Michigan Senate Democrats introduce new data center regulation proposal
Michigan Senate Democrats have introduced a new legislative proposal aimed at regulating data centers statewide. The bills seek to address public concerns about the impact on electricity and water costs by capping water usage and requiring upfront payment for power. This proposal is a follow-up to previous laws offering tax breaks, with the goal of ensuring data centers benefit Michiganders without creating burdens.
Michigan Senate Democrats, led by State Senators Rosemary Bayer, Kevin Hertel, Erika Geiss, and Mallory McMorrow, have unveiled a new legislative package aimed at comprehensively regulating data centers within the state. The proposal seeks to address long-standing public concerns regarding the environmental and economic impacts of hyperscale data centers, particularly their demands on electricity and water resources.
Key provisions within the proposed bills include imposing caps on water usage for data centers, requiring these projects to pay upfront for at least 20 years of their projected power costs, and limiting the ability of public officials to sign non-disclosure agreements related to data center developments. Senator Hertel emphasized that these measures would apply consistently to all data centers of a significant size, positioning Michigan with some of the strictest data center regulations nationally.
This new legislative effort builds upon data center laws enacted in Michigan in 2024, which offered tax incentives to attract hyperscale projects under specific conditions, including a mandate that residential customers would not subsidize the electricity costs of these facilities. The current proposal also incorporates earlier bills introduced by Senate Democrats that call for annual reports on energy and water usage and explicitly prevent water costs from being passed on to residential customers. Unlike a separate bipartisan proposal earlier this year, these new bills do not include a moratorium on new data center permitting.
For the bills to become law, they must successfully pass through both the Democratic-controlled Senate and the Republican-led House of Representatives. House Speaker Matt Hall indicated his support for further regulation of data centers, echoing concerns about water consumption, potential increases in energy costs for residents, and the need for community benefit agreements, though he had not yet reviewed the specific details of the new proposal.