How NIMBY’s Saved Data Centers in PA

“We will not be bullied” by data centers, Gov. Josh Shapiro said this past August. He had just signed an executive order restricting their development in Pennsylvania. The promised productivity boom of AI is propping up the U.S. economy, and data centers – the warehouses of computers that train and run the technology – are proliferating across the country. With plentiful land and energy, Pennsylvania has been a hotspot for investment. 

Shapiro once welcomed data centers with open arms. Just over a year ago, he boasted that Amazon’s $20 billion statewide investment was the largest in the Commonwealth’s history. 

“The future of AI is going to run right here through the Commonwealth of Pennsylvania,” Shapiro told the borough of Berwick, not far from the nuclear power plant slated to power Amazon’s data center innovation campus.  

No more. Shapiro’s executive order stripped data centers from the fast-track program. “I have put the strictest guardrails in the nation in place to stop these predatory developers and these bad proposals from infecting our Commonwealth,” he said. 

Overnight, it would seem, data centers became a disease to be eradicated.

And yet, Shapiro hasn’t halted data center development. With an eye toward the 2028 presidential election, Shapiro sounds like a populist, but he’s quietly taken a more moderate path, one that recognizes AI’s long-term potential for reindustrialization while giving communities a greater say. The irony is that a little NIMBYism (not in my backyard) could seemingly save data center proposals from complete and permanent backlash. But Shapiro needs to learn how to sell it. 

Driving the Data Center Backlash

The problem with data center moratoriums is they are a populist Band-Aid. Shapiro recognizes this, telling NBC: “The pause can’t be the policy.” 

That’s because fundamentally the data center backlash is not about data centers. It’s about AI. And that’s not going away. 

Indeed, polling suggests voters are most concerned about the water use and electricity prices of data centers, but that misses the forest for the trees. States like Pennsylvania have long embraced industrial developments that polluted water, burdened the electrical grid, but also created jobs and anchored local economies (and then pulled the rug out when they left). And before ChatGPT, data centers had long supported services that underpinned the modern economy, from data storage to cloud computing and even streaming Netflix. 

What’s new is not the data centers themselves, but AI. Hyperscalers like Amazon, Microsoft, and Meta are expected to spend trillions to build massive data centers to handle the heavy demands of AI models – models that AI executives increasingly warn could lead to killer robots and mass unemployment, if left unregulated by the Trump administration.

With dystopia apparently on the horizon, it’s hardly shocking that the data center rush has led to bipartisan backlash. 

Voters “feel like the future is being forced on them,” a data center investor told me. 

It’s an age-old battle where communities fear that technology will disrupt their lives and replace them. This is what I heard over a year ago when I reported for RealClearPennsylvania on local resistance to a data center development, called Project Hazelnut, in Pennsylvania’s Luzerne County.

Locals feared their home values plummeting, energy prices rising, and what these machines would do to the environment and their health. 

“AI is going to make it possible to eliminate jobs by robotics, and we’re going to have all this industry but fewer jobs,” said Pat Pecora, a retired psychiatric social worker who’s lived through boom and bust before.  

For all the tax revenue promised from data centers, they create few permanent jobs. 

“Money isn’t a cure all for life. There has to be more to it than money,” said John Zola, leader of a local movement called Stop the Line, which he said successfully lobbied the county council to block Project Hazelnut. 

And Zola literally means money. After facing local backlash, the developer NorthPoint sent letters to every resident of Hazle Township, a mix of rural and suburbia surrounding the city of Hazleton, offering $10,000 payments to be paid once the first data center building received a certificate of occupancy. 

“This isn’t a favor. This wasn’t truly to help the community. This was – in some people’s words – a bribe,” Zola told me.

It’s not simply that data centers represent AI’s existential threat to their way of life. Locals fear how they are being built.

Zola had long asked who would be the customer of these data centers. Only right-to-know requests filed by pediatrician Colby Wesner revealed Amazon Web Services as the ultimate beneficiary, and that the state’s economic development agency had been in contact with Amazon concerning Hazelnut for months, according to PennLive.

“Everything was secretive. Now Gov Shapiro is trying to pull the veil of secrecy back. Why the NDAs [non-disclosure agreements]?” Zola asked me. “They went about it all wrong. They failed miserably.”

Was Shapiro’s Executive Order a Saving Grace for AI?

Shapiro has listened. His executive order is a step in the right direction. It basically sets a floor of conditions that almost all data center developers would have to meet if they want swift state approval to build in Pennsylvania. 

Under the governor’s GRID requirements, data centers – not residents – must pay for their energy use. That means grid upgrades and phasing in clean energy. Developers must also disclose their project footprint and end users, so no more speculation or NDAs with the state. They must submit workforce plans that encourage local hiring and training alongside other community benefits. And they need to show how they will limit water and energy use.

Most important, communities get a veto.

“If you don’t have local approval, it’s not happening,” said Zola. “Communities can put pressure on their local governing body.”

At a time when it seems the U.S. can’t build things anymore and Congress is trying to remove obstacles to energy permitting from the 1970s, having to get local approval sounds like just another obstacle to development. 

It may also be AI’s saving grace. 

Currently, supporting data centers is political suicide, and it only gets worse with each and every TV ad these midterms.

The well has been poisoned. When I asked Zola if he thinks Pennsylvanians could come around to data centers, he said, “That ship has sailed.” 

Indeed, the AI data center buildout has in large part been a colossal marketing failure. Communities feel like faceless developers have run roughshod over them. 

If they can be won over, it’s by giving them leverage to ensure they benefit from the AI buildout. They can ensure local tax incentives don’t go to waste toward developments that would happen anyway. Or demand AI workforce training to enable adoption in the local economy and protect workers from automation.  

It’s a genuine question if townships and counties have the state capacity to pull this off, but it is what this executive order is supposed to do. It just needs a champion to sell it. 

AI and Data Centers need a rebrand

At the AI Horizon Summit, Shapiro said he’s not a “doomer.” He still believes AI can create efficiencies, improve health outcomes, and assist workers in daily tasks – if it is developed in responsible, ethical ways. He highlighted positive use cases in Pennsylvania, like Gecko Robotics, which uses AI-enabled robots to inspect critical infrastructure for safety. He also pointed to the potential harms of AI like chatbots posing as medical professionals and the need for the federal government to regulate the industry.

But simply regulating AI will not stymie the existential backlash. AI and data centers need a rebrand.

As Salena Zito pointed out in the Washington Post, Shapiro said 90% of the data center projects reviewed by the state were causing community havoc. But he didn’t name a single developer getting it right. 

Shapiro could start by pointing to the good-faith developers working with local residents and generating their own power, like those in Homer City. He could meet with the union workers building them – and who support him. 

He could also learn the language of reindustrialization, which would appeal to the manufacturing heritage of Pennsylvania. Already, AI is supporting a jobs boom. Between the workers and supply chains involved in the data center buildout and the demand for labor created from more productive lawyers and other workers using AI, The Economist estimates AI has created 1 million jobs, far offsetting AI-related layoffs.

When AI integrates into the next wave of automation, it could help discover new materials, build and scale the production of machine tools and lost arts like tool and die making, and bring an adaptive ChatGPT-like knowledge of the world to robotics assembly. These are the building blocks of a wider AI industrial renaissance, one that can support technologies like electric vehicles and semiconductors.

This may not allay fears of robots replacing workers. But this goes back to Shapiro requiring local approval from data centers. 

The data center backlash points to a wider phenomenon: the only viable pro-development position is to ensure workers and communities benefit from investment. Done are the days where businesses build and ask questions later. We now live in an era of investment conditionality. 

And we may have NIMBYs in rural Pennsylvania to thank for it.

Ethan Dodd is a journalist and policy analyst passionate about reindustrialization. He covered the 2024 election in Pittsburgh and studied industrial policy at the London School of Economics.