Commentary · Data Center Law
Data Center Law Is a Practice Area Now
In April I drafted a piece calling the legal issues in the Ohio and Michigan data center build-out the ones nobody was talking about. I never published it. Four months later everyone is talking — in township halls, at two public utility commissions, and at the Ohio Supreme Court.
Primary sources are linked where cited — state statutes, governors’ offices, and commission orders. Current as of July 30, 2026. Two items are live as this publishes: a township referendum set for August 4, and the Palisades nuclear restart, expected but not yet completed.
The April draft opened with the land rush: central Ohio one of the largest data center markets in the country, Michigan pushing to attract the next wave, billions in investment behind every press conference. All still true. Data centers drew a reported $27 billion of capital investment into Ohio in 2025 alone, and the Michigan pipeline now includes a 1.4-gigawatt campus under construction southwest of Ann Arbor.
What changed is the direction of the story. In April, the legal work looked like getting deals done. By July, a large share of it is defending them — against townships, against ratepayer math, and in one case against the state that wrote the incentive.
The incentive states passed each other
Michigan finished building its on-ramp. The enterprise data center exemption became law at the end of 2024 and took effect in April 2025: sales and use tax relief for facilities with at least $250 million of investment and thirty qualified jobs paying 150 percent of the regional median wage, running through 2050 — 2065 on brownfield and former power plant sites. Then, on July 15, the governor asked developers to sign a pledge: ten commitments to carry their own energy, grid, and water costs, with statutory ratepayer protections to follow. Oracle and Google signed. A pledge is not a moratorium, but it is a state telling the industry the free-attraction phase is over.
Ohio drove the other direction. Its exemption — R.C. 122.175, sales tax relief on data center equipment for projects clearing $100 million of investment and $1.5 million of payroll — helped build the Columbus market. It also cost far more than anyone projected: roughly $1.57 billion in the last fiscal year against an original estimate near $136 million. The legislature tried to shut off new awards in the budget; the governor vetoed that. Then in May the same governor paused new exemptions himself while a joint committee studies the program, and legislative leaders have said they intend to override the veto and end new awards outright. Existing agreements stand. New ones wait.
The April draft said the legal work in incentives was in the details — what counts toward the investment threshold, how jobs are counted, what triggers a clawback. That aged well. One detail got bigger: what happens to your agreement when the program that created it becomes a political target. Anyone negotiating in either state should be reading the clawback and change-in-law provisions the way Ohio’s early recipients wish they had.
Power became the fight
The April draft treated utility agreements as complex contracts worth careful review. Four months later they are contested rate proceedings with appellate dockets.
In Ohio, the commission approved AEP Ohio’s data center tariff last summer: new loads over 25 megawatts commit to twelve-year contracts, pay minimum monthly charges on 85 percent of subscribed capacity whether they use it or not, and face exit fees measured in years. Amazon, Google, Meta, and Microsoft opposed it. The Ohio Manufacturers’ Association appealed, and the case is now pending at the Ohio Supreme Court. However it comes out, the principle it tests — whether the biggest new loads can be made to carry their own grid risk — is the frame every state is watching.
Michigan built its version in parallel. The commission approved Consumers Energy’s large-load terms in November — loads of 100 megawatts and up, fifteen-year minimum contracts, 80 percent minimum billing — and approved DTE’s special contracts for the 1.4-gigawatt Saline Township campus in December, with a general large-load tariff still pending. And the state’s most-watched power story sits a county away: the Palisades nuclear plant, expected to be the first restart of a shuttered reactor in American history, with fuel on site and no announced date.
For anyone signing these agreements, the practical point: a fifteen-year commitment to pay for 80 percent of capacity you may not use is not a utility formality. It is one of the largest financial obligations in the project, and it deserves the same negotiation attention as the ground lease.
The siting fights got real
The April draft predicted that communities without clear zoning frameworks would end up in litigation with developers or neighbors, sometimes both. Saline Township ran the full script in under a year: the board rejected the project, the developer sued, the township settled and let it proceed, and a zoning maneuver in January blocked the citizens’ referendum. Construction is underway. Next door, Augusta Township’s 522-acre proposal goes to the voters on August 4 — an actual ballot question on a single land-use decision.
The moratorium is now the default municipal move. By one running count, more than fifty Michigan municipalities have enacted data center moratoria, and a wave of Ohio townships — Jackson, Jerome, Boardman, Butler County — have done the same. Several Michigan proposals have simply been withdrawn. For developers, the local process is no longer a formality after the state incentive; it is the highest-variance step in the project. For municipalities, the lesson from April stands and now has receipts: the communities that write clear, predictable frameworks will get the projects on their terms. The ones that improvise will get the litigation.
What survived from April
The employment analysis held up. Data centers still need two workforces at two different times — hundreds of construction trades on compressed schedules, then a small permanent team of facilities engineers and technicians who are scarce everywhere and scarcer here. Operators still compete for that pool with noncompetes and nonsolicits that tend to run broader than Michigan and Ohio courts will enforce. What changed around that analysis: the FTC’s noncompete ban is formally dead, removed from the Code of Federal Regulations in February, and the agency now attacks individual employers’ agreements case by case, while Michigan’s proposed near-total ban sits in committee. Reasonableness doctrine governs, employer by employer, which is exactly the environment where drafting discipline pays.
One claim from April does not survive: I wrote that Ohio incentive packages often trigger prevailing-wage requirements. They don’t. Ohio’s prevailing-wage law reaches public improvements financed with public funds, and a sales tax exemption is neither; the federal version turns on federal money. Wage terms on these projects come from negotiated labor agreements, not the incentive statute. The construction section’s core — delay risk flowing downhill through liquidated damages, supply-chain force majeure getting tested, change orders turning into seven-figure arguments as tenant specs evolve mid-build — needed no correction.
The name
The April draft ended by saying this converging body of work — employment, commercial, real estate, energy, public incentives, one asset class — was a practice area without a name. Four months supplied the rest: a paused exemption and a repeal fight, a tariff appeal at a state supreme court, commission dockets in two states, a township referendum with a construction schedule riding on it, and fifty-odd moratoria. The convergence thesis didn’t need defending. The dockets named it.