Sherrill rolls out NJ data center regulations

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The basics:

• Gov. Sherrill proposes statewide data center regulations
• Plan targets energy demand, water use, transparency
• Framework includes clean energy, labor requirements
• Plan unveiled as communities statewide oppose proposed facilities

Gov. Mikie Sherrill unveiled May 27 what her administration described as the nation’s first comprehensive statewide framework for regulating the rapidly growing data center industry.

The announcement comes as New Jersey faces mounting concerns over rising electricity demand, water usage and local community impacts tied to artificial intelligence infrastructure.

Speaking at the State House in Trenton Wednesday, Sherrill said the plan seeks to balance economic opportunity tied to AI development with protections for ratepayers and local communities.

“I’ve said many times, I ran for governor to create a more affordable New Jersey to lower costs and build a government that delivers for the people that it’s meant to serve,” said Sherrill. “So today I want to talk about something that’s on a lot of people’s minds: data centers.”

Proposed mega-projects have garnered a lot of attention and, increasingly, backlash around the state and country.

“We have over 80 facilities right here in New Jersey,” said Sherrill. “They’ve created over 100,000 construction jobs, boosting tax revenue, and feeding our innovation economy. But today AI is driving an explosion in the construction of even bigger centers nationwide.

“There are real concerns about their impact on our energy bills, our water supply, our quality of life. And there are worries that growth is happening without transparency or concern for our communities.

I know for a lot of people things can feel out of control — like it’s the wild west, like it’s happening in the dark. I hear you, and we’ve got your back – and I have plan.
– Gov. Mikie Sherrill

“I know for a lot of people things can feel out of control — like it’s the wild west, like it’s happening in the dark. I hear you, and we’ve got your back – and I have plan.”

Strategy specifics

Sherrill said the framework centers around four core pillars:

• Requiring data centers to help fund new clean energy generation and grid upgrades needed to support their operations
• Expanding transparency requirements around energy and water usage
• Creating statewide standards for Community Benefits Agreements to address issues such as noise, light pollution and local infrastructure impacts
• Requiring projects to use local trades and prevailing wage labor

Sherrill repeatedly tied the issue to rising utility costs. She argued that rapidly growing energy demand from large-scale data centers is putting pressure on the electric grid.

“We haven’t seen real growth in energy demand for decades, but in the last few years there’s been an explosion,” she said. Beyond that recent surge, the governor also noted her early energy efforts, such as signing executive orders during her inauguration to freeze rate hikes and increase power generation.

Sherrill also highlighted other efforts, including ending a moratorium on new nuclear power in the state and approving six stalled solar and battery storage projects, as well as plans to modernize natural gas plants.

First in the nation plan

However, she said it is imperative to address the soaring demand – not just supply.

“And data centers are the single biggest driver,” said Sherrill. “Our grid operator, PJM, has said that data centers were responsible for 70% of the projected increase in demands last year. The Department of Energy says they’ll account for over 10% of all power consumed in America by 2030. So, today I’m stepping up to establish clear guardrails for data centers in New Jersey – the first comprehensive strategy across the country like this.

“It’s a four-part plan to make data centers pay their fair share by bringing their own energy to the table, to make sure they operate transparently, add value to the grid and to our communities, and support good-paying jobs long-term.”

Growing Garden State opposition

The announcement comes as data center proposals spark increasingly heated opposition battles across New Jersey and beyond. Contentious planning board and council meetings have drawn residents concerned about energy consumption, water usage, noise, environmental impacts and quality-of-life issues.

Communities including Andover, Vineland, Kenilworth and many others have heard vocal public pushback over proposed facilities. Meanwhile, some municipalities have moved to prohibit data centers altogether. Earlier this year, Pemberton approved a local ban on data centers amid growing resident concerns. And just recently, Andover did the same.

A statewide poll from Stockton’s William J. Hughes Center for Public Policy found a majority of New Jersey voters (56%) support banning data centers in their own communities. The consensus underscores growing political sensitivity surrounding the issue.

Sherrill emphasized the need for greater public oversight and local involvement as more communities grapple with proposed projects. The governor said her proposal intends to ensure New Jersey can remain competitive in the AI economy — without sacrificing affordability or environmental protections.

“We are not going to be beholden to big tech,” Sherrill stressed. “We are going to chart our path forward here in New Jersey.”

Watch the full announcement here:

‘Not an uncomplicated issue’

Sen. John Burzichelli, D-3rd District, also joined Sherrill at the announcement. He said lawmakers are working through legislation to implement portions of the framework and stressed the need for a balanced approach.

“This is not an uncomplicated issue,” said Burzichelli. “Technology is coming, it’s always coming. So, we have to adapt.”

“The Legislature is ready to join her [Sherrill] in her goals. Legislation is coming, and as you all know, the legislative process isn’t perfect,” Burzichelli continued. “But we’re going to work to get it the best we can.”

He again noted that this is a complicated, but step-by-step, process.

“What you’re hearing outlined today is an important step, and we have to follow through, stay focused on what matters because we need jobs. But we can’t force people out of their homes because they can’t afford to turn the lights on,” said Burzichelli. “That’s where the delicate balance is. We’re going to figure it out.”

A proactive approach

In a statement, New Jersey Business & Industry Association President and CEO Michele Siekerka said her organization 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,” said Siekerka. “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.”

Siekerka added NJBIA has also studied the opportunities and potential challenges of data centers. “And we look forward to sharing that data with the administration and the public in the short-term,” she said.