By Liz Nass
Gongwer News Service
Attorney General Dana Nessel told Gongwer News Service on Tuesday that she would be interested in having a third party ensure environmental standards are met in data center tax exemptions.
The Michigan Strategic Fund is currently the oversight board for the standards under the tax exemption law, which may gain a new applicant with the $500 billion Saline data center project announced last month by OpenAI and Oracle.
The data center project is also facing criticism from Nessel’s office on contracts with DTE Energy Company in front of the Public Service Commission, saying the process is not transparent and that consumers need more answers to their concerns.
Nessel said given issues with other earmark oversight in the Michigan Economic Development Corporation and MSF, she may want to take further steps to ensure data centers meet requirements.
The Department of Attorney General is currently investigating Fay Beydoun, a businesswoman who was granted $20 million in legislative grant funding for a business accelerator, raiding the MEDC headquarters in June in relation to the grant administration. MEDC CEO Quentin Messer Jr. was also named a potential target of the investigation.
Danielle Emerson, spokesperson for the MEDC, said both the MEDC and MSF are following their standard process for developing program guidelines.
Nessel said her concerns on past issues made her wary of the requirements being met for the tax exemption, wondering if there could be a third party to ensure companies met requirements for eligibility, or if eligibility would just work “on the honor system.”
She said she wants to know who is making the decisions and vetting the companies, wanting experts on the case instead of taking companies by their word.
Although this would be the first instance of the MSF’s oversight on data centers under the tax exemption law passed in 2024, her issues stem from the MEDC’s stance on claiming it is not its job to vet information on grants like the legislative earmarks, just administration.
“Obviously we’ve seen the way the MEDC has operated in the past and the way MSF has operated in the past, and we should be making sure that we have all those significant guardrails in place so that Michigan is not providing these massive tax breaks without the companies having to abide by those requirements,” Nessel said.
Emerson said the process for developing guidelines has included close partnership with both the Department of Treasury and Department of Attorney General to certify eligibility for the tax exemption and performing annual compliance.
She said no applications have been submitted for the exemption yet, so the work is being done in preparation for that eventual process.
The MSF is also in hot water with some environmental groups that sent a letter to the board, disagreeing with how the tax exemption law was interpreted by the MSF’s standards.
Although the law states a data center must use 90% clean energy by the end of their first three years, the MSF’s interpretation states the data center can just procure its energy from a utility company also subject to energy standards. However, the groups do not agree with this standard because energy companies have lower standards than the centers in both the amount of clean energy and how many years it needs to be procured.
MSF’s interpretation also says companies would not lose their tax break if they could not hit this clean energy standard.
Nessel said she did not know if her office had given legal advice on the interpretation and that she had not read the letter to the MSF on the clean energy interpretation.
She held a roundtable discussing her frustration with the utility contracts on the data center last week with two of the organizations signed onto the letter: the Michigan Environmental Council and the Natural Resources Defense Council.
Nessel also questioned the purpose of the Public Service Commission ahead of Wednesday’s public hearing on ex parte contracts submitted for approval by DTE Energy Company with the data center project, saying she feels the commission is just “rubber stamping” the agreements.
She called the hearing “merely performative,” and that it will not answer questions to those concerned about the project.
Nessel said there are many unknowns: the impact of the center on the grid, impact on residential households and what are in the contracts that she said are heavily redacted. She said it makes her wonder “what exactly is it that they’re hiding?”
DTE previously said the contracts would not affect current customers and their rates, but Nessel asked how homeowners are supposed to know that for sure if they can’t see “behind the curtain.”
DTE has not “always been a good faith actor in this space in many other cases where they have made promises they’ve not been able to keep,” Nessel said, wondering why the state was trusting them now with a project this large in scope.
Nessel even offered a compromise to a full 180-day hearing process, instead suggesting 60 days for an abbreviated expert hearing, wondering why it has to be rushed.
She said, “if this is such a great deal now, isn’t it going to still be a great deal in 60 or 90 days?”
Although the Legislature and Gov. Gretchen Whitmer invited the data centers into the state, Nessel said she was unsure if this is what they envisioned for the process.
If the state is going to be data center-friendly, Nessel said, they must do it responsibly.
“Can we make sure that we’re crossing our T’s and dotting our I’s? Because here’s what I know, once the Public Service Commission signs off on this, then all bets are off and it’ll be too late,” Nessel said. “What’s happening at that point, it’s going to be really difficult for us to say, ‘Oh, well, now we have to make sure that all the things that these companies said were going to happen, that they actually come into fruition.’ We don’t know that, so it just makes sense for me to do this on the front end and not the back end, where we have a lot more options in place.”
Nessel also touched on the AI market as a bubble, citing “the dot-com bubble” in the 1990s, which created an oversaturated market mixed with tech companies falling into bankruptcy. She said with long-term contracts that need to be paid off over the course of the next 15 years, it raises questions about what happens if the need for the facilities does not exist in only five years from now.
She said her overall hope is for a contested case before the commission and is exploring all options if the commissioners decide to “rubber stamp this without any further input,” hoping it does not come to that.
Gongwer News Service
Attorney General Dana Nessel told Gongwer News Service on Tuesday that she would be interested in having a third party ensure environmental standards are met in data center tax exemptions.
The Michigan Strategic Fund is currently the oversight board for the standards under the tax exemption law, which may gain a new applicant with the $500 billion Saline data center project announced last month by OpenAI and Oracle.
The data center project is also facing criticism from Nessel’s office on contracts with DTE Energy Company in front of the Public Service Commission, saying the process is not transparent and that consumers need more answers to their concerns.
Nessel said given issues with other earmark oversight in the Michigan Economic Development Corporation and MSF, she may want to take further steps to ensure data centers meet requirements.
The Department of Attorney General is currently investigating Fay Beydoun, a businesswoman who was granted $20 million in legislative grant funding for a business accelerator, raiding the MEDC headquarters in June in relation to the grant administration. MEDC CEO Quentin Messer Jr. was also named a potential target of the investigation.
Danielle Emerson, spokesperson for the MEDC, said both the MEDC and MSF are following their standard process for developing program guidelines.
Nessel said her concerns on past issues made her wary of the requirements being met for the tax exemption, wondering if there could be a third party to ensure companies met requirements for eligibility, or if eligibility would just work “on the honor system.”
She said she wants to know who is making the decisions and vetting the companies, wanting experts on the case instead of taking companies by their word.
Although this would be the first instance of the MSF’s oversight on data centers under the tax exemption law passed in 2024, her issues stem from the MEDC’s stance on claiming it is not its job to vet information on grants like the legislative earmarks, just administration.
“Obviously we’ve seen the way the MEDC has operated in the past and the way MSF has operated in the past, and we should be making sure that we have all those significant guardrails in place so that Michigan is not providing these massive tax breaks without the companies having to abide by those requirements,” Nessel said.
Emerson said the process for developing guidelines has included close partnership with both the Department of Treasury and Department of Attorney General to certify eligibility for the tax exemption and performing annual compliance.
She said no applications have been submitted for the exemption yet, so the work is being done in preparation for that eventual process.
The MSF is also in hot water with some environmental groups that sent a letter to the board, disagreeing with how the tax exemption law was interpreted by the MSF’s standards.
Although the law states a data center must use 90% clean energy by the end of their first three years, the MSF’s interpretation states the data center can just procure its energy from a utility company also subject to energy standards. However, the groups do not agree with this standard because energy companies have lower standards than the centers in both the amount of clean energy and how many years it needs to be procured.
MSF’s interpretation also says companies would not lose their tax break if they could not hit this clean energy standard.
Nessel said she did not know if her office had given legal advice on the interpretation and that she had not read the letter to the MSF on the clean energy interpretation.
She held a roundtable discussing her frustration with the utility contracts on the data center last week with two of the organizations signed onto the letter: the Michigan Environmental Council and the Natural Resources Defense Council.
Nessel also questioned the purpose of the Public Service Commission ahead of Wednesday’s public hearing on ex parte contracts submitted for approval by DTE Energy Company with the data center project, saying she feels the commission is just “rubber stamping” the agreements.
She called the hearing “merely performative,” and that it will not answer questions to those concerned about the project.
Nessel said there are many unknowns: the impact of the center on the grid, impact on residential households and what are in the contracts that she said are heavily redacted. She said it makes her wonder “what exactly is it that they’re hiding?”
DTE previously said the contracts would not affect current customers and their rates, but Nessel asked how homeowners are supposed to know that for sure if they can’t see “behind the curtain.”
DTE has not “always been a good faith actor in this space in many other cases where they have made promises they’ve not been able to keep,” Nessel said, wondering why the state was trusting them now with a project this large in scope.
Nessel even offered a compromise to a full 180-day hearing process, instead suggesting 60 days for an abbreviated expert hearing, wondering why it has to be rushed.
She said, “if this is such a great deal now, isn’t it going to still be a great deal in 60 or 90 days?”
Although the Legislature and Gov. Gretchen Whitmer invited the data centers into the state, Nessel said she was unsure if this is what they envisioned for the process.
If the state is going to be data center-friendly, Nessel said, they must do it responsibly.
“Can we make sure that we’re crossing our T’s and dotting our I’s? Because here’s what I know, once the Public Service Commission signs off on this, then all bets are off and it’ll be too late,” Nessel said. “What’s happening at that point, it’s going to be really difficult for us to say, ‘Oh, well, now we have to make sure that all the things that these companies said were going to happen, that they actually come into fruition.’ We don’t know that, so it just makes sense for me to do this on the front end and not the back end, where we have a lot more options in place.”
Nessel also touched on the AI market as a bubble, citing “the dot-com bubble” in the 1990s, which created an oversaturated market mixed with tech companies falling into bankruptcy. She said with long-term contracts that need to be paid off over the course of the next 15 years, it raises questions about what happens if the need for the facilities does not exist in only five years from now.
She said her overall hope is for a contested case before the commission and is exploring all options if the commissioners decide to “rubber stamp this without any further input,” hoping it does not come to that.
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