WEBVTT 1 00:00:01.960 --> 00:00:03.000 Welcome to the debate. 2 00:00:03.560 --> 00:00:04.719 Thanks glad to be here. 3 00:00:04.919 --> 00:00:08.679 So right now, there are well over one hundred multi 4 00:00:08.720 --> 00:00:11.960 billion dollar AI data centers that are just trying to 5 00:00:12.000 --> 00:00:13.759 plug into Pennsylvania's electric. 6 00:00:13.480 --> 00:00:16.839 Cred Oh yeah, the volume is staggering right now. 7 00:00:16.719 --> 00:00:20.320 Right, It's massive, and almost none of them have any 8 00:00:20.480 --> 00:00:24.519 kind of public approval because usually the traditional assumption with 9 00:00:24.679 --> 00:00:27.519 large scale infrastructure is that you have a public process, right, 10 00:00:27.519 --> 00:00:28.879 you have local zoning, hearing. 11 00:00:28.800 --> 00:00:31.800 Right, legislative oversight, town halls, all of that exactly. 12 00:00:32.320 --> 00:00:36.960 But hyperscale AI facilities have historically just bypassed all of that. 13 00:00:37.000 --> 00:00:40.200 They operate under this veil of total secrecy. So today 14 00:00:40.240 --> 00:00:44.399 we are diving into Pennsylvania's Executive Order twenty twenty six zero. 15 00:00:44.200 --> 00:00:46.880 Five, which is a pretty wild piece of policy. 16 00:00:47.359 --> 00:00:53.159 It really is. It's this groundbreaking regulatory framework designed to 17 00:00:53.320 --> 00:00:56.880 rain in the industry. And what makes it so fascinating 18 00:00:57.079 --> 00:01:01.719 and honestly pretty controversial is that it operates entirely without 19 00:01:01.759 --> 00:01:02.560 new legislation. 20 00:01:02.960 --> 00:01:06.400 Yeah, we are basically looking at a state executive branch 21 00:01:06.879 --> 00:01:10.799 just completely bypassing its own legislature to regulate one of 22 00:01:10.840 --> 00:01:15.799 the most capital intensive, resource heavy industries on the planet 23 00:01:15.920 --> 00:01:17.680 using only administrative levers. 24 00:01:17.799 --> 00:01:20.120 Right, So the core question we really need to resolve 25 00:01:20.120 --> 00:01:24.359 today is this how effective and I guess how legitimate 26 00:01:24.959 --> 00:01:28.079 is it to use existing permitting authority to do this? 27 00:01:28.760 --> 00:01:32.439 Like seeing how contracts replace new laws essentially right, using 28 00:01:32.480 --> 00:01:37.159 these state contracts to enforce really strict rules. And specifically 29 00:01:37.239 --> 00:01:40.560 we want to analyze the technical requirements on water and 30 00:01:40.719 --> 00:01:41.920 energy consumption. 31 00:01:41.599 --> 00:01:44.560 Because that's where the actual physical impact hits the local community. 32 00:01:44.719 --> 00:01:48.359 Exactly can a contract act as a direct substitute for 33 00:01:48.439 --> 00:01:51.560 traditional lawmaking? So our discussion today is rooted in the 34 00:01:51.599 --> 00:01:55.840 recent rollout of the Governor's Responsible Infrastructure Development or the 35 00:01:55.879 --> 00:01:59.599 grid requirements right in a state's mandatory template, the Consent 36 00:01:59.719 --> 00:02:03.959 Order Agreement, the CoA. Yeah, yeah, the CoA. So I'll 37 00:02:03.959 --> 00:02:06.519 be making the case that this contract based approach is 38 00:02:06.640 --> 00:02:11.159 frankly a brilliant pragmatic innovation. It successfully forces developers to 39 00:02:11.199 --> 00:02:14.879 internalize their massive energy and water impacts, and it totally 40 00:02:14.919 --> 00:02:18.039 bypasses the legislative gridlock that usually stalls this stuff. 41 00:02:18.080 --> 00:02:20.879 And I am going to argue that relying on executive 42 00:02:20.919 --> 00:02:26.800 permitting levers and forced contracts, it basically circumvents the democratic process. 43 00:02:27.199 --> 00:02:31.759 It creates this precarious regulatory instability and honestly technical constraints 44 00:02:32.000 --> 00:02:35.759 that I think will ultimately paralyze critical infrastructure development. 45 00:02:36.000 --> 00:02:38.400 Okay, well, let me lay out the foundation of my 46 00:02:38.479 --> 00:02:43.400 position first. From my perspective, Pennsylvania has effectively cracked the 47 00:02:43.439 --> 00:02:45.199 code on modern tech regulation. 48 00:02:45.759 --> 00:02:47.240 That's a bold claim. 49 00:02:47.439 --> 00:02:50.280 I think it's true. Though. They realized a very simple, 50 00:02:50.599 --> 00:02:54.360 very powerful truth, which is that contracts can substitute for 51 00:02:54.439 --> 00:02:56.879 new laws when the law just fails to keep pace 52 00:02:56.960 --> 00:02:59.840 with technology. Okay, but we'll just think about it. We 53 00:03:00.080 --> 00:03:04.000 all know that AI capabilities scale exponentially, right, they turn 54 00:03:04.039 --> 00:03:08.159 over every six to twelve months. But state legislatures they 55 00:03:08.280 --> 00:03:11.719 operate on these sluggish, linear timelines. 56 00:03:12.120 --> 00:03:15.080 Sure, the legislative process is slow by design. 57 00:03:15.240 --> 00:03:18.479 Right, but Governor Josh Shapiro didn't wait for a divided 58 00:03:18.560 --> 00:03:22.240 legislature to catch up. Instead, the state fundamentally changed the 59 00:03:22.319 --> 00:03:25.879 rules of engagement. They are now conditioning the mere opening 60 00:03:25.919 --> 00:03:29.520 of a Department of Environmental Protection a DP permit file 61 00:03:30.039 --> 00:03:33.520 on the developer signing a legally binding consent order and agreement. 62 00:03:33.719 --> 00:03:35.400 They won't even open the file. 63 00:03:35.360 --> 00:03:37.680 Exactly, they won't even look at it. The state is 64 00:03:37.680 --> 00:03:41.280 wielding its existing administrative authority to just blast through the gridlock. 65 00:03:41.680 --> 00:03:44.319 And the technical brilliance of these grid requirements is that 66 00:03:44.360 --> 00:03:47.479 developers must now legally commit to paying the full cost 67 00:03:47.479 --> 00:03:50.439 of generation, transmission and distribution. 68 00:03:50.080 --> 00:03:54.800 Upgrades, which are massively expensive, exactly massively, and they have 69 00:03:54.879 --> 00:03:57.560 to meet strict water conservation standards. 70 00:03:57.919 --> 00:04:01.080 So by utilizing a contract to manded these upgrades, the 71 00:04:01.120 --> 00:04:05.479 executive branch prevents the staggering infrastructural costs of hyperscale AI 72 00:04:05.639 --> 00:04:08.879 from being you know, quietly absorbed by local households and 73 00:04:08.960 --> 00:04:13.199 small businesses. Right. It is this elegant, immediate solution to 74 00:04:13.240 --> 00:04:17.079 an exploding problem that the legislature just utterly failed to solve. 75 00:04:18.240 --> 00:04:19.920 Okay, I see where you're coming from. 76 00:04:19.920 --> 00:04:23.480 But I approach this from a completely different philosophical and 77 00:04:23.639 --> 00:04:27.480 honestly practical foundation. Okay, this framework, it is not a 78 00:04:27.600 --> 00:04:32.360 brilliant administrative innovation. I mean, it is textbook regulatory coercion. 79 00:04:32.600 --> 00:04:34.839 Coercion is a strong word, but it fits. 80 00:04:35.199 --> 00:04:39.560 It undermines the predictability required for major capital investments. Look, 81 00:04:40.000 --> 00:04:43.480 a contract fundamentally implies two willing parties coming to a 82 00:04:43.560 --> 00:04:44.399 mutual agreement. 83 00:04:44.560 --> 00:04:46.720 Right. Generally yes, right. 84 00:04:47.519 --> 00:04:51.560 In this context, developers who refuse to sign this specific 85 00:04:51.600 --> 00:04:57.240 consent order, they are permanently removed from Pennsylvania's permit FastTrack program. 86 00:04:57.639 --> 00:05:00.399 The dep just simply refuses to even ow open their 87 00:05:00.399 --> 00:05:05.040 application file until every single local municipal approval is secured 88 00:05:05.439 --> 00:05:09.480 and every construction permit has already been reviewed through the traditional, 89 00:05:09.680 --> 00:05:11.160 agonizingly slow. 90 00:05:10.959 --> 00:05:13.639 Channels, which takes year's exactly. 91 00:05:14.319 --> 00:05:18.199 It completely inverts the normal sequencing that developers rely on 92 00:05:18.279 --> 00:05:21.279 to secure financing. I mean, you cannot get bank funding 93 00:05:21.279 --> 00:05:23.560 without a permit path, right, and you cannot get a 94 00:05:23.560 --> 00:05:29.120 permit path without signing this executive ultimatum, so it's not mutual. Furthermore, 95 00:05:29.199 --> 00:05:32.600 we really have to recognize the extreme fragility of this method. 96 00:05:32.399 --> 00:05:35.680 Because it's an executive order, because no statute was passed. 97 00:05:35.800 --> 00:05:40.480 Yeah, the Pennsylvania House actually passed bipartisan grid legislation, but 98 00:05:40.639 --> 00:05:42.959 Senate Republicans declined to move it. 99 00:05:42.959 --> 00:05:45.399 Forward, right the gridlock I mentioned. 100 00:05:45.360 --> 00:05:49.639 Sure, But because the executive branch decided to act unilaterally anyway, 101 00:05:50.120 --> 00:05:53.480 this entire multi billion dollar framework, it just rests on 102 00:05:53.519 --> 00:05:56.040 the stroke of a pen by a single governor, a 103 00:05:56.079 --> 00:05:59.000 governor facing re election this November, I might add. 104 00:05:59.000 --> 00:06:01.720 I know the timing is tight right, So. 105 00:06:01.759 --> 00:06:04.879 Any future administration can simply revoke the order on day one. 106 00:06:05.319 --> 00:06:08.319 When you compare this to actual codified laws enacted by 107 00:06:08.360 --> 00:06:12.519 legislatures in places like you know, California, Ohio, Utah, this 108 00:06:12.600 --> 00:06:17.920 contractual method creates a disastrous, unpredictable foundation. Multi billion dollar 109 00:06:17.959 --> 00:06:22.319 infrastructure requires decades of certainty, not fragile political workarounds. 110 00:06:22.519 --> 00:06:26.439 I mean, I definitely understand the concern regarding statutory permanence. 111 00:06:26.959 --> 00:06:33.040 But let's examine how this contractual mechanism actually functions in reality. Okay, specifically, 112 00:06:33.079 --> 00:06:35.759 when we look at the ban on secrecy, I think 113 00:06:35.800 --> 00:06:40.279 the overarching legality and frankly, the moral justification of this 114 00:06:40.439 --> 00:06:44.720 framework is validated by the specific mechanism that makes it work, 115 00:06:44.759 --> 00:06:47.800 which is the outright ban on non disclosure. 116 00:06:47.319 --> 00:06:49.079 Agreements the NDAs. 117 00:06:49.199 --> 00:06:52.800 Right, the NDAs. Yeah, The executive order dictates that the 118 00:06:52.879 --> 00:06:56.319 use of NDAs is no longer permissible for Commonwealth agencies 119 00:06:56.360 --> 00:07:00.519 interacting with these developers, and for the past decade have 120 00:07:00.519 --> 00:07:02.560 been the global standard for data center siting. 121 00:07:02.720 --> 00:07:02.879 Oh. 122 00:07:02.920 --> 00:07:06.480 Absolutely, everything is hidden behind shell companies, right. 123 00:07:06.839 --> 00:07:10.560 These shell companies are utilized to deliberately hide load projections 124 00:07:10.600 --> 00:07:13.519 and water draw from the very residents who will actually 125 00:07:13.519 --> 00:07:17.560 be impacted. So, coming back to how contracts substitute for 126 00:07:17.600 --> 00:07:21.199 new laws, this contract substitutes for a new law by 127 00:07:21.240 --> 00:07:24.720 mandating absolute public disclosure to earn local consent. 128 00:07:25.160 --> 00:07:27.319 I'm not defending NDAs. 129 00:07:27.199 --> 00:07:30.160 But just think about it from a practical standpoint. It 130 00:07:30.240 --> 00:07:33.160 is like someone buying the empty lot next to your house, 131 00:07:33.399 --> 00:07:37.160 right but legally forbidding you or even the town council 132 00:07:37.519 --> 00:07:39.639 from knowing if they plan to turn it into a 133 00:07:39.680 --> 00:07:42.959 twenty four hour industrial factory that will just drain the 134 00:07:43.000 --> 00:07:48.160 local reservoir. Sure no one wants that exactly. The state 135 00:07:48.240 --> 00:07:52.120 is entirely justified in withholding public fast tracks and these 136 00:07:52.199 --> 00:07:56.560 lucrative tax exemptions from entities that demand total secrecy. The 137 00:07:56.600 --> 00:08:00.560 government is simply saying, if you want our expedited administry help, 138 00:08:00.600 --> 00:08:02.560 you have to tell us exactly who you are and 139 00:08:02.600 --> 00:08:03.399 what you're building. 140 00:08:03.759 --> 00:08:07.040 Look, the concept of transparency is incredibly popular. I'll give 141 00:08:07.079 --> 00:08:10.279 you that, but let's look at the actual bureaucratic reality 142 00:08:10.360 --> 00:08:12.920 of weaponizing the permitting process. 143 00:08:12.560 --> 00:08:13.199 To achieve it. 144 00:08:13.839 --> 00:08:19.120 Weaponizing, Yeah, weaponizing you mentioned with holding tax exemptions. This 145 00:08:19.199 --> 00:08:22.040 is where the legal gymnastics of this executive order really 146 00:08:22.079 --> 00:08:25.079 become a parent. The administration is tying the Department of 147 00:08:25.120 --> 00:08:28.959 Revenues sales and Use tax exemptions which are massive, I 148 00:08:29.000 --> 00:08:32.639 mean massive financial incentives for server hardware directly to the 149 00:08:32.679 --> 00:08:35.320 signing of the Dep's environmental contract. 150 00:08:35.279 --> 00:08:36.759 Right leveraging the incentive. 151 00:08:36.919 --> 00:08:40.720 But that creates a convoluted maze of interagency hostage taking. 152 00:08:41.120 --> 00:08:44.039 By linking a tax incentive to a grid priority surrender, 153 00:08:44.360 --> 00:08:47.480 you aren't streamlining good projects. You are creating a massive 154 00:08:47.519 --> 00:08:48.879 administrative choke point. 155 00:08:49.120 --> 00:08:50.919 But is it a choke point or a filter? 156 00:08:51.279 --> 00:08:53.200 Well, look at the data release with the order. It 157 00:08:53.240 --> 00:08:56.399 reveals a staggering bottleneck. There are over one hundred projects 158 00:08:56.399 --> 00:08:59.559 sitting in public databases right now in Pennsylvania. Of those 159 00:08:59.600 --> 00:09:03.679 fifty eight of approach the DP okay, only fifteen have 160 00:09:03.840 --> 00:09:08.000 actually formally applied for a permit and exactly five, just 161 00:09:08.159 --> 00:09:10.080 five hold what is needed for. 162 00:09:10.039 --> 00:09:14.080 A first phase Wow. Okay, five out of one hundred. 163 00:09:14.440 --> 00:09:19.039 When you use complex interagency contracts to substitute for clear laws, 164 00:09:19.320 --> 00:09:22.919 you don't speed up responsible development. You create a paralyzed 165 00:09:23.000 --> 00:09:26.240 environment where developers are basically just waiting to see how 166 00:09:26.279 --> 00:09:30.120 a rotating cast of executive agencies will interpret a newly 167 00:09:30.200 --> 00:09:31.399 minted consent order. 168 00:09:31.639 --> 00:09:32.759 Before they commit capital. 169 00:09:33.000 --> 00:09:36.039 See I look at that bottleneck, and I don't think 170 00:09:36.120 --> 00:09:39.159 that is a failure of the system. I think it 171 00:09:39.240 --> 00:09:41.799 is the system working exactly as intended. 172 00:09:42.240 --> 00:09:45.879 How is blocking ninety five percent of projects working as intended? 173 00:09:46.559 --> 00:09:49.639 Because sorting those one hundred projects out in public, forcing 174 00:09:49.679 --> 00:09:52.120 them to meet the grid requirements before they receive the 175 00:09:52.159 --> 00:09:56.440 state's blessing. That is how you separate viable, responsible infrastructure 176 00:09:56.519 --> 00:09:58.960 from what are essentially speculative land grabs. 177 00:09:59.159 --> 00:10:02.240 I mean some them are speculative, Sure. 178 00:10:02.000 --> 00:10:04.600 A lot of them are. And this forces developers to 179 00:10:04.639 --> 00:10:07.879 consult communities early enough in the process to actually shape 180 00:10:07.879 --> 00:10:12.639 the design decisions, rather than presenting a finished, unalterable schematic 181 00:10:12.720 --> 00:10:15.080 to a town under the threat of litigation, which is 182 00:10:15.080 --> 00:10:15.960 what they usually do. 183 00:10:16.200 --> 00:10:20.080 But transparency over data means nothing. If the facility brings 184 00:10:20.120 --> 00:10:22.639 the electric grid to its knees first. 185 00:10:22.360 --> 00:10:24.399 Well that's where the technical requirements. 186 00:10:23.879 --> 00:10:26.240 Come in, right, And the DP knows this, which is 187 00:10:26.240 --> 00:10:30.240 why they tied these transparency disclosures directly to the most 188 00:10:30.279 --> 00:10:34.080 controversial part of this whole order, which is the curtailment ranking. 189 00:10:34.240 --> 00:10:36.120 Ah, the curtailment ranking. 190 00:10:36.360 --> 00:10:40.000 Yeah, this shifts our focus to the physical consequences on 191 00:10:40.039 --> 00:10:43.679 the power grid. The Special Council for Energy Fordability is 192 00:10:43.799 --> 00:10:47.720 actively pushing the Public Utility Commission to mandate the data 193 00:10:47.720 --> 00:10:51.039 centers lose electric service before anyone else when the grid 194 00:10:51.080 --> 00:10:51.720 is under strain. 195 00:10:51.919 --> 00:10:55.000 Right, which protects hospital, schools and you know, residential neighborhoods 196 00:10:55.039 --> 00:10:58.879 from rolling blackouts during extreme weather events. That seems entirely reasonable. 197 00:10:58.960 --> 00:11:02.440 It protects them by destroying the fundamental business model of 198 00:11:02.480 --> 00:11:03.639 AI infrastructure. 199 00:11:03.840 --> 00:11:05.840 Okay, explain that because I think a lot of people 200 00:11:05.879 --> 00:11:08.360 just see them as giant server rooms. 201 00:11:08.200 --> 00:11:10.840 Right, we really need to unpack the mechanics of what 202 00:11:10.960 --> 00:11:14.559 happens inside these facilities. If a company is training a 203 00:11:14.639 --> 00:11:18.679 large language model, a trillion parameter AI model, they have 204 00:11:18.840 --> 00:11:22.679 tens of thousands of GPUs synchronizing weight updates in real time. 205 00:11:23.000 --> 00:11:23.200 Right. 206 00:11:23.320 --> 00:11:24.519 If the regional. 207 00:11:24.080 --> 00:11:27.480 Grid operator cuts their power because say it's a hot 208 00:11:27.559 --> 00:11:31.159 day in July and the grid is stressed, the hardware 209 00:11:31.360 --> 00:11:32.799 doesn't just pause nicely. 210 00:11:33.240 --> 00:11:34.919 It doesn't just pick up where it left off. 211 00:11:35.320 --> 00:11:39.799 No, not at all. The system desynchronizes. You corrupt the 212 00:11:39.879 --> 00:11:44.840 checkpoint data. The developer loses days, sometimes weeks of complex 213 00:11:44.960 --> 00:11:49.519 computational math, which easily translates to tens of millions of 214 00:11:49.600 --> 00:11:53.200 dollars in lost capital per event. Oh wow, yeah, it's 215 00:11:53.240 --> 00:11:57.279 catastrophic for a training run. If developers are forced, via 216 00:11:57.320 --> 00:12:00.679 this mandatory contract to price in the extra dream risk 217 00:12:00.759 --> 00:12:03.480 of losing power first, they are just not going to 218 00:12:03.519 --> 00:12:06.720 build in Pennsylvania. They will take their capital to states 219 00:12:06.720 --> 00:12:10.279 that don't treat them as a disposable, interruptible asset. 220 00:12:10.399 --> 00:12:11.519 I see the risk there, but. 221 00:12:11.840 --> 00:12:15.639 And wait, furthermore, the order demands they pay for pgm's 222 00:12:15.679 --> 00:12:21.360 reliability backstop auctions, right the regional grid operator exactly PJM. 223 00:12:21.519 --> 00:12:26.120 If the regional transmission organization and backstop auctions are essentially 224 00:12:26.240 --> 00:12:29.759 capacity markets, you pay power plants to stay on standby 225 00:12:30.039 --> 00:12:33.919 just in case demand spikes. Forcing data centers to shoulder 226 00:12:34.000 --> 00:12:37.919 that standby cost alone through an executive contract rather than 227 00:12:37.919 --> 00:12:41.639 a broad legislative tax is While it's like making a 228 00:12:41.679 --> 00:12:44.679 new resident pay for a fully staffed ambulance to sit 229 00:12:44.720 --> 00:12:47.440 idle in their driveway twenty four hours a day just 230 00:12:47.480 --> 00:12:49.399 in case they get sick, while the rest of the 231 00:12:49.399 --> 00:12:50.759 town pays normal taxes. 232 00:12:51.080 --> 00:12:52.519 It is totally punitive. 233 00:12:52.799 --> 00:12:55.720 That is a great analogy, But I interpret that dynamic 234 00:12:56.080 --> 00:13:00.000 entirely differently. I fiercely defend the curtailment ranking, and I 235 00:13:00.120 --> 00:13:03.480 think it echoes a really vital principle articulated by PUC 236 00:13:03.639 --> 00:13:07.799 chairman Steve defranc He said growth should pay for growth. 237 00:13:07.919 --> 00:13:10.120 I agree with the principle, just not the method. 238 00:13:10.399 --> 00:13:13.679 But you argue that turning grid costs into a constraint 239 00:13:13.679 --> 00:13:17.120 on uptime will make them flee. I argue it is 240 00:13:17.159 --> 00:13:20.759 the exact technical lever required to force hyperscalers to innovate 241 00:13:20.799 --> 00:13:22.519 an energy efficiency. 242 00:13:22.200 --> 00:13:23.519 By threatening their uptime. 243 00:13:23.720 --> 00:13:26.120 Yes, because if they know they are first on the 244 00:13:26.159 --> 00:13:29.600 chopping block for curtailment, they are mathematically forced to change 245 00:13:29.600 --> 00:13:33.080 their architecture. Okay, how they will build robust on site 246 00:13:33.200 --> 00:13:38.000 backup generation right like small modular reactors or geothermal storage. 247 00:13:38.039 --> 00:13:40.600 They will invest in advanced cooling systems that draw less 248 00:13:40.639 --> 00:13:43.440 power during peak hours, and they'll design more fault tolerant 249 00:13:43.480 --> 00:13:46.720 AI training architectures that can actually handle those rolling power adjustments. 250 00:13:47.080 --> 00:13:49.080 Or they will just bypass the headache and build in 251 00:13:49.120 --> 00:13:52.679 Ohio where the legislature offers clear statutory guidance without the 252 00:13:52.759 --> 00:13:54.039 threat of sudden curtailment. 253 00:13:54.159 --> 00:13:56.600 They can try, but they cannot hide from grid physics 254 00:13:56.600 --> 00:14:00.320 forever twenty seven. Other states are currently weighing large load 255 00:14:00.399 --> 00:14:04.519 legislation right now because the grid constraints are completely universal. 256 00:14:04.840 --> 00:14:06.720 Sure the grid is stressed everywhere. 257 00:14:07.080 --> 00:14:09.600 Look at what happens when a state does not mandate 258 00:14:09.639 --> 00:14:12.720 these curtailments and upgrades upfront. If you look at Virginia, 259 00:14:12.759 --> 00:14:15.480 which is widely considered the data center capital of the world, 260 00:14:15.840 --> 00:14:19.200 forty eight massive projects representing like one hundred and fifty 261 00:14:19.240 --> 00:14:22.799 six billion dollars in potential investment were blocked or stalled 262 00:14:22.840 --> 00:14:25.080 by intense local opposition just this year. 263 00:14:25.279 --> 00:14:27.279 The pushback there has been huge. 264 00:14:27.399 --> 00:14:31.320 Right because the citizens realized that data centers were threatening 265 00:14:31.320 --> 00:14:35.799 their local grid reliability and driving up their baseline utility rates, 266 00:14:36.039 --> 00:14:39.799 so they were volted at the zoning level. Pennsylvania's contractual 267 00:14:39.840 --> 00:14:43.879 approach preempts that local rebellion by legally ensuring data centers 268 00:14:43.919 --> 00:14:48.159 lose power before households do. The contract secures local consent, 269 00:14:48.679 --> 00:14:52.039 which honestly is the only way these multi billion dollar 270 00:14:52.080 --> 00:14:54.440 facilities actually get built in the long term. But that 271 00:14:54.519 --> 00:14:57.279 assumes the premise that executive fiat is the only way 272 00:14:57.360 --> 00:15:00.519 to secure consent. If we agree that growth should pay 273 00:15:00.559 --> 00:15:03.600 for growth, we should implement that through the legislature. That's 274 00:15:03.639 --> 00:15:07.159 where all stakeholders, the utilities, the tech firms, the consumer 275 00:15:07.200 --> 00:15:11.559 advocates can actually debate the economic impact of that curtailment. Ranking. 276 00:15:12.000 --> 00:15:14.600 When an executive order just declares it, it sends a 277 00:15:14.679 --> 00:15:17.679 chilling signal for the capital markets. It sends a signal 278 00:15:17.759 --> 00:15:18.960 that the state is serious. 279 00:15:19.240 --> 00:15:23.200 It sends a signal of instability. And this local rebellion 280 00:15:23.240 --> 00:15:26.480 you mentioned it isn't just about electricity. A massive power 281 00:15:26.559 --> 00:15:30.080 draw is always accompanied by a massive physical footprint that 282 00:15:30.200 --> 00:15:33.679 threatens local natural resources. And this brings us back to 283 00:15:33.720 --> 00:15:36.799 the core issue, which is we need to analyze the 284 00:15:36.960 --> 00:15:41.399 technical requirements on water consumption because this further illustrates the 285 00:15:41.480 --> 00:15:43.080 limits of executive authority. 286 00:15:43.360 --> 00:15:45.919 I actually look at the water usage requirements as one 287 00:15:45.960 --> 00:15:49.039 of the areas where the consent order absolutely shines. The 288 00:15:49.039 --> 00:15:53.279 specific disclosure duties mandated by this contract are rigorously detailed. 289 00:15:53.639 --> 00:15:57.200 Facility operators aren't just giving a vague public relations promise 290 00:15:57.279 --> 00:15:58.919 not to waste local water anymore. 291 00:15:59.320 --> 00:16:02.159 No, they have to provide hard numbers exactly. 292 00:16:02.639 --> 00:16:05.480 The contract forces them to report annual energy and natural 293 00:16:05.519 --> 00:16:09.519 gas consumption, estimated average hourly use at peak, total overall 294 00:16:09.559 --> 00:16:12.720 water consumption, and crucially, their maximum day demand. 295 00:16:12.840 --> 00:16:16.799 Now, maximum day demand sounds like standard bureaucratic jargon, but 296 00:16:16.919 --> 00:16:20.600 physically it is the most dangerous metric on that paper. 297 00:16:20.840 --> 00:16:23.679 Exactly because we have to look at the thermodynamics of 298 00:16:23.679 --> 00:16:27.000 how these facilities operate. Let's break this down for a second. 299 00:16:27.440 --> 00:16:31.440 Data centers are essentially massive heat generators YEP. To prevent 300 00:16:31.480 --> 00:16:36.080 the servers from melting, operators frequently rely on evaporative cooling systems, 301 00:16:36.360 --> 00:16:39.120 so they pump water over heat exchangers and blow air 302 00:16:39.159 --> 00:16:42.320 across them, evaporating the water to reject the heat into 303 00:16:42.360 --> 00:16:43.080 the atmosphere. 304 00:16:43.120 --> 00:16:45.639 It's essentially a giant swamp cooler basically. 305 00:16:45.840 --> 00:16:48.799 Yeah, And on a mild day, their water draw from 306 00:16:48.840 --> 00:16:52.840 the local municipality is manageable. But on the hottest day 307 00:16:52.840 --> 00:16:55.919 of the year that is the maximum day, the outside 308 00:16:55.919 --> 00:16:59.519 air is already hot, right, so the heat exchange is 309 00:17:00.080 --> 00:17:03.759 radibly inefficient, meaning the system has to work over time 310 00:17:04.039 --> 00:17:07.799 evaporating millions of gallons of water pulling directly from local 311 00:17:07.839 --> 00:17:10.880 aquifers or municipal supplies, exactly when the rest of the 312 00:17:10.880 --> 00:17:14.839 town is already facing drought conditions or peak agricultural demand. 313 00:17:15.359 --> 00:17:16.759 It's a perfect storm. 314 00:17:17.079 --> 00:17:20.400 It is that single day can ruin a local water system. 315 00:17:20.960 --> 00:17:24.200 By forcing the disclosure of maximum day demand and by 316 00:17:24.200 --> 00:17:27.000 providing a live public map of every proposed project that 317 00:17:27.039 --> 00:17:30.519 has engaged with the DDP, the state forces developers to 318 00:17:30.559 --> 00:17:34.000 prove they meet water conservation standards before a single shovel 319 00:17:34.079 --> 00:17:37.680 hits the ground. It replaces a reactive regulatory posture with 320 00:17:37.759 --> 00:17:41.920 a proactive, data driven contract that actually protects public resources. 321 00:17:42.200 --> 00:17:45.319 Okay, let's look at the mechanics of what you just described, 322 00:17:45.720 --> 00:17:49.400 because while a live map and reporting requirements sound great 323 00:17:49.440 --> 00:17:53.680 in a press release, they are inherently flimsy compared to hard, 324 00:17:53.880 --> 00:17:58.880 codified legislative financial commitments. How So, let's examine the critique 325 00:17:58.880 --> 00:18:01.799 from Food and Water Wine much they campaign heavily on 326 00:18:01.920 --> 00:18:06.359 protecting local aquifers from exactly the evaporative cooling threat you 327 00:18:06.480 --> 00:18:07.079 just outlined. 328 00:18:07.200 --> 00:18:09.880 Right, They are very active in Pennsylvania. 329 00:18:09.160 --> 00:18:12.160 And they called this executive order too little, too late. 330 00:18:12.359 --> 00:18:12.680 Really? 331 00:18:13.039 --> 00:18:17.000 Yes, why because the highly lucrative sales tax incentive for 332 00:18:17.079 --> 00:18:21.000 data center equipment actually survives this order. The governor is 333 00:18:21.039 --> 00:18:24.799 demanding transparency on maximum day water demand, yes, but the 334 00:18:24.839 --> 00:18:28.880 executive branch is simultaneously handing out massive tax breaks to 335 00:18:28.960 --> 00:18:31.559 the very facilities draining those specific resources. 336 00:18:31.720 --> 00:18:33.160 I see the contradiction there. 337 00:18:33.279 --> 00:18:36.279 It's a huge contradiction. If we want to look at 338 00:18:36.279 --> 00:18:39.680 how this should actually be done to protect citizens, we 339 00:18:39.759 --> 00:18:43.440 need to look at states passing actual, binding financial laws 340 00:18:43.680 --> 00:18:45.839 that target the economics of the industry. 341 00:18:46.200 --> 00:18:49.960 Okay, so you're referring to the statutory approaches in places 342 00:18:50.000 --> 00:18:52.279 like New Jersey and Virginia precisely. 343 00:18:52.640 --> 00:18:55.319 Let's look at New Jersey. They recently passed the Data 344 00:18:55.359 --> 00:18:59.119 Center Fair Share Act. That is a real debated statute. 345 00:18:59.200 --> 00:18:59.480 Okay. 346 00:18:59.640 --> 00:19:03.920 It legally requires facilities above fifty megawatts to commit to 347 00:19:03.960 --> 00:19:06.839 paying at least eighty five percent of their projected power 348 00:19:06.880 --> 00:19:10.319 costs for a decade. Oh wow, right, that guarantees the 349 00:19:10.400 --> 00:19:13.119 utilities and the taxpayers aren't left holding the bag if 350 00:19:13.160 --> 00:19:16.640 the AI bubble bursts and these facilities go dark. And 351 00:19:16.759 --> 00:19:19.680 Virginia added a hard energy consumption tax of one point 352 00:19:19.720 --> 00:19:21.200 one CeNSE per kilowatt hour. 353 00:19:21.079 --> 00:19:23.920 Which adds incredibly fast for a data center. 354 00:19:24.200 --> 00:19:24.759 Exactly. 355 00:19:25.200 --> 00:19:29.799 Those are real, durable financial laws passed by legislatures that 356 00:19:29.880 --> 00:19:34.480 fundamentally alter the economics of resource consumption. A contract based 357 00:19:34.519 --> 00:19:36.880 on a live map, you know, forced onto a developer 358 00:19:36.920 --> 00:19:39.319 by an executive branch that could change hands in twenty 359 00:19:39.319 --> 00:19:43.279 four months. It is simply not a substitute for democratic lawmaking. 360 00:19:43.720 --> 00:19:48.599 It creates a mirage of strict environmental regulation while quietly 361 00:19:48.680 --> 00:19:52.000 maintaining the tax loopholes that incentivize the resource extraction in 362 00:19:52.039 --> 00:19:52.680 the first place. 363 00:19:53.079 --> 00:19:55.240 I hear you, but I think the flaw in that 364 00:19:55.279 --> 00:19:58.279 reasoning is that you are treating the legislative process as 365 00:19:58.279 --> 00:20:01.359 if it operates in a vacuum of perfect efficiency and 366 00:20:01.440 --> 00:20:02.359 objective debate. 367 00:20:02.640 --> 00:20:04.160 It's not perfect, but it's durable. 368 00:20:04.519 --> 00:20:08.440 But you mentioned earlier that the Pennsylvania Senate Republicans declined 369 00:20:08.440 --> 00:20:11.720 to move the grid legislation. We simply do not have 370 00:20:11.799 --> 00:20:15.240 the luxury of waiting for the perfect legislative consensus while 371 00:20:15.279 --> 00:20:20.039 AI models scale exponentially every few months. The technical requirements 372 00:20:20.039 --> 00:20:23.720 embedded in this executive contract, you know, forcing hyperscalers to 373 00:20:23.759 --> 00:20:28.119 report pollution mitigation, perform highly accurate load forecasting, and detail 374 00:20:28.160 --> 00:20:33.039 peak water draw those are enforceable right now today, enforceable 375 00:20:33.079 --> 00:20:36.960 by who by the dep The dep has real teeth. 376 00:20:37.440 --> 00:20:40.160 If a developer violates the terms of the consent order 377 00:20:40.200 --> 00:20:42.759 by pulling more water than agreed upon, the state can 378 00:20:42.799 --> 00:20:46.680 halt their operations. Immediately. It is an immediate, practical application 379 00:20:46.759 --> 00:20:49.880 of state power designed to protect citizens in real time. 380 00:20:50.559 --> 00:20:53.240 It is an application of state power, yes, but it 381 00:20:53.279 --> 00:20:57.559 fundamentally shifts the balance of power from elected lawmakers to 382 00:20:57.759 --> 00:21:01.480 unelected bureaucrats at the dep and the Department of Revenue. 383 00:21:01.680 --> 00:21:03.960 But they are executing the governor's mandate. 384 00:21:04.240 --> 00:21:06.759 Sure, but you are celebrating the fact that the state 385 00:21:06.880 --> 00:21:11.200 is withholding a massive sales tax exemption unless a private 386 00:21:11.200 --> 00:21:15.079 developer signs away their right to grid prioritization. That is 387 00:21:15.119 --> 00:21:19.640 a colossal policy decision. It is deciding who receives power 388 00:21:19.720 --> 00:21:22.599 during a severe winter storm or a summer heat wave 389 00:21:23.000 --> 00:21:25.720 should not be buried in a template agreement drafted by 390 00:21:25.720 --> 00:21:28.960 an executive agency in a back room. That allocation of 391 00:21:28.960 --> 00:21:31.680 critical resources should be debated on the floor of the 392 00:21:31.720 --> 00:21:35.000 House and Senate, where representatives of the actual citizens can 393 00:21:35.079 --> 00:21:35.599 vote on it. 394 00:21:35.839 --> 00:21:39.640 But the underlying principles of the grid requirements reflect exactly 395 00:21:39.680 --> 00:21:42.759 what those constituents are demanding. I mean, people do not 396 00:21:42.799 --> 00:21:46.240 want their communities kept in the dark by NDAs, They 397 00:21:46.240 --> 00:21:49.440 do not want their local aquifers drained for server cooling, 398 00:21:49.759 --> 00:21:52.039 and they certainly do not want their monthly power bills 399 00:21:52.079 --> 00:21:54.839 spiking to subsidize a tech giant's new server farm. 400 00:21:55.079 --> 00:21:57.440 Nobody wants that, I agree, right. 401 00:21:57.400 --> 00:21:59.799