Chicago advances ordinance mandating data center impact study

A key Chicago city council committee advanced an ordinance at its meeting today directing city departments to study the environmental and energy impacts of data centers within Chicago.

The primary purpose of the ordinance is to encourage “data residency,” providing a bid preference in the city’s procurement process to reward vendors who agree to store city data at facilities in the city. However, in response to environmental activists concerned about the impact of data centers, the ordinance mandates the creation of an interdepartmental working group to review and recommend policies and practices to address the environmental and energy impacts of data centers within the city.

The addition of greater regulatory oversight raises further concern over whether increased regulation will further chill the development of data centers in Chicago, and ultimately deny community access to skilled jobs, tax revenues, and digital infrastructure. The ordinance directs the working group to issue its report and recommendations by December 1, 2025.

At the state level, Illinois continues to promote data center investment through its incentive program, and the state has recently taken steps to address its Biometric Information Privacy Act (BIPA), which is one of the most punitive in the nation. In August, Governor JB Pritzker signed an amendment to BIPA that reins in damage awards and loosens the requirements for obtaining written consent. Industry advocates continue to work with the state to limit the liability of data hosts who store data that may have been collected by third parties in violation of BIPA.

For more information about these changes, please contact Mariah DiGrino or Mike Rechtin in our Chicago office. For information about real estate development matters in and around Chicago, please contact any members of the Chicago Land Use team at DLA Piper:

Richard F. Klawiter

Paul W. Shadle

Mariah F. DiGrino

Katie Jahnke Dale