Michigan’s Existing Protections
Ensuring responsible data center development
The good news: Michigan already has strong, enforceable protections ensuring data centers operate responsibly and do not shift costs onto residents.
Our rules and regulations ensure:
- Residents are not paying for data center infrastructure
- Water resources are carefully managed and protected
- Environmental impacts are reviewed, monitored, and enforced
Energy Protections
Michigan has learned from other states and implemented safeguards to ensure large energy users, like data centers, pay their fair share.
Under state law and oversight by the Michigan Public Service Commission (MPSC):
- Residents and small businesses cannot subsidize data center energy costs
- Data centers must pay in full for:
- The electricity they use
- The infrastructure required to serve them
- Utilities must implement long-term contracts and minimum payment guarantees
- These requirements are legally enforceable and regulator-approved
In addition, the MPSC approved a rate tariff for Consumers Energy last year that dictates any customer requiring 100 MW of energy or more would require the customer to sign a minimum contract term of 15 years; a minimum billing demand of 80% that must be paid regardless use; a ramp-up period of up to 5 years to reach full service levels; and automatic contract extensions of 5 years with a required 4 years’ notice for contract termination. Large users would also pay an administrative fee for studies and plans required to develop a project.
These regulations ensure Michigan ratepayers are protected from the financial risks associated with large-scale energy users. Because shared infrastructure costs would be spread over more customers, Consumers Energy projects a savings of $7.50 in monthly bill reduction per 1 GW of large-load.
Michigan’s approach doesn’t just prevent harm, it creates benefits.
Energy systems have high fixed costs, including generation plants, substations, and transmission lines. When large customers like data centers are added responsibly:
- These fixed costs are spread across more users
- System efficiency improves
- Cost pressure on residents can decrease
In fact, one major project is expected to generate approximately $300 million in net benefits for customers.
Bottom line: Michigan’s framework ensures data centers pay their own way and help lower long-term costs.
Michigan attracts business development and is committed to ensuring new projects play by the rules and meet stringent environmental standards before receiving any tax write-offs or benefits.
In April 2025, Governor Whitmer signed the Enterprise Data Center Sales & Use Tax Exemption, which eliminates Michigan’s 6% sales tax on eligible data center construction and equipment purchases. To qualify for the exemption, a project must:
- Be located in Michigan,
- Invest at least $250 million in capital,
- Create at least 30 qualified new jobs with an annual wage of at least 150% of the prosperity region’s median wage. Jobs must be maintained through December of 2050, or December of 2065 for brownfield or former power plant sites,
- The facility must not receive state or local property tax benefits, unless approved by the local government,
- The facility may not take electric service at any rate that would cause residential customers to subsidize the infrastructure and costs required to service the facility,
- No later than three years after startup, the facility must certify with MSF that it has obtained one or more green building certifications.
Water Protections
Through the Water Use Program administered by the Michigan Department of Environment, Great Lakes, and Energy (EGLE):
- Large water withdrawals must be registered and reviewed
- Projects are evaluated for environmental impact before approval
- The state can deny or limit withdrawals that would harm ecosystems
- Facilities must report water usage regularly
To qualify for the Sales & Use Tax Exemption, projects must be certified with the Michigan Strategic Fund for the use of municipal water at the time the facility is placed in service.
Michigan is a member of the Great Lakes–St. Lawrence River Basin Water Resources Compact, which:
- Restricts water diversions outside the Great Lakes basin
- Requires sustainability reviews for major withdrawals
- Ensures long-term protection of regional water resources
This creates an additional layer of oversight beyond state regulation.
If a data center discharges water, it must comply with federal and state permitting:
- National Pollutant Discharge Elimination System permits regulate discharges
- Facilities must monitor, test, and report water quality
- Chemical use (such as cooling agents) is regulated and limited
These rules protect rivers, lakes, and groundwater from pollution and thermal impacts.
Large facilities must also comply with industrial stormwater regulations:
- Required to maintain Stormwater Pollution Prevention Plans (SWPPP)
- Must implement controls to prevent contamination from runoff
- Subject to inspection and ongoing compliance requirements
While Michigan’s laws focus on protection and permitting, many data center projects are also expected to:
- Use water-efficient cooling technologies
- Recycle or reuse water where possible
- Partner with local utilities on sustainable water management
These practices, such as those outlined by Google and Microsoft, are increasingly part of project planning and public accountability.
Transparency & Accountability
Michigan’s permitting system ensures transparency and community input:
- Major permits require public notice and comment periods
- Projects can be challenged or modified based on feedback
- Facilities must provide ongoing reporting and compliance data
This ensures that communities have a voice in how projects are developed and operated.
