain that data centers address impacts such as light, noise, and pollution while making meaningful local investments.”
- Delivering good-paying jobs. The state said it wants to ensure these centers leverage local trades and pay prevailing wages.
“If you’re going to build a data center here, you should be using union labor and paying prevailing wages,” Sherrill said during a press conference.
The plan builds on her administration’s broader affordability agenda and ongoing efforts to lower energy costs by addressing some of the largest drivers of grid demand growth.
Affordable Energy Projects
From her first day in office, Sherrill took decisive action with Executive Orders No. 1 and 2 to freeze rate hikes and expand power generation. Since then, she and her administration have:
- Approved six large-scale solar and battery storage projects
- Approved community solar expansion to 3,000 MW
- Accelerated battery storage deployment
- Lifted the 50-year moratorium on new nuclear energy
- Launched the next phase of the Garden State Energy Storage Program and opened up thousands of megawatts of community solar for new applications.
The Backlash Against Data Centers
Across party lines nationwide, lawmakers are developing, debating, or advancing legislation to regulate data centers. Officials in some states are joining concerned citizen groups to question whether data center projects are viable, given aging electrical grids that are already strained.
More than 300 state data center legislation bills have been filed across over 30 states in the first six weeks of this year, according to Multistate.us. There has been a rise in legislation imposing moratoria on data center construction. Other states are imposing stricter oversight on energy, water, and grid impacts. When state-level moratoriums have stalled, some communities have implemented their own temporary freezes, Multistate reported.
Data Centers in New Jersey
The backlash against data centers continues to grow among residents and local politicians, with some municipalities passing their own laws banning construction. There are over 80 active facilities in New Jersey, with a heavy concentration in the Greater Meadowlands Region: there are three data centers in Hackensack, eight in Secaucus, two in Carlstadt, seven in Clifton, two in Nutley, and several in Newark, according to datacenters.com.
Millville, in South Jersey’s Cumberland County, passed an ordinance on May 19 banning data centers within its borders. The unanimous vote by the Millville Mayor and Council killed a proposed 2.6-million-square-foot facility.
Pemberton Township in Burlington County passed in February what is widely considered the state’s first municipal ban on data centers. In Gloucester County, Monroe Township, Harrison Township, Logan Township, and Mantua Township passed ordinances.
New Jersey residential electricity bills surged in 2025 by an average of 17% compared to the national average of 6.4%, according to the Board of Public Utilities.
An April FDU Poll, conducted in partnership with the International Union of Operating Engineers, found that 65% of registered voters in N.J. favored a ban on the construction of new data centers until more power plants are built.
“Freezing electric bills helps, but it doesn’t solve the long-term problem or bring costs back down to where they used to be,” said Dan Cassino, a Professor of Government and Politics at Fairleigh Dickinson University, and the Executive Director of the FDU Poll. “The state needs to expand capacity, and voters don’t seem to care too much how we do it, so long as it gets done.”
