Data Center Bills Multiply as Lansing Debate Widens

The data center fight in Lansing is no longer just about hitting pause.

As large projects draw scrutiny across Michigan, lawmakers have introduced proposals aimed at tax incentives, transparency, water use, energy costs and community protections.

In Washtenaw County, the debate is not abstract. The Barn in Saline Township has already raised local questions about infrastructure, public access to information, water demand and power needs.

The Sun Times News previously reported that state Sen. Jim Runestad’s office said Senate moratorium bills would prevent The Barn from beginning operations until the moratorium ends because the project is not yet operational. A similar House proposal would pause certain state and local approvals until April 1, 2027.

But a moratorium is only one part of the broader push.

Separate proposals would repeal Michigan’s sales and use tax exemptions for data centers, limit nondisclosure agreements and add new rules for large users. House Democrats introduced a guardrail package this week focused on ratepayer protections, community benefit agreements, water use, noise reporting, labor agreements, transparency and decommissioning plans.

State Rep. Morgan Foreman, a Washtenaw County lawmaker, said in a public post that the House bills are intended to protect ratepayers and local communities from bearing the costs and impacts of rapidly expanding data centers. Foreman’s bill would prohibit elected officials from entering into nondisclosure agreements related to data center construction.

State Sen. Jeff Irwin, another Washtenaw County lawmaker, said in a public post that Michigan’s original data center tax-exemption law included some ratepayer and water protections, but not all the regulations lawmakers sought. He said newer bills are meant to strengthen protections for ratepayers and water, ban nondisclosure agreements, add transparency measures, require community benefit agreements and strengthen clean energy requirements.

State Sen. Rosemary Bayer told The Sun Times News that parts of the Senate package could apply to projects that are already built or nearly complete if they meet large-user thresholds. She said provisions tied to water, energy use and ratepayer impacts would still apply to facilities in those categories.

Other provisions, including those involving nondisclosure agreements and community benefit agreements, would not be retroactive because those steps happen earlier in the development process, Bayer said.

Michigan is not alone in rethinking its approach. Ohio has paused new data center tax exemption requests, Illinois is pausing new data center incentive agreements starting July 1, and Minnesota changed its program so electricity no longer qualifies for the state’s data center exemption.

Michigan’s current data center tax incentive is not automatic. Under Michigan Strategic Fund guidelines, a project must receive a certificate before qualifying purchases are eligible.

What remains unclear is whether any entity connected to The Barn has applied for or received that certification, and how pending legislation would affect projects already moving through development.