Writing the Rules in Real Time

I was in the room where it happened this week.

Entering City Hall in Lancaster, Pennsylvania, I walked into the Council Chambers where the City Council had its scheduled meeting at 6:30pm, and it was already full, with local residents spilling out into the hallways. More than forty people had signed up to speak on the subject of a new data center zoning ordinance.1 The ordinance passed unanimously that evening, after hours of public comment and statements by each city council member. That was on Tuesday, July 14, and in this past week, much of the country has been experiencing record summer heat and poor air quality from Canadian wildfires. A weekend “microburst” storm flooded streets and downed trees only days before the public hearing.

One after another, residents stood and connected the dots themselves in their personal stories — between the storms, the heat, and the enormous amount of energy these facilities draw. The room roared in applause in support of impassioned speeches about protecting public health from noise and air pollution, and preserving their environment and natural resources. Then as expected the City Council voted, 7 to 0, to adopt Lancaster’s first data center zoning ordinance.

The new ordinance permits data centers only by special exception, and on a limited basis — parcels of land in a single manufacturing district in the city’s northeast corner, and it strikes the one other site county planners had identified. It sets noise limits, requires Tier 4 backup generators2, demands a certified water-use report, and makes developers post financial security deposits to decommission a site when it closes. It keeps these facilities out of the floodplain and requires a public information meeting before any zoning hearing. By the planning director’s own account, developers are now unlikely to pursue what little land remains.3

I have written about the City of Lancaster as a model for the state, if not the country, for having executed a community benefit agreement — a legal contract between the data center developer and the city. What I had not fully appreciated until this week is that the CBA was put in place because the city had no ordinance regulating data centers when a new development was proposed last year. This vote filled a gap and its standards were shaped by the CBA itself. Despite its intentions, I observed a community frustrated by the lack of transparency and engagement in the decision to bring a data center to Lancaster in the first place. Seven months ago data center projects were being approved with little attention, in Lancaster and across the country, and the tide has turned. Public awareness has grown, and so have engagement and opposition — moratoriums increasingly are the tool communities, along with many policymakers, are calling for in order to figure out how to regulate data centers to protect the public.

The data centers already under construction in Lancaster were approved before any of these rules — they were permitted under an old category, “wholesale trade and storage.” When advocacy groups organized, the community benefit agreement became the compromise, and negotiated to do the job the missing zoning ordinance could not. The ordinance the Council passed this week was shaped in large part by that agreement, and it cannot reach the projects that prompted its adoption. Those buildings are grandfathered out, governed by the earlier deal under contract law.4

So the vote was unanimous and protective, and the residents who packed the chamber still called it insufficient. This moment did not feel like a win for the City Council or the residents. Both were caught in the same order of events: the money moved before the rules. A community can win real protections and still be unable to stop a project from being built. But the room was not resigned. Increasingly, average citizens experiencing a lack of agency feel empowered to act on what current reporting indicates is necessary: vibration and noise studies, closed-loop water systems, grid upgrades and clean energy standards, just to name a few.5 The City Council acknowledged it has more work to do to understand the full potential impacts of data centers.

Lancaster now has a way to regulate data centers, but some members of the community felt deceived by how quietly the projects were approved. One resident said that the City Council had approved the projects “while we were asleep.” Lancaster, like hundreds of municipalities across the country, is waking up to a new reality — and pushing back, only to find the limits of what a city can do. Municipalities in Pennsylvania, as in many other states, have no legal authority to pause development. That is why state legislatures are beginning to move.

Just this week, three governors took action at the state level, and those actions are game-changing at this moment. In New York, Kathy Hochul signed an executive order pausing new large data centers for up to a year and directing the state to write stronger rules, including a Community Investment Framework that would have developers pay into local funds for energy costs, child care, and public infrastructure — these could become community benefit agreements.6

In Pennsylvania, the state did far less: a budget signed July 12 that asks data centers to report their water and power use once a year and gives regulators a clearer view of grid forecasts.7 Ongoing monitoring and demanding transparency in reporting are important steps, but PA state bills looking to protect ratepayers, mandate clean energy, repeal tax incentives, and call for a 180-day moratorium remain stalled in the Senate chamber with just 11 days left in the legislative session.

And in Michigan, Governor Gretchen Whitmer — who in June broke ground on a $16 billion Oracle and OpenAI campus in Saline Township — declined to pause anything. On July 15 she asked data center companies to sign a voluntary pledge that they will cover their own energy and water costs, and called on the legislature to write the state’s existing ratepayer protections into law. Google and Oracle signed the same day. The voluntary pledge has been criticized, and now the Michigan state legislature is left to act.8

New York State Governor Hochul exercised her executive authority, a move favorable among residents and environmental advocates. This action is the first in the nation and is being met with mixed reaction: lauded by conservationists and progressives, and criticized by labor union leaders and business leaders. Michigan and Pennsylvania took softer, more development-friendly paths, but opted for different levers. For communities across the country working to block data centers, a zoning ordinance appears to be the most effective tool.

As the federal government pulls back from funding the community lenders and green banks built to route investment toward the people nearest these projects, the question of who benefits from AI deployment and data center construction grows.9 It also cascades down to the community level — from Washington to the statehouse, and from the statehouse to the city council. New York’s own framework pushes the decision down to localities to decide what direct benefits mean or look like, and formalizing a CBA will require expertise, time and money.

Lancaster is what that looks like when a locality is left to act alone: a Council that inherited a gap, a set of rules with no funding to implement zoning standards, and an organizing effort run by volunteers — in Lancaster County there are 59 other municipalities where data centers could go, and county planners have identified potentially suitable parcels in nine of them, municipalities that by the county's own account are still seeking guidance on how to regulate this use. The City Council itself called Lancaster a model for the rest of the county, as it continues to be the only municipality with an executed CBA in place to date.10

I keep watching these town halls and public hearings. And I have spent years following where capital is promised and often never arrives. The pattern is familiar, and the lessons are the same: the instrument matters, and the timing matters more. What Lancaster shows is that this question is now being decided in city councils, in real time, for the defining infrastructure of the decade. The distinct advantage that the City of Lancaster now has is to work on the infrastructure to monitor and enforce the CBA it has in place, as well as to decide how it will invest $20 million the developer committed and organized into two funds: one for economic development and the other to support green infrastructure.

Local residents understood the stakes. The volunteers of Lancaster Stands Up, who helped win that first benefits agreement, put it in plain terms to help the community understand the impact of its new neighbor: the first phase of a single data center, they said, will use as much electricity as all of the houses in Lancaster city combined.11 That is the claim that filled the room in a week of record heat, polluted air and flooded streets. People connected the grid to the weather because they are now living through both. Climate events are increasingly linked to this industrial revolution, even if we are years or decades away from these specific data center projects having direct impact at scale.

The Lancaster City Council could not give the residents who showed up everything they asked for. It also understood its limits. It could not declare a moratorium. That power sits with the state. It also could not rewrite a deal already signed under contract law. What it could do, it did — unanimously, and late, after hours of debate and public comment. In Lancaster, the community finally got to write the rules, but the feeling is that they may have arrived too late.

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