Lawmakers, stakeholders are ready for summer of data center negotiations

(Capitol News Illinois) – Lawmakers have a busy summer of negotiations ahead of them with pressure from both the governor’s office and their constituents to craft data center regulations that stakeholders and legislators can live with.

The pressure comes after lawmakers failed to pass any regulations during the spring session, despite widespread concerns from Illinois communities about data centers’ impact on energy demand, water, and quality of life. Lawmakers say the issue is complex, and like with other energy-related bills, they needed more information and time to decide how to structure guardrails.

Early in June, Gov. JB Pritzker took executive action to pause tax benefits for data centers and called on the General Assembly to pass regulations that resemble those in the POWER Act, a bill that was discussed in committee meetings but was never voted on.

Advocates earlier had lamented Pritzker’s “lack of engagement” in legislative negotiations despite his clear record of calling for added regulations.

From 2020-2024, the state pledged about $983 million in lifetime tax benefits to 27 data centers, according to a state report.

Rep. Ann Williams, D-Chicago, said lawmakers will continue negotiating data center regulations with stakeholders this summer, but no dates have been established.

“I support the pause while we get a handle on how we’re going to put some guardrails in place regarding data centers,” she said. “But I know some of my colleagues are very interested in the development and the job creation and the economic benefits that development on the scale of a data center can provide.”

Williams chaired three House Executive Committee hearings about data centers and their effects on energy demand, water and Illinois communities. The hearings dealt with House Bill 5513, also known as the POWER Act.

‘Wasn’t even close’

The bill would have required data centers to pay for and supply their own renewable energy, track and report water usage and enter community benefits agreements with the municipalities where they’re based.

Williams said it’s normal for large bills dealing with energy-related issues to require a lot of negotiation and to take time to pass. The 2025 Clean and Reliable Grid Affordability Act and the 2021 Climate and Equitable Jobs Act both passed in veto sessions after failing to advance in the spring.

“We have a lot of stakeholders that are interested in the topic, a lot of diverse viewpoints in the caucus,” she said. “So those are the kind of issues that generally take a lot of conversations before they get across the finish line.”

A last-minute push among some lawmakers to pause tax incentives also failed because there was disagreement in the House Democratic caucus, House Speaker Emanuel “Chris” Welch, D-Hillside, said.

“Not only did it struggle, it wasn’t even close in my caucus. I believe it was similar in the Senate,” Welch told Capitol News Illinois.

That hurdle is one of the major issues to overcome, and Williams said it will be important to strike a balance between economic development, protecting resources and protecting communities.

Williams said she personally plans to hold a few town hall-type meetings in her district to hear what regulations people want to see, and she’s interested in taking the question to residents across the state.

“Nothing is planned yet, but that’s just something a few of us— the sponsor, or the Majority Leader (Robyn Gabel)—and I have talked about with some of our working group members, so we’ll see if that comes,” she said.

Communities around Illinois have resisted data centers, and there’s bipartisan interest in creating guardrails for them, but the split between environmental concerns, labor, and the data center industry is significant.

What lobbyists say

Lobbyists from stakeholder organizations said they’ve been ready to meet at the negotiating table and they’re only waiting for lawmakers to set dates.

“I think it’s unfortunate that we didn’t actually really begin any stakeholder negotiations,” Brad Tietz, director of state policy for the Data Center Coalition, said. “We were prepared and able to do that. It just never came to fruition.”

Tietz testified at every POWER Act hearing, and his position has long been that the industry can negotiate on energy, water reporting and community impact regulations. but he’s maintained the bill in question is too broad and it unfairly singles out data centers when industries like farming and manufacturing have similar energy and water impacts.

He said the Data Center Coalition suggested language to amend the Illinois Water Use Act of 1983 and require all large water users to report their usage. They’ve also suggested making the “bring your own clean energy” provision voluntary and incentivizing data centers to do it by letting them connect to the electricity grid faster. The POWER Act made “bring your own clean energy” mandatory, but it also allowed data centers to connect to the grid faster for doing it, and for meeting other standards in the bill.

“The (POWER Act) language itself we don’t believe should be the starting point,” he told Capitol News Illinois. “Like, let’s identify the broad framework of things that we want to tackle in the Illinois General Assembly and work from there.”

Tietz said he had some informal meetings with lawmakers to give them more information and to get a sense of their priorities, but real negotiations need to happen sooner rather than later.

“I think this kind of uncertainty is not helping the industry, but it’s also obviously not helping the communities as well,” he said.

Labor unions

Climate Jobs Illinois, a collection of labor organizations dedicated to a pro-worker, pro-climate agenda in Illinois, opposed Pritzker’s freeze on data center tax benefits, saying the move will send developers to other states where labor and environmental protections are weaker.

“Illinois didn’t become a national leader in clean energy policy by reacting to polling and headlines,” it said in an emailed statement. “We got here by doing the hard work of building durable frameworks that protect workers, consumers, and the environment. This pause abandons that approach entirely.”

The organization declined to comment on what it wants in negotiations, saying it needs to see how the pause plays out. Joe Duffy, the lobbyist representing the group, did attend committee hearings during session.

Environmental groups

Jen Walling, the executive director of the Illinois Environmental Council, said she’s also ready to get into detailed negotiations.

“I know what we want in terms of guardrails, but I don’t know what labor or some of the data center companies are going to want to see,” she said.

The IEC is part of the Illinois Clean Jobs Coalition, the group that has advocated for the POWER Act, and the bill contains their regulatory priorities.

“The coalition introduced the POWER Act because it offers the solutions Illinoisans – and this moment – are demanding,” they said in an emailed statement after Pritzker announced his tax benefit pause. “Consumers cannot afford more delays. Now is the time to begin negotiations on policies that will stop rising utility bills, protect our water, and end backroom development deals, and we look forward to working with the governor, legislators, and stakeholders to get this done in the Fall veto session.”

Walling said she expects the POWER Act to be pared back in some areas, but she doesn’t have details because she hasn’t met with the Data Center Coalition. The IEC had some informal meetings with lawmakers during the session, but she said those never went into detail or involved other groups.

“I want lawmakers in the room to help us get this done,” she said. “That’s the way we’ve done everything else, and that’s what I expect to happen here.”

She said she expects something will pass either in veto session later this year or in the January lame duck session.

A key obstacle for getting regulations over the finish line, Walling said, was that both legislative chambers were rarely in session at the same time this year. Before May, the House and Senate were only in session at the same time for four weeks — two in February, one in March and one in April.

“And so there’s very little time to have in-person meetings that included leaders from both chambers. That made it really hard to get anything done,” Walling said.

Though no dates have been established, she said there’s currently “promising movement towards negotiations.”

“I do think the vast majority of General Assembly members want to do something about it,” Walling said. “It’s just figuring out what.”

(Reporting by Nikoel Hytrek and UIS Public Affairs Reporting (PAR), Capitol News Illinois)

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