“This bill is not coming from left field… This is something we've been talking about," Rep. Shannon Zimmerman said about his data center regulation bill. (Photo by Baylor Spears/Wisconsin Examiner)

The Assembly passed a Republican bill Tuesday to implement state regulations on data centers being built in Wisconsin. Democratic lawmakers said the measure wouldn’t effectively hold companies accountable, hold down electric rates for Wisconsinites or protect the environment.

Data center development is booming in Wisconsin. Microsoft this week proposed adding 15 data centers to a project in Mount Pleasant. Some projects in development has triggered pushback from area residents. According to datacentermap.com, there are at least 40 data centers currently in the state and more in development. Local governments, including in Madison, where the city council became the first in the state to pass a one-year moratorium on approvals for data center projects, are considering their roles in regulating or pushing forward projects. 

AB 840, coauthored by Rep. Shannon Zimmerman (R-River Falls) and Sen. Romaine Quinn (R-Birchwood), establishing regulations of data centers, passed 53-44. Rep. Joy Goeben (R-Hobart) joined Democrats voting against the bill, while Rep. Steve Doyle and Jodi Emerson (D-Eau Claire) voted with Republicans in favor of the bill.

“This bill balances the strategic and economic benefits of AI and data centers to the state while balancing concerns that ratepayers may have over energy, and that some may have over environmental implications,” Zimmerman said at a press conference ahead of the floor session.

Democratic lawmakers were critical of the bill, saying it doesn’t go far enough to protect Wisconsinites. 

“We need to take action to regulate data centers, but we need to get it right. Unfortunately, the GOP bill that we’re voting on today will not do what it promises,” Minority Leader Greta Neubauer (D-Racine) told reporters ahead of the floor session, adding that the bill process was “rushed.” The GOP bill was introduced on Jan. 9, and received a public hearing on Jan. 14. 

“It will not hold corporations accountable in the way that we should, and it doesn’t protect our communities entirely from the higher energy costs that are being discussed,” Neubauer said.  She asserted that Republican lawmakers “don’t actually want to regulate data centers or large corporations.” 

Zimmerman said the bill is responsive to concerns from constituents.

“Hands down the concerns are concern over ratepayer protection, concern over water, concern over land, and protection of those sort of things,” Zimmerman said. “This bill is not coming from left field… This is something we’ve been talking about.”  

Whether the bill becomes law is up in the air. It must pass the Senate and be signed by Gov. Tony Evers, who has expressed some skepticism about it.

According to the Milwaukee Journal Sentinel, Evers’ spokesperson Britt Cudaback said on Jan. 14 that “the one thing environmentalists, labor, utilities, and data center companies can all agree on right now is how bad Republican lawmakers’ data center bill is.” 

Assembly Speaker Robin Vos (R-Rochester) said he didn’t know why Evers “would ever consider vetoing this bill, especially considering the fact that it is really based on what the citizens have said.” 

“I don’t think being on the side of not wanting data center regulation is anywhere near the middle, so we have been very thoughtful in what we put forward,” Vos said. 

The Republican bill includes a number of requirements including having the Public Service Commission (PSC) ensure that no costs related to construction of electric infrastructure for data centers are allocated to other customers and requiring that any renewable energy facilities that are primarily serving a data center must be located within the data center site. Democratic lawmakers said the requirement would stifle the development of renewable energy in Wisconsin and expansion of the state’s energy portfolio. 

“Their limits on renewable energy would come at a significant cost to consumers and are clearly a continuation of the GOP’s ongoing allegiance with the fossil fuel industry,” Neubauer said. 

Zimmerman said, however, that requiring renewable sources on site would ensure that a local community is benefiting from jobs that are created. 

Under the bill, water used for cooling purposes in a data center is required to be contained in a “closed-loop cooling system,” or “or any other system that uses an amount of water equal to or less than the amount that a closed-loop cooling system would use.” A closed-loop cooling system uses a fixed amount of water to keep data centers cool.

An amendment to the bill states that the requirements will only apply to large data centers that begin operating or undergo construction after the bill takes effect.

Data center operators also will be required to submit annual reports to the Department of Natural Resources (DNR) on the total amount of water used in a year. An amendment to the bill also says that data center developers should as much as possible encourage hiring of Wisconsin residents. 

“This bill is not a reaction to any of those data centers acting in various ways. This is just smart legislation to make sure we have the rules of the road going forward,” Zimmerman said. 

The bill also says no one can  operate a large data center unless they file a bond in an amount sufficient to cover the estimated cost of fulfilling any required reclamation with the DNR.

An amendment to the bill also clarifies that if the permit granted for the construction of a large data center expires before the center is finished, then the owner must notify the DNR and local government. It requires that if it isn’t finished by the date then the owner must work to restore the land as much as possible. 

Zimmerman said the provision gives flexibility to local governments for recourse in the case  a project is abandoned. 

According to the Wisconsin Lobbying website, the Wisconsin Farm Bureau Federation and the Associated Builders and Contractors of Wisconsin Inc. registered in favor of the bill. There are several more groups registered against the bill, including Wisconsin Conservation Voters and the International Brotherhood of Electrical Workers Construction Electrician Local Unions. 

Democratic lawmakers, led by Rep. Angela Stroud (D-Ashland) and Sen. Jodi Habush Sinykin (D-Whitefish Bay), have proposed their own legislation to regulate data centers. That bill, AB 722, would place data centers in their own class of “very large customers” to ensure that everyday ratepayers don’t bear the costs of data centers’ energy demands. It would also take steps to regulate data centers and encourage renewable energy use. Lawmakers introduced the bill as an amendment during the floor session, but Republican lawmakers voted it down.

Stroud said the GOP bill is a “concept of an idea.” 

“There’s nothing in the bill that the PSC could actually implement to do the job it says it’s going to do,” Stroud said. 

Stroud said her proposal, while “not perfect,” would “get us as close as possible to the central goal of protecting the public by controlling costs, creating transparency and making sure that we’re keeping as much value in our communities as possible.”

Under the Democratic bill, data center companies would be required to pay an annual fee to the Department of Administration (DOA); revenue which would go towards renewable energy programs. It would also have companies submit quarterly reports to the PSC on the amount of energy being used by data centers as well as information on the source of the energy. Water utilities would also need to publicly report when a single customer will account for more than 25% of the total water usage in the district. 

The bill would require that companies pay workers at construction sites the prevailing wage rate or if the employee is a union member, then the rate in the worker’s collective bargaining agreement — whichever rate is higher. It also says that to qualify for sales tax exemptions available to data centers under current law, companies would need to meet labor requirements and source 70% of their energy from renewable sources.

Vos said that the Democratic bill will “have very little impact on the average person unless you’re a union activist or someone who wants renewable energy everywhere.”