Speaker 1: Welcome to the debate.
Speaker 2: Thanks glad to be here.
Speaker 1: So right now, there are well over one hundred multi
Speaker 1: billion dollar AI data centers that are just trying to
Speaker 1: plug into Pennsylvania's electric.
Speaker 2: Cred Oh yeah, the volume is staggering right now.
Speaker 1: Right, It's massive, and almost none of them have any
Speaker 1: kind of public approval because usually the traditional assumption with
Speaker 1: large scale infrastructure is that you have a public process, right,
Speaker 1: you have local zoning, hearing.
Speaker 3: Right, legislative oversight, town halls, all of that exactly.
Speaker 1: But hyperscale AI facilities have historically just bypassed all of that.
Speaker 1: They operate under this veil of total secrecy. So today
Speaker 1: we are diving into Pennsylvania's Executive Order twenty twenty six zero.
Speaker 2: Five, which is a pretty wild piece of policy.
Speaker 1: It really is. It's this groundbreaking regulatory framework designed to
Speaker 1: rain in the industry. And what makes it so fascinating
Speaker 1: and honestly pretty controversial is that it operates entirely without
Speaker 1: new legislation.
Speaker 3: Yeah, we are basically looking at a state executive branch
Speaker 3: just completely bypassing its own legislature to regulate one of
Speaker 3: the most capital intensive, resource heavy industries on the planet
Speaker 3: using only administrative levers.
Speaker 1: Right, So the core question we really need to resolve
Speaker 1: today is this how effective and I guess how legitimate
Speaker 1: is it to use existing permitting authority to do this?
Speaker 1: Like seeing how contracts replace new laws essentially right, using
Speaker 1: these state contracts to enforce really strict rules. And specifically
Speaker 1: we want to analyze the technical requirements on water and
Speaker 1: energy consumption.
Speaker 3: Because that's where the actual physical impact hits the local community.
Speaker 1: Exactly can a contract act as a direct substitute for
Speaker 1: traditional lawmaking? So our discussion today is rooted in the
Speaker 1: recent rollout of the Governor's Responsible Infrastructure Development or the
Speaker 1: grid requirements right in a state's mandatory template, the Consent
Speaker 1: Order Agreement, the CoA. Yeah, yeah, the CoA. So I'll
Speaker 1: be making the case that this contract based approach is
Speaker 1: frankly a brilliant pragmatic innovation. It successfully forces developers to
Speaker 1: internalize their massive energy and water impacts, and it totally
Speaker 1: bypasses the legislative gridlock that usually stalls this stuff.
Speaker 3: And I am going to argue that relying on executive
Speaker 3: permitting levers and forced contracts, it basically circumvents the democratic process.
Speaker 3: It creates this precarious regulatory instability and honestly technical constraints
Speaker 3: that I think will ultimately paralyze critical infrastructure development.
Speaker 1: Okay, well, let me lay out the foundation of my
Speaker 1: position first. From my perspective, Pennsylvania has effectively cracked the
Speaker 1: code on modern tech regulation.
Speaker 2: That's a bold claim.
Speaker 1: I think it's true. Though. They realized a very simple,
Speaker 1: very powerful truth, which is that contracts can substitute for
Speaker 1: new laws when the law just fails to keep pace
Speaker 1: with technology. Okay, but we'll just think about it. We
Speaker 1: all know that AI capabilities scale exponentially, right, they turn
Speaker 1: over every six to twelve months. But state legislatures they
Speaker 1: operate on these sluggish, linear timelines.
Speaker 3: Sure, the legislative process is slow by design.
Speaker 1: Right, but Governor Josh Shapiro didn't wait for a divided
Speaker 1: legislature to catch up. Instead, the state fundamentally changed the
Speaker 1: rules of engagement. They are now conditioning the mere opening
Speaker 1: of a Department of Environmental Protection a DP permit file
Speaker 1: on the developer signing a legally binding consent order and agreement.
Speaker 2: They won't even open the file.
Speaker 1: Exactly, they won't even look at it. The state is
Speaker 1: wielding its existing administrative authority to just blast through the gridlock.
Speaker 1: And the technical brilliance of these grid requirements is that
Speaker 1: developers must now legally commit to paying the full cost
Speaker 1: of generation, transmission and distribution.
Speaker 3: Upgrades, which are massively expensive, exactly massively, and they have
Speaker 3: to meet strict water conservation standards.
Speaker 1: So by utilizing a contract to manded these upgrades, the
Speaker 1: executive branch prevents the staggering infrastructural costs of hyperscale AI
Speaker 1: from being you know, quietly absorbed by local households and
Speaker 1: small businesses. Right. It is this elegant, immediate solution to
Speaker 1: an exploding problem that the legislature just utterly failed to solve.
Speaker 2: Okay, I see where you're coming from.
Speaker 3: But I approach this from a completely different philosophical and
Speaker 3: honestly practical foundation. Okay, this framework, it is not a
Speaker 3: brilliant administrative innovation. I mean, it is textbook regulatory coercion.
Speaker 1: Coercion is a strong word, but it fits.
Speaker 3: It undermines the predictability required for major capital investments. Look,
Speaker 3: a contract fundamentally implies two willing parties coming to a
Speaker 3: mutual agreement.
Speaker 1: Right. Generally yes, right.
Speaker 3: In this context, developers who refuse to sign this specific
Speaker 3: consent order, they are permanently removed from Pennsylvania's permit FastTrack program.
Speaker 3: The dep just simply refuses to even ow open their
Speaker 3: application file until every single local municipal approval is secured
Speaker 3: and every construction permit has already been reviewed through the traditional,
Speaker 3: agonizingly slow.
Speaker 1: Channels, which takes year's exactly.
Speaker 3: It completely inverts the normal sequencing that developers rely on
Speaker 3: to secure financing. I mean, you cannot get bank funding
Speaker 3: without a permit path, right, and you cannot get a
Speaker 3: permit path without signing this executive ultimatum, so it's not mutual. Furthermore,
Speaker 3: we really have to recognize the extreme fragility of this method.
Speaker 1: Because it's an executive order, because no statute was passed.
Speaker 3: Yeah, the Pennsylvania House actually passed bipartisan grid legislation, but
Speaker 3: Senate Republicans declined to move it.
Speaker 1: Forward, right the gridlock I mentioned.
Speaker 3: Sure, But because the executive branch decided to act unilaterally anyway,
Speaker 3: this entire multi billion dollar framework, it just rests on
Speaker 3: the stroke of a pen by a single governor, a
Speaker 3: governor facing re election this November, I might add.
Speaker 1: I know the timing is tight right, So.
Speaker 3: Any future administration can simply revoke the order on day one.
Speaker 3: When you compare this to actual codified laws enacted by
Speaker 3: legislatures in places like you know, California, Ohio, Utah, this
Speaker 3: contractual method creates a disastrous, unpredictable foundation. Multi billion dollar
Speaker 3: infrastructure requires decades of certainty, not fragile political workarounds.
Speaker 1: I mean, I definitely understand the concern regarding statutory permanence.
Speaker 1: But let's examine how this contractual mechanism actually functions in reality. Okay, specifically,
Speaker 1: when we look at the ban on secrecy, I think
Speaker 1: the overarching legality and frankly, the moral justification of this
Speaker 1: framework is validated by the specific mechanism that makes it work,
Speaker 1: which is the outright ban on non disclosure.
Speaker 2: Agreements the NDAs.
Speaker 1: Right, the NDAs. Yeah, The executive order dictates that the
Speaker 1: use of NDAs is no longer permissible for Commonwealth agencies
Speaker 1: interacting with these developers, and for the past decade have
Speaker 1: been the global standard for data center siting.
Speaker 2: Oh.
Speaker 3: Absolutely, everything is hidden behind shell companies, right.
Speaker 1: These shell companies are utilized to deliberately hide load projections
Speaker 1: and water draw from the very residents who will actually
Speaker 1: be impacted. So, coming back to how contracts substitute for
Speaker 1: new laws, this contract substitutes for a new law by
Speaker 1: mandating absolute public disclosure to earn local consent.
Speaker 2: I'm not defending NDAs.
Speaker 1: But just think about it from a practical standpoint. It
Speaker 1: is like someone buying the empty lot next to your house,
Speaker 1: right but legally forbidding you or even the town council
Speaker 1: from knowing if they plan to turn it into a
Speaker 1: twenty four hour industrial factory that will just drain the
Speaker 1: local reservoir. Sure no one wants that exactly. The state
Speaker 1: is entirely justified in withholding public fast tracks and these
Speaker 1: lucrative tax exemptions from entities that demand total secrecy. The
Speaker 1: government is simply saying, if you want our expedited administry help,
Speaker 1: you have to tell us exactly who you are and
Speaker 1: what you're building.
Speaker 3: Look, the concept of transparency is incredibly popular. I'll give
Speaker 3: you that, but let's look at the actual bureaucratic reality
Speaker 3: of weaponizing the permitting process.
Speaker 2: To achieve it.
Speaker 3: Weaponizing, Yeah, weaponizing you mentioned with holding tax exemptions. This
Speaker 3: is where the legal gymnastics of this executive order really
Speaker 3: become a parent. The administration is tying the Department of
Speaker 3: Revenues sales and Use tax exemptions which are massive, I
Speaker 3: mean massive financial incentives for server hardware directly to the
Speaker 3: signing of the Dep's environmental contract.
Speaker 1: Right leveraging the incentive.
Speaker 3: But that creates a convoluted maze of interagency hostage taking.
Speaker 3: By linking a tax incentive to a grid priority surrender,
Speaker 3: you aren't streamlining good projects. You are creating a massive
Speaker 3: administrative choke point.
Speaker 1: But is it a choke point or a filter?
Speaker 3: Well, look at the data release with the order. It
Speaker 3: reveals a staggering bottleneck. There are over one hundred projects
Speaker 3: sitting in public databases right now in Pennsylvania. Of those
Speaker 3: fifty eight of approach the DP okay, only fifteen have
Speaker 3: actually formally applied for a permit and exactly five, just
Speaker 3: five hold what is needed for.
Speaker 2: A first phase Wow. Okay, five out of one hundred.
Speaker 3: When you use complex interagency contracts to substitute for clear laws,
Speaker 3: you don't speed up responsible development. You create a paralyzed
Speaker 3: environment where developers are basically just waiting to see how
Speaker 3: a rotating cast of executive agencies will interpret a newly
Speaker 3: minted consent order.
Speaker 2: Before they commit capital.
Speaker 1: See I look at that bottleneck, and I don't think
Speaker 1: that is a failure of the system. I think it
Speaker 1: is the system working exactly as intended.
Speaker 3: How is blocking ninety five percent of projects working as intended?
Speaker 1: Because sorting those one hundred projects out in public, forcing
Speaker 1: them to meet the grid requirements before they receive the
Speaker 1: state's blessing. That is how you separate viable, responsible infrastructure
Speaker 1: from what are essentially speculative land grabs.
Speaker 2: I mean some them are speculative, Sure.
Speaker 1: A lot of them are. And this forces developers to
Speaker 1: consult communities early enough in the process to actually shape
Speaker 1: the design decisions, rather than presenting a finished, unalterable schematic
Speaker 1: to a town under the threat of litigation, which is
Speaker 1: what they usually do.
Speaker 3: But transparency over data means nothing. If the facility brings
Speaker 3: the electric grid to its knees first.
Speaker 1: Well that's where the technical requirements.
Speaker 3: Come in, right, And the DP knows this, which is
Speaker 3: why they tied these transparency disclosures directly to the most
Speaker 3: controversial part of this whole order, which is the curtailment ranking.
Speaker 1: Ah, the curtailment ranking.
Speaker 3: Yeah, this shifts our focus to the physical consequences on
Speaker 3: the power grid. The Special Council for Energy Fordability is
Speaker 3: actively pushing the Public Utility Commission to mandate the data
Speaker 3: centers lose electric service before anyone else when the grid
Speaker 3: is under strain.
Speaker 1: Right, which protects hospital, schools and you know, residential neighborhoods
Speaker 1: from rolling blackouts during extreme weather events. That seems entirely reasonable.
Speaker 3: It protects them by destroying the fundamental business model of
Speaker 3: AI infrastructure.
Speaker 1: Okay, explain that because I think a lot of people
Speaker 1: just see them as giant server rooms.
Speaker 3: Right, we really need to unpack the mechanics of what
Speaker 3: happens inside these facilities. If a company is training a
Speaker 3: large language model, a trillion parameter AI model, they have
Speaker 3: tens of thousands of GPUs synchronizing weight updates in real time.
Speaker 1: Right.
Speaker 2: If the regional.
Speaker 3: Grid operator cuts their power because say it's a hot
Speaker 3: day in July and the grid is stressed, the hardware
Speaker 3: doesn't just pause nicely.
Speaker 1: It doesn't just pick up where it left off.
Speaker 3: No, not at all. The system desynchronizes. You corrupt the
Speaker 3: checkpoint data. The developer loses days, sometimes weeks of complex
Speaker 3: computational math, which easily translates to tens of millions of
Speaker 3: dollars in lost capital per event. Oh wow, yeah, it's
Speaker 3: catastrophic for a training run. If developers are forced, via
Speaker 3: this mandatory contract to price in the extra dream risk
Speaker 3: of losing power first, they are just not going to
Speaker 3: build in Pennsylvania. They will take their capital to states
Speaker 3: that don't treat them as a disposable, interruptible asset.
Speaker 1: I see the risk there, but.
Speaker 3: And wait, furthermore, the order demands they pay for pgm's
Speaker 3: reliability backstop auctions, right the regional grid operator exactly PJM.
Speaker 3: If the regional transmission organization and backstop auctions are essentially
Speaker 3: capacity markets, you pay power plants to stay on standby
Speaker 3: just in case demand spikes. Forcing data centers to shoulder
Speaker 3: that standby cost alone through an executive contract rather than
Speaker 3: a broad legislative tax is While it's like making a
Speaker 3: new resident pay for a fully staffed ambulance to sit
Speaker 3: idle in their driveway twenty four hours a day just
Speaker 3: in case they get sick, while the rest of the
Speaker 3: town pays normal taxes.
Speaker 2: It is totally punitive.
Speaker 1: That is a great analogy, But I interpret that dynamic
Speaker 1: entirely differently. I fiercely defend the curtailment ranking, and I
Speaker 1: think it echoes a really vital principle articulated by PUC
Speaker 1: chairman Steve defranc He said growth should pay for growth.
Speaker 2: I agree with the principle, just not the method.
Speaker 1: But you argue that turning grid costs into a constraint
Speaker 1: on uptime will make them flee. I argue it is
Speaker 1: the exact technical lever required to force hyperscalers to innovate
Speaker 1: an energy efficiency.
Speaker 2: By threatening their uptime.
Speaker 1: Yes, because if they know they are first on the
Speaker 1: chopping block for curtailment, they are mathematically forced to change
Speaker 1: their architecture. Okay, how they will build robust on site
Speaker 1: backup generation right like small modular reactors or geothermal storage.
Speaker 1: They will invest in advanced cooling systems that draw less
Speaker 1: power during peak hours, and they'll design more fault tolerant
Speaker 1: AI training architectures that can actually handle those rolling power adjustments.
Speaker 3: Or they will just bypass the headache and build in
Speaker 3: Ohio where the legislature offers clear statutory guidance without the
Speaker 3: threat of sudden curtailment.
Speaker 1: They can try, but they cannot hide from grid physics
Speaker 1: forever twenty seven. Other states are currently weighing large load
Speaker 1: legislation right now because the grid constraints are completely universal.
Speaker 2: Sure the grid is stressed everywhere.
Speaker 1: Look at what happens when a state does not mandate
Speaker 1: these curtailments and upgrades upfront. If you look at Virginia,
Speaker 1: which is widely considered the data center capital of the world,
Speaker 1: forty eight massive projects representing like one hundred and fifty
Speaker 1: six billion dollars in potential investment were blocked or stalled
Speaker 1: by intense local opposition just this year.
Speaker 2: The pushback there has been huge.
Speaker 1: Right because the citizens realized that data centers were threatening
Speaker 1: their local grid reliability and driving up their baseline utility rates,
Speaker 1: so they were volted at the zoning level. Pennsylvania's contractual
Speaker 1: approach preempts that local rebellion by legally ensuring data centers
Speaker 1: lose power before households do. The contract secures local consent,
Speaker 1: which honestly is the only way these multi billion dollar
Speaker 1: facilities actually get built in the long term. But that
Speaker 1: assumes the premise that executive fiat is the only way
Speaker 1: to secure consent. If we agree that growth should pay
Speaker 1: for growth, we should implement that through the legislature. That's
Speaker 1: where all stakeholders, the utilities, the tech firms, the consumer
Speaker 1: advocates can actually debate the economic impact of that curtailment. Ranking.
Speaker 1: When an executive order just declares it, it sends a
Speaker 1: chilling signal for the capital markets. It sends a signal
Speaker 1: that the state is serious.
Speaker 3: It sends a signal of instability. And this local rebellion
Speaker 3: you mentioned it isn't just about electricity. A massive power
Speaker 3: draw is always accompanied by a massive physical footprint that
Speaker 3: threatens local natural resources. And this brings us back to
Speaker 3: the core issue, which is we need to analyze the
Speaker 3: technical requirements on water consumption because this further illustrates the
Speaker 3: limits of executive authority.
Speaker 1: I actually look at the water usage requirements as one
Speaker 1: of the areas where the consent order absolutely shines. The
Speaker 1: specific disclosure duties mandated by this contract are rigorously detailed.
Speaker 1: Facility operators aren't just giving a vague public relations promise
Speaker 1: not to waste local water anymore.
Speaker 2: No, they have to provide hard numbers exactly.
Speaker 1: The contract forces them to report annual energy and natural
Speaker 1: gas consumption, estimated average hourly use at peak, total overall
Speaker 1: water consumption, and crucially, their maximum day demand.
Speaker 3: Now, maximum day demand sounds like standard bureaucratic jargon, but
Speaker 3: physically it is the most dangerous metric on that paper.
Speaker 1: Exactly because we have to look at the thermodynamics of
Speaker 1: how these facilities operate. Let's break this down for a second.
Speaker 1: Data centers are essentially massive heat generators YEP. To prevent
Speaker 1: the servers from melting, operators frequently rely on evaporative cooling systems,
Speaker 1: so they pump water over heat exchangers and blow air
Speaker 1: across them, evaporating the water to reject the heat into
Speaker 1: the atmosphere.
Speaker 2: It's essentially a giant swamp cooler basically.
Speaker 1: Yeah, And on a mild day, their water draw from
Speaker 1: the local municipality is manageable. But on the hottest day
Speaker 1: of the year that is the maximum day, the outside
Speaker 1: air is already hot, right, so the heat exchange is
Speaker 1: radibly inefficient, meaning the system has to work over time
Speaker 1: evaporating millions of gallons of water pulling directly from local
Speaker 1: aquifers or municipal supplies, exactly when the rest of the
Speaker 1: town is already facing drought conditions or peak agricultural demand.
Speaker 2: It's a perfect storm.
Speaker 1: It is that single day can ruin a local water system.
Speaker 1: By forcing the disclosure of maximum day demand and by
Speaker 1: providing a live public map of every proposed project that
Speaker 1: has engaged with the DDP, the state forces developers to
Speaker 1: prove they meet water conservation standards before a single shovel
Speaker 1: hits the ground. It replaces a reactive regulatory posture with
Speaker 1: a proactive, data driven contract that actually protects public resources.
Speaker 3: Okay, let's look at the mechanics of what you just described,
Speaker 3: because while a live map and reporting requirements sound great
Speaker 3: in a press release, they are inherently flimsy compared to hard,
Speaker 3: codified legislative financial commitments. How So, let's examine the critique
Speaker 3: from Food and Water Wine much they campaign heavily on
Speaker 3: protecting local aquifers from exactly the evaporative cooling threat you
Speaker 3: just outlined.
Speaker 1: Right, They are very active in Pennsylvania.
Speaker 2: And they called this executive order too little, too late.
Speaker 1: Really?
Speaker 3: Yes, why because the highly lucrative sales tax incentive for
Speaker 3: data center equipment actually survives this order. The governor is
Speaker 3: demanding transparency on maximum day water demand, yes, but the
Speaker 3: executive branch is simultaneously handing out massive tax breaks to
Speaker 3: the very facilities draining those specific resources.
Speaker 1: I see the contradiction there.
Speaker 3: It's a huge contradiction. If we want to look at
Speaker 3: how this should actually be done to protect citizens, we
Speaker 3: need to look at states passing actual, binding financial laws
Speaker 3: that target the economics of the industry.
Speaker 1: Okay, so you're referring to the statutory approaches in places
Speaker 1: like New Jersey and Virginia precisely.
Speaker 3: Let's look at New Jersey. They recently passed the Data
Speaker 3: Center Fair Share Act. That is a real debated statute.
Speaker 1: Okay.
Speaker 3: It legally requires facilities above fifty megawatts to commit to
Speaker 3: paying at least eighty five percent of their projected power
Speaker 3: costs for a decade. Oh wow, right, that guarantees the
Speaker 3: utilities and the taxpayers aren't left holding the bag if
Speaker 3: the AI bubble bursts and these facilities go dark. And
Speaker 3: Virginia added a hard energy consumption tax of one point
Speaker 3: one CeNSE per kilowatt hour.
Speaker 1: Which adds incredibly fast for a data center.
Speaker 2: Exactly.
Speaker 3: Those are real, durable financial laws passed by legislatures that
Speaker 3: fundamentally alter the economics of resource consumption. A contract based
Speaker 3: on a live map, you know, forced onto a developer
Speaker 3: by an executive branch that could change hands in twenty
Speaker 3: four months. It is simply not a substitute for democratic lawmaking.
Speaker 3: It creates a mirage of strict environmental regulation while quietly
Speaker 3: maintaining the tax loopholes that incentivize the resource extraction in
Speaker 3: the first place.
Speaker 1: I hear you, but I think the flaw in that
Speaker 1: reasoning is that you are treating the legislative process as
Speaker 1: if it operates in a vacuum of perfect efficiency and
Speaker 1: objective debate.
Speaker 2: It's not perfect, but it's durable.
Speaker 1: But you mentioned earlier that the Pennsylvania Senate Republicans declined
Speaker 1: to move the grid legislation. We simply do not have
Speaker 1: the luxury of waiting for the perfect legislative consensus while
Speaker 1: AI models scale exponentially every few months. The technical requirements
Speaker 1: embedded in this executive contract, you know, forcing hyperscalers to
Speaker 1: report pollution mitigation, perform highly accurate load forecasting, and detail
Speaker 1: peak water draw those are enforceable right now today, enforceable
Speaker 1: by who by the dep The dep has real teeth.
Speaker 1: If a developer violates the terms of the consent order
Speaker 1: by pulling more water than agreed upon, the state can
Speaker 1: halt their operations. Immediately. It is an immediate, practical application
Speaker 1: of state power designed to protect citizens in real time.
Speaker 3: It is an application of state power, yes, but it
Speaker 3: fundamentally shifts the balance of power from elected lawmakers to
Speaker 3: unelected bureaucrats at the dep and the Department of Revenue.
Speaker 1: But they are executing the governor's mandate.
Speaker 3: Sure, but you are celebrating the fact that the state
Speaker 3: is withholding a massive sales tax exemption unless a private
Speaker 3: developer signs away their right to grid prioritization. That is
Speaker 3: a colossal policy decision. It is deciding who receives power
Speaker 3: during a severe winter storm or a summer heat wave
Speaker 3: should not be buried in a template agreement drafted by
Speaker 3: an executive agency in a back room. That allocation of
Speaker 3: critical resources should be debated on the floor of the
Speaker 3: House and Senate, where representatives of the actual citizens can
Speaker 3: vote on it.
Speaker 1: But the underlying principles of the grid requirements reflect exactly
Speaker 1: what those constituents are demanding. I mean, people do not
Speaker 1: want their communities kept in the dark by NDAs, They
Speaker 1: do not want their local aquifers drained for server cooling,
Speaker 1: and they certainly do not want their monthly power bills
Speaker 1: spiking to subsidize a tech giant's new server farm.
Speaker 2: Nobody wants that, I agree, right.
Speaker 1: So the contract is just the vehicle to deliver the
Speaker 1: protection the public is overwhelmingly asking for.
Speaker 3: Delivering protection via an executive ultimatum establishes a very dangerous precedent. Though,
Speaker 3: what happens when a different governor with entirely different political
Speaker 3: priorities decides to use this exact same contractual mechanism to
Speaker 3: bypass environmental protections.
Speaker 1: Well, that's a hypothetical risk, but.
Speaker 3: It's a real structural risk. If we establish the norm
Speaker 3: that contracts can substitute for laws as long as the
Speaker 3: state controls the permit file, we are degrading the foundational
Speaker 3: rule of law. And from an industry perspective, it makes
Speaker 3: Pennsylvania highly precarious for investment. You cannot build a multi
Speaker 3: billion dollar AI training facility that requires a ten year
Speaker 3: payback period based on an executive order that might just
Speaker 3: vanish after the next election cycle.
Speaker 1: I really have to disagree that it makes the state uninvestable.
Speaker 1: I think it makes the state predictably responsible. Predictably, yes, predictably.
Speaker 1: The tech companies building these facilities, these trillion dollar hyper scalers.
Speaker 1: They are incredibly sophisticated. Governor Shapiro previously championed a twenty
Speaker 1: billion dollar Amazon commitment in the state. Right he understands
Speaker 1: how these companies operate and what they can absorb.
Speaker 2: They can absorb a lot.
Speaker 1: Yes, as he noted, these companies possess the capital to
Speaker 1: be good neighbors, to follow the rules, and to build
Speaker 1: sustainable infrastructure. They know that if they try to force
Speaker 1: their way into a community using NDAs in secret power allocations,
Speaker 1: the eventual zoning backlash and litigation will cost them far
Speaker 1: more than simply complying with this consent order. Upfront, the
Speaker 1: contract provides a clear, albeit strict roadmap to local acceptance.
Speaker 3: Recognizing that a trillion dollar company has the capital to
Speaker 3: afford infrastructure upgrades and legally mandating those upgrades through an
Speaker 3: improper administrative channel. Those are two completely different things. One
Speaker 3: is an observation of wealth right, the other is a
Speaker 3: circumvention of the legislature.
Speaker 1: We have on packed a tremendous amount of legal and
Speaker 1: technical complexity today, and I think we really delivered on
Speaker 1: looking at how contracts substitute for new laws and analyzing
Speaker 1: those technical requirements on water and energy. We definitely covered
Speaker 1: some ground, so to summarize my position, Pennsylvania has effectively
Speaker 1: rewritten the regulatory rule book for the AI era. They
Speaker 1: have proven that leveraging existing permitting powers and mandatory technical
Speaker 1: contracts regarding water demand, energy forecasting, and grid retailment, that
Speaker 1: can outpace sluggish legislatures to protect citizens. By banning NDAs
Speaker 1: and forcing developers to internalize their massive infrastructural costs through
Speaker 1: a consent order, I think the state has delivered a
Speaker 1: pragmatic masterstroke of modern regulation.
Speaker 3: And my position remains that regulating multi billion dollar AI
Speaker 3: infrastructure via executive ultamada and permit hostage taking it creates
Speaker 3: a precarious, unpredictable environment. It substitutes true democratic lawmaking with
Speaker 3: fragile political contracts. While I absolutely agree that transparency over
Speaker 3: water and energy use is vital, circumventing the legislature to
Speaker 3: imposed draconian curtailment rules and convoluted tax games will only
Speaker 3: drive critical infrastructure to other states. It leaves the foundational
Speaker 3: issues of grid stability and water management unresolved by actual, durable.
Speaker 1: Law, despite our fundamental disagreement on the mechanism. I think
Speaker 1: where we do find some profound convergence today, and honestly,
Speaker 1: the source material makes this undeniable is the realization of
Speaker 1: a massive structural shift in the data center industry itself.
Speaker 1: Oh entirely. The core in variable to price into AI
Speaker 1: capacity is no longer just land acquisition or cheap baseline power,
Speaker 1: or even your queue position with the regional utility.
Speaker 3: That is absolutely true. The new core variable is consent
Speaker 3: and the mandatory disclosure of technical data, the evaporative cooling
Speaker 3: water draw the peak energy use, the grid impact studies.
Speaker 3: That is now the absolute baseline required to earn that
Speaker 3: local consent. The era of hyperscalers building massive facilities behind
Speaker 3: shell companies and in total secrecy is functionally over.
Speaker 1: It really is. This is a remarkably complex issue, sitting
Speaker 1: right at the intersection of cutting edge technology, thermodynamics, and
Speaker 1: administrative law. Listeners should keep a close eye on whether
Speaker 1: this Pennsylvania contractual template spreads to other states looking for
Speaker 1: a quick regulatory fix, or if it ultimately collapses under
Speaker 1: its own lack of statutory permanence as capital flees to
Speaker 1: friendlier legislative environments.
Speaker 2: It's going to be fascinating to watch.
Speaker 1: We will leave it to you to weigh the evidence
Speaker 1: and decide which path is best. But the next time
Speaker 1: you look at an empty lot in your neighborhood, just
Speaker 1: remember the fight over what gets built there and exactly
Speaker 1: who gets to know about it is quietly reshaping the
Speaker 1: future of the Internet and.
Speaker 2: The grid we all rely on.
Speaker 1: Thank you for joining us.