A growing consensus is emerging in Springfield around regulating data centers in Illinois, as stakeholders from corporate, labor, and environmental groups seek to address the rising political and resource challenges posed by these facilities.

Marc Poulos, executive director of labor management operations for the International Union of Operating Engineers Local 150, has circulated a three-page proposal aimed at balancing economic development with environmental and community concerns. His plan includes requiring data centers to use closed-loop cooling systems to conserve water, mandating that they bring their own power sources—including natural gas—to reduce pressure on the electrical grid, restoring state tax incentives for data center construction, and adjusting some provisions of Illinois’ Biometric Information Privacy Act to require plaintiffs prove actual harm before pursuing lawsuits.

Illinois Environmental Council executive director Jen Walling indicated that her group is likely to support or not oppose several elements of Poulos’s proposal, noting similarities to other ideas circulating among the governor’s office and industry representatives. One key provision endorsed by environmental advocates includes requiring data centers to supply their own power, an idea integrated into earlier legislation known as the POWER Act.

Despite efforts toward a coordinated framework, no formal legislative negotiations have commenced. A second meeting of the state’s data center task force—comprising officials from Governor JB Pritzker’s administration and lawmakers—is planned for later this month. Lawmakers are slated to return for the fall legislative session on November 17, following the Illinois Commerce Commission’s (ICC) release of an Integrated Resource Plan addressing projected electricity shortfalls and price increases driven in part by data center demand.

Around the United States, more than 530 counties and municipalities have imposed moratoriums or restrictions on data centers, with over 200 additional communities considering similar measures, reflecting widespread concern over the facilities’ use of land, water, and electricity. In Illinois alone, six towns have canceled data center projects since last year, 13 have implemented restrictions, and four others continue debating their approach.

Data center operators emphasize the need for regulations that balance growth with operational realities. Brad Tietz, Midwest government affairs director for the Data Center Coalition, which includes companies such as Google, Microsoft and Meta, called Illinois’s existing biometric privacy laws among the strictest in the country and a barrier to attracting large-scale “hyperscaler” AI data centers. The coalition advocates reinstating tax incentives, provided they are linked to commitments on renewable energy use, sustainable water management, and labor agreements.

While the coalition supports measures to require data centers to bring their own power, including through investments in nuclear energy, it opposes broad mandates requiring facilities to curtail operations during peak demand, citing contractual and technical complexities. Tietz also cautioned that Illinois should monitor federal and regional energy policies before implementing its own peak demand rules.

Opposition remains on privacy grounds. Chicago attorney Jim Zouras, who has represented individuals in biometric privacy lawsuits, argued that protecting the confidentiality of biometric data should take precedence over economic incentives for data centers. He said hyperscalers have not proven more prone to violating privacy laws than other data centers but have drawn criticism for heavy utility consumption.

Governor Pritzker has defended suspending data center tax incentives, stating at a recent climate conference that large technology firms must bring their own clean energy and employ closed-loop water systems to avoid straining Illinois’s resources. His office has expressed support for a comprehensive regulatory framework aimed at ensuring data center growth does not compromise affordability or reliability for Illinois residents.

State Senator Bill Cunningham acknowledged that tax incentives could be reinstated to support construction costs if balanced by regulatory safeguards protecting utility ratepayers. However, he also noted that tough policy decisions lie ahead, especially as Illinois faces demands to reduce its reliance on natural gas power plants—many located in communities disproportionately affected by pollution.

To explore alternatives for sustainable energy supply, Walling is organizing a trip for Illinois lawmakers and labor representatives to visit geothermal energy projects in British Columbia. The initiative aligns with recent state legislation authorizing subsidies for geothermal pilot programs designed to provide clean heating and cooling solutions.

As the debate continues, Illinois leaders seek to forge a framework that enables data center development while addressing environmental sustainability, energy reliability, labor interests, and privacy protections. The outcome will have significant implications for the state’s economic prospects and resource management in the coming decade.