Great Lakes States Face a Data Center Governance Gap

The rapid build-out of hundreds of AI data centers across the Great Lakes basin is reshaping rural communities, straining fragile ecosystems, and forcing states to rethink energy and water policies.

More than 220 facilities are still planned across the region. But while questions about data centers’ cumulative freshwater and energy needs are more pressing now than ever, answers remain murky. 

“We’re dialed into this now,” says Pat Oreskovich, 74, a small business owner in Saukville, Wisconsin, a town that now sits in the shadow of several new Milwaukee-area hyperscale data centers. “We can’t stop it. The secrecy of this bothers me.” 

This week, regional organizations have released new guides aimed at helping both residents and lawmakers navigate the rapidly expanding industry and the regulatory blind spots that have accompanied it.

The Alliance for the Great Lakes’ Regional Playbook for Managing Data Center Impacts in the Great Lakes is a guide for residents to better understand data center types, operations, the decision-making that precedes their arrival, and water resources in the basin. Two checklists included in the guide offer communities specific questions they should be asking public officials about a proposed site’s environmental impact and economic footprint. 

The playbook also includes instructions on how to draft a community benefit agreement that will hold companies accountable for any promises they make. 

“Communities across the Great Lakes are increasingly confronted by proposals for large-scale developments with significant water demands… that are not required to measure or publicly report how much water they use when they receive water from local municipal systems,” Maria Iturbide-Chang, director of water resources for the Alliance for the Great Lakes, says in a statement. “These proposals often move quickly and can come with community and environmental impacts that are not always clearly explained to residents or local leaders.”

The University of Wisconsin-Milwaukee’s Center for Water Policy has meanwhile released a legislative framework for lawmakers to improve public disclosure of water and energy needs, protect ratepayers from rising utility costs, and introduce legislation with greater protective heft.

The model, which is meant to be customized by lawmakers depending on need, includes options to enact moratoriums on data center construction to better understand their ecological impacts, prohibit non-disclosure agreements, and require clean energy sources to provide some or a majority of facilities’ electricity needs.

“Our new legislative model offers policy options and customizable language to help communities promote transparency and protect the public interest,” Emilie Washer, a water policy specialist at the Center for Water Policy, says in a statement.

Unpacking Water and Energy Usage Confusion 

The two guides arrive at a time when reliable information on data centers’ water needs is scarce.

Thus far, understanding these buildings’ direct water needs — the water that is circulated on-site to cool servers — has been muddled by conflicting messaging and, in some cases, shielded by non-disclosure agreements. 

As an example, spokespeople from Vantage Data Centers, a company that is building an OpenAI and Oracle data center in Port Washington, Wisconsin, continue to say publicly that their on-site daily water needs will only use 22,000 gallons. This contradicts the town’s continued assurance that the facility will be able to access 1.2 million gallons each day. 

Indirect water needs — the water that is used by power plants new and old that will supply these energy-intensive data centers with electricity — are a much more intensive and complex calculation. 

In Wisconsin again, where power-generating sites account for 73 percent of the state’s total water withdrawals in 2024, a lack of transparency from companies and public utilities has meant that many data centers were approved without publicly disclosing the exact power plants they plan to purchase electricity from. 

Michael Greif, a legal fellow with Midwest Environmental Advocates, says that there are two prevailing agreements between energy utilities and data center companies. 

In one, a utility will contractually assign power generating sources to new data centers. However, the specific parties involved are not divulged publicly. In the other, a utility is not assigning specific power generating sources at all, and the data center is served by whatever is available on the grid.  Because electricity on the grid is pooled together from many generators, tracing the source of a specific facility’s power — and the water used to produce it — becomes extremely difficult.

“In both cases, from a physical standpoint, electricity from all generators on the grid is pooled together and cannot be traced to individual customers,” Grief says. “Data centers are physically powered by the same interconnected grid, so absent some sort of contractual accounting, there isn’t a way to say what generating resources are powering which data centers.”

New Legislation Across the Region

Across the Great Lakes, lawmakers are racing to decide how the industry should be regulated. A bevy of new bills targeting data centers’ largely unchecked momentum has been introduced into state legislatures in recent months. 

Few proposals are exactly the same, and many have been met with dueling bills from the opposite party. As these proposals are being deliberated, companies seeking to expand their influence in the region — such as Amazon’s recent $26 billion investment in data centers in northern Indiana, or Microsoft’s $20 billion project outside Milwaukee —are continuing to act fast. 

“It makes sense, from an economic standpoint, to get as many [data centers] on the ground as they can before there are other hurdles in their way,” Hannah Richerson, the water policy manager at Clean Wisconsin, tells Circle of Blue.

Wisconsin

In Wisconsin, Democrat-backed Senate Bill 729 — which has received support from environmental advocates across the state — would require large water withdrawers to submit reports to the Public Service Commission. And, for large-scale data centers to receive an exemption from sales and use taxes, “at least 70 percent of the total annual electric energy used by the data center must be derived from renewable resources.” 

State Republicans meanwhile have introduced Assembly Bill 840. This bill, which requires data centers to use closed-loop cooling systems on-site to conserve water, and orders utilities to ensure that regular customers do not foot the bill for the construction of new energy infrastructure built to serve these campuses, passed out of the Assembly in late January and now sits in the Senate. 

But the bill also requires all renewable energy sources serving the data center to be built on-site — an expensive and impractical proposition for data centers with limited space that decreases the bill’s chances of becoming law.

“Even if a data center has a solar farm right next to it, it will still be buying from the grid at night,” says João Ferreira, the acting executive director of the University of Virginia Center for Economic and Policy Studies. “You cannot have a data center living exclusively off that power plant, and that power plant will not run efficiently with a data center right next to it.”

Illinois

In Illinois, pollution and water security have joined rising energy prices as focal points of currently competing data center regulation.

Senate Bill 3830, introduced by state Democrats in February, would require data centers to identify and track all likely pollutants in wastewater that is discharged from these facilities into treatment plants. The bill would also task the state Environmental Protection Agency with analyzing and assessing this data. 

Recent investigations have shown that chemicals such as PFAS and nitrates, which are harmful to human health, are often a part of data center discharges. The concentrations are high enough to be concerning, but their environmental and human health impacts have not been adequately studied. In September, the U.S. EPA ordered a priority review of these chemicals. 

The bill, which is included in a larger package related to artificial intelligence and data privacy, would also charge the state Department of Natural Resources with maintaining water consumption data from these facilities in a publicly accessible website. 

Illinois state Republicans responded with a more narrowly focused SB 4004, which would specifically prohibit data centers from tapping into the Mahomet Aquifer, which is the sole source of drinking water for roughly one million people in central Illinois. 

Ohio

And in Ohio, which has more planned data centers (77) than any other state in the region, new bill packages are taking aim at water consumption restrictions, reporting requirements, and operational review.

In February, Democratic lawmakers announced several new pieces of legislation regulating data centers. Among them is an act that would prohibit data centers from consuming more than 5 million gallons of water per day, require them to report annual water usage, and mandate they pay for all needed water infrastructure upgrades. 

The package followed HB 646, introduced this winter by House Republicans and which is moving quickly through the chamber. The bill would create a 13-person commission to study the environmental and economic impact of data centers, though Democrats are wary that the panel would be appointed by a Republican-majority state legislature and governor. 

Meanwhile, a third, bipartisan bill introduced in the Ohio House aims to shield residents from shouldering infrastructure costs for data centers’ energy needs.

“Data centers are an important part of Ohio’s future, and we want to continue attracting them,” said state Rep. David Thomas, a Republican, in a statement. “At the same time, utilities and regulators need clear rules so that grid investments are planned responsibly and existing customers are not left holding the bag.”