Bill
HB 5777
Michigan HB 5777 requires registered large-scale data centers to maintain financial security and undergo ongoing lifecycle oversight, including decommissioning and local-government
Title: Large-scale data center life cycle financial responsibility act
Purpose
- Establish a new framework to regulate, monitor, and financially responsibility for large-scale data centers (LSDCs) in Michigan.
- Require registration, set financial security, impose sanctions for noncompliance, and create a dedicated fund to reimburse local governments for costs related to LSDCs.
- Ensure ongoing operational accountability from construction through decommissioning, including potential changes in ownership or control.
Key Definitions (selected)
- Large-scale data center (LSDC): A data center on a single site or multiple contiguous sites, meeting at least one of: 5+ MW critical IT load, 25,000+ square feet, or phased development meeting those thresholds.
- Projected operational level vs. operational level: Projects vs. actual measured activity such as energy use, water usage, emissions, computing capacity, land use, etc.
- Financial security: Required funding instruments (e.g., surety bonds, letters of credit) to cover anticipated costs such as environmental response, decommissioning, post-closure monitoring, and unrecovered public infrastructure costs.
- Registered LSDC: LSDC that has completed registration under the act.
Main Provisions
1) Registration and Fees (Sec. 5)
- LSDC owners/operators must file for registration before operation.
- Registration fees (adjusted annually for CPI):
- < 15 MW: $25,000
- 15–<50 MW: $50,000
- ≥ 50 MW: $100,000
- Fees must be paid, research costs reimbursed, financial security posted, and the director must approve the registration.
- Registration is suspended or revoked if noncompliant (Sec. 5(5)).
- Contracts cannot be structured to evade the act (Sec. 5(6)).
2) Financial Security (Sec. 7)
- LSDCs must maintain financial security (surety bonds, letters of credit, escrow, etc.) to cover:
- Environmental investigation/response
- Decommissioning/site restoration
- Post-closure monitoring and stabilization
- Unrecovered public infrastructure costs
- Security must be enforceable in insolvency or dissolution.
- Annual CPI-based adjustments to security amounts begin next year (Sec. 7(2)).
- Upon notice of adjustment, owners must post updated amounts within 90 days (Sec. 7(3)).
3) Construction Labor Standards (Sec. 9)
- Contracts for LSDC construction (for agreements entered/extended after enactment) must pay prevailing local wage and fringe benefits to construction mechanics.
- Applies only to contracts tied to economic development incentives.
4) Operational Oversight and Audits (Sec. 11)
- LSDC owners must ensure actual operations do not materially exceed projections.
- If material exceedance occurs (defined as >10% or triggers denial/modification of permissions), the director may draw on financial security to stabilize operations.
- Department may conduct periodic independent audits; costs reimburseable by owners.
- Local governments may audit/ test local infrastructure impacts; costs reimbursable by LSDCs.
5) Annual Reporting (Sec. 13)
- By March 1 each year, LSDC owners must submit a report detailing:
- Energy consumption
- Peak demand
- Water withdrawals and discharges
- Water sources
6) Change of Ownership or Control (Sec. 15, Sec. 16)
- Changes of ownership/control require a formal review, with a fee determined by the director and a written approval/denial within 90 days.
- Applications must ensure continued obligations for successors and prevent shifting liability.
7) Insolvency or Cessation (Sec. 17)
- If LSDC becomes insolvent, ceases operation, or dissolves, owner must notify the director within 10 business days.
- Director may draw on financial security to stabilize or decommission as needed.
- Permanent closure requires a decommissioning/restoration order.
8) Civil Remedies and Enforcement (Sec. 19)
- Violations carry civil fines up to $100,000 (adjusted annually for CPI).
- Fines go to the Large-Scale Data Center Financial Responsibility Fund.
- The director may order reimbursements, comply with the act, suspend/revoke registration for material noncompliance, or seek injunctive relief.
9) Public Database and Fund (Sec. 21, Sec. 23)
- Within 180 days, the department must create a public database of LSDCs applying for registration.
- The Large-Scale Data Center Financial Responsibility Fund is created to reimburse local governments for eligible costs and to be funded by fines and other sources.
- The department administers the fund and establishes uniform reimbursement procedures.
Rulemaking and Effective Date
- Department may promulgate rules under the Administrative Procedures Act.
- Enacting clause: Act takes effect 90 days after enactment.
Potential Impacts
Overall, HB 5777 creates a comprehensive lifecycle accountability regime for large-scale data centers in Michigan, spanning registration, financial assurance, operational oversight, labor standards, and local government cost recovery.
Compiled from official sources — confirm details with the bill’s official record.
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