Data center development and its climate, environmental, and energy impacts have emerged as a central and hotly debated issue facing local governments in 2026. Various studies have explored, among other things, the large amounts of land required for data centers; their immense use of energy and water ; their greenhouse gas emissions and other contributions to air pollution; and the significant noise they can produce. Well-crafted regulatory responses can help mitigate those impacts. However, because the Trump administration has opted for a bullish and deregulatory approach to data centers, detailed federal regulations remain largely absent. And, while the degrees to which state governments are regulating data center development are mixed, many have taken a very “hands off” approach.
All this means that local governments and communities experiencing impacts from data center development have a crucial role to play in regulating data centers. This second post in our series data center regulation at the local level addresses community benefits agreements (CBAs) and considers their role in mitigating the impacts from data center development and operation. Specifically, this post will look at the data center related CBA that the City of Lancaster, Pennsylvania, recently entered into.
What are Community Benefits Agreements?
CBAs are legally binding contracts between project developers and host municipalities and/or local community groups, under which the developer agrees to provide specified benefits to the community in which it wishes to operate, and, in return, the community agrees to not oppose or to support the project. As my colleagues have explained in prior posts, CBAs usually involve multiple steps, including: “(1) public education; (2) community negotiation; (3) contract drafting and signing; and (4) implementation and enforcement.”
Local governments’ authority to enter into CBAs can vary from state to state. Because some states, like Texas, statutorily prescribe or limit how and when CBAs can be used, CBAs aren’t necessarily a viable option for local governments everywhere. But where they are, they can be powerful tools. For example, Byron, New York, a town with a population less than three thousand, negotiated to receive almost $25 million over 20 years in connection with a 280 megawatt (MW) solar facility. In San Francisco, local coalitions negotiated major benefits related to a large development project in the Bayview-Hunters Point neighborhood, including substantial affordable housing commitments and millions of dollars in housing assistance and job training. Moreover, even if a local government cannot enter into a CBA, another local group might do so. Further, when a city is a party to any CBA, it must be careful to avoid structing an agreement that might give rise to a regulatory takings claim, which may reduce the flexibility of possible agreement terms.
Once executed, CBAs operate as enforceable agreements: the developer is obligated to deliver on a set of promises, which often include making monetary payments and sometimes providing other benefits to the community. In return, a developer will usually receive increased support for, or reduced opposition to, the project (e.g., the community might agree to file letters in support of the project with state authorities responsible for permitting or not to commence or continue litigation challenging the project). Because CBAs are customizable legal agreements negotiated for specific projects, they can be tailored to meet the specific needs of the host community, meaning that they can be comprehensive or more targeted, depending on the particular impacts of the project and the relative importance the host community places on each impact. When effectively implemented, CBAs don’t just reduce the burdens of development, they also help redistribute its benefits to the host community.
Case Study: Lancaster, Pennsylvania
Negotiating CBAs in the data center context is still an emerging practice so there are few direct examples from which to draw. That being said, CBAs are commonly negotiated when other types of projects are developed. The Sabin Center maintains a CBA database that includes example agreements from various types of projects, including renewable energy, waste management, and housing. Much can be learned from these examples, and many of the negotiated provisions can be transferred to the data center context. Workforce development, for instance, is a major sticking point in many CBA negotiations. CBAs can present cities with an opportunity to secure enforceable promises from a developer to hire a certain number of local workers, provide associated housing, contract with minority contractors, raise wages for its workers, or affirm the right for workers to unionize, among other possible benefits and protections. This aspect of CBA negotiation is transferable across contexts, but highly variable depending on the specific project. In the data center context, for example, the fact that there are relatively few ongoing jobs in the facility may make this benefit less valuable to local governments / communities. Property value guarantees, on the other hand, are transferable across contexts but not as variable as workforce development provisions. Generally, a developer guarantees the appraised value of surrounding properties as of a certain date, and that guarantee usually ends once a property is sold. Financial contributions to the community, the most common benefit provided for in CBAs, are also transferable. These three types of provisions, which have been used in other development contexts, can also be adapted to data center related CBA negotiations.
To our knowledge, the first data center-specific CBA was recently executed between the City of Lancaster, Pennsylvania and three developers (the “Owners”). The Owners intend to develop three data centers across two 75-acre “campuses” within Lancaster’s city limits. When completed, the data centers will “house computer servers and related infrastructure focused on the delivery of the latest artificial intelligence applications” across a total footprint of approximately 2,000,000 square feet, or about 45 acres. The data centers will operate twenty-four hours a day, seven days a week, and will include on-site backup energy generation, likely from diesel generators. The development is expected to create just 300 full time jobs and thus offers relatively limited local benefits but potentially significant harms (e.g., in terms of air pollution, noise, water use, etc.).
The twenty-year CBA is intended to help mitigate these risks and includes important protections and monetary benefits for the community. However, as explained below, the agreement frequently relies on flexible or ambiguous language rather than measurable performance standards, which may reduce its effectiveness. Nevertheless, because this is one of the few examples in the data center context, examining its provisions may help inform future local government CBA negotiations.
Key Provisions of Lancaster’s CBA
Noise. The Owners are required to “design and construct” the data centers to minimize noise. For example, each “campus” is prohibited from transmitting any noise that exceeds the ambient noise level of certain adjacent properties. To achieve this commitment, the Owners will use low-noise technology, practices, conduct noise studies, and provide Lancaster with a noise mitigation plan prepared and certified by a professional acoustic engineer. Data center noise pollution has emerged as a significant issue and can adversely impact staff, surrounding communities, and wildlife. While the CBA includes noise protections, it does not establish a specific decibel threshold that the data centers must comply with (e.g., 85 dB(A) is considered harmful to human health). Further, while each campus must abide by the noise limit, it is not clear from the language that that cumulative noise attributable to the campuses must be below pre-construction ambient noise levels of certain surround properties, which would create a major gap. If each campus independently complies while their combined operations exceed ambient levels, surrounding communities could still experience materially elevated noise impacts.
Air Quality. In addition to re-affirming any state and federal statutory obligations with respect to air emissions, the CBA requires the Owners to provide copies of any and all air emissions-related permits, if requested by Lancaster. The Owners are required to use emissions-reducing technology for backup generators and utilize permitted air emissions capture technology. These provisions largely reinforce existing legal obligations rather than impose additional substantive air-quality protections. The addition included in the CBA is that the Owners agree to provide information to Lancaster. Although the CBA incorporates commitments to use certain emissions-reducing technologies, like catalytic reduction systems, it does not specify to what extent emissions will be reduced, nor does it provide any additional commitments to improve local air quality.
Energy Usage. Under the terms of the CBA, all electricity used for the data centers themselves must be “derived from clean energy sources.” This phrase may not be what it appears—it does not actually mean, for example, that the electricity must come directly from low or zero-emissions sources. Rather, the term “derived” encompasses the procurement of such energy, as well as procurement of renewable energy credits or similar instruments. If the Owners fail to comply with this section, they must make certain “Required Clean Energy Payment[s]” from a pre-filed $10 million letter of credit (the “Contingent Clean Energy Fund”), but face no additional liabilities. For each data center that comes online in compliance with the 100% clean energy requirement, the letter of credit will be reduced by $2.5 million. Further, the Owners must annually present on the clean energy usage and sources for the preceding year at a public City Council meeting. Although the CBA includes the expected size of the data centers, it does not describe the MWs of energy each building is expected to consume. Not including that detail renders the CBA somewhat opaque, making it unclear just how energy intensive the data centers will be, how many backup generators and other redundancies will be needed, and whether it would be feasible to source all or a portion of the energy from renewable sources. In other words, because the expected energy use of the data centers is not included in the CBA, it is less clear that the benefits bargained for are commensurate with the development’s impacts.
Water usage. The Owners’ use of municipal water cannot exceed 20,000 gallons per day at either “campus.” (For context, that volume is close to the daily water use of approximately 65 U.S. households.) Additionally, the Owners must use a closed-loop water cooling system that minimizes municipal water use and includes no added chemicals. Closed-loop systems reduce water consumption relative to other forms of cooling, but the heat must go somewhere and is often transferred to the ambient air, possibly contributing to a heat island effect. Moreover, the cooling system is the second largest energy consumer in a data center, but Lancaster’s CBA does not include specific efficiency requirements that the Owners must comply with beyond an arguably-vague condition to minimize municipal water use.
Land Use & Operations. Each campus must be screened by plants and trees, must include 100-foot buffers along public streets and residential or park edges, and must include 50-foot buffers for all other boundaries. The Owners must also prepare a comprehensive e-waste plan detailing how all e-waste will be handled through the term of the agreement, including disposal of “computer hardware, energy transmitting equipment, energy generating equipment, chillers, any other portion of the cooling system and the backup generators.” Some related provisions, however, may be difficult to enforce. For example, the Owners must “reasonably maximize” rainwater capture and, “where feasible”, design the development to maximize “climate resiliency and healthy building features.” Non-specific language like this, which is scattered throughout the agreement, makes enforcement of the CBA more difficult than if there were specific design and operation requirements that could be referenced if and when Lancaster conducts compliance assessments.
Financial contributions. The Owners must contribute $10 million, as well as a separate $250,000 contribution, to the Lancaster County Community Foundation, and $10 million to the City’s Sustainable Development and Clean Energy Fund, for a total of $20.25 million. Payments will be made in installments—before construction and after the data centers begin operating. Under section 8.1.3(a), a small, select committee—which does not include a direct community representative—will determine how to use the contributions to the Lancaster County Community Foundation. The use of all the contributions must be consistent with Section 1.1 of the Agreement and must be used to “provide both direct benefit to [Lancaster] residents, businesses, property owners, institutions, and not-for-profit entities.” Section 1.1 is a general-purpose provision that does not include any major restrictions on how the funds might be used. At least some of the separate $250,000 contribution must be used to design a strategic plan to guide how all the contributed funds will be deployed.
Enforcement. The agreement includes enforcement provisions to ensure compliance with both financial and non-financial commitments, and remedies for noncompliance may include discontinuation of operations and additional interest added to missed payments. For example, in the case of non-compliance with non-financial commitments, after a notice and opportunity to cure period, Lancaster may pursue injunctive relief or other judicial orders. Enforcement provisions, while essential to ensuring that a CBA is a legally enforceable document, come with practical challenges. Most significant in the local government context is a lack of resources. Smaller communities may have less financial and personnel resources to devote to enforcing CBA provisions, whether through administrative oversight or litigation. If the latter, a smaller community may be up against very well-resourced corporations, which could lead to delays in implementation or non-enforcement altogether.
Lessons for Local Governments
Lancaster’s CBA includes important environmental, energy, and fiscal mitigation measures that may be instructive as to what other communities pursue in their own CBA negotiations, but CBA negotiations are not a one size fits all process and enforcing their provisions is often difficult.
Other communities could look to build on what’s included in the Lancaster CBA. For example, where Lancaster’s CBA allows the Owners to procure renewable energy credits to satisfy the development’s clean energy supply requirements, another municipality might specify that the developer cannot rely on credits to meet its clean energy commitments. Instead, it could require an in-state 100% low- or zero-emission clean energy supply from power-purchase agreements or on-site owner-developed clean energy to supply both electricity and provide redundant energy supplies. In St. Louis’s recently negotiated data center-related CBA, its clean energy provisions look more like Lancaster’s. They require the developer to make “reasonable efforts” to “source at least 50% of the data center’s energy load from renewable sources” within five years. But if the goal is not met, there’s no real penalty. The developer only “must endeavor to purchase localized renewable energy credits” (emphasis added), weakening the enforceability of the development’s commitment to clean energy.
Lancaster community members have also raised procedural justice concerns, alleging that Lancaster did not adequately include community members in negotiations. For example, the community group Lancaster Stands Up reported that it only received a version of the agreement two days before the city council voted on it. CBAs negotiated without robust community involvement may not adequately address community concerns, which may reduce the impact of any benefits but also undermine local support for the project. Additionally, although the CBA requires the Owners to create a “Local Hiring Plan,” it does not commit them to hiring a certain number or percentage of local workers. Instead, the Owners must identify “percentage goals for local resident hiring” and work with local entities to make “good faith efforts” to hire local workers. These provisions largely require planning and outreach efforts rather than any minimum level of local employment or other labor protections, such as those identified above.
Conclusion
When negotiated and implemented effectively, CBAs can win substantial developer promises to mitigate the adverse impacts of data centers, reduce power imbalances between large, well-resourced corporations and resource-constrained local governments, and redistribute the fiscal benefits of development to the host communities that ultimately bear the costs. Interested communities should keep in mind best practices for negotiating and drafting agreements and look to other existing resources, like the Sabin Center’s CBA Database and the NAACP’s Stop Dirty Data Centers campaign. As investment in data centers continues, CBAs are one tool, among others, available to local governments and communities who are considering how to respond to their development and operation.
Vincent M. Nolette is the Sabin Center's Equitable Cities Climate Law Fellow.
