Microsoft Urges Major Changes To Washington Data Center Regulations As Bill Nears Final Vote

The race to regulate artificial intelligence infrastructure has arrived at a crossroads in Washington state.

After weeks on the sidelines, Microsoft publicly declared its opposition to a controversial state bill that aims to rein in the environmental and economic impacts of the massive data centers powering the AI boom.

Labeling the proposed regulations “uniquely anti-competitive,” Microsoft’s senior director of Washington state government affairs, Lauren McDonald, urged Senate leaders on Friday evening to reconsider key features of House Bill 2515.

“We respectfully urge the committee not to advance the bill without significant changes,” McDonald said in testimony before the Senate Committee on Ways & Means.

The bill aims would require utilities and data center companies to create agreements that protect rate payers from increased power costs and brings transparency to the environmental impacts of the facilities.

Microsoft, which operates roughly 30 data centers in Washington alone, plans to spend up to $140 billion on global infrastructure this year, while has Amazon committed to spending $200 billion this year on capital expenditures worldwide, predominately for its Amazon Web Services cloud business.

Elected officials, communities and tribal leaders nationwide are increasingly anxious about data center deployments driving up electricity rates with their power-hungry electronics and consuming vast quantities of water to cool the devices. President Trump and other officials are pursuing commitments to ensure tech companies protect ratepayers from price increases.

Tech companies, labor organizations and municipalities that have seen job creation and the benefits of taxes generated by the facilities have pushed back against the regulations. Microsoft President Brad Smith last month launched a community-focused initiative pledging to bear its own electrical costs and emphasizing its support of local taxes.

At the same time, the Seattle Times reported today that Microsoft and Amazon have been working aggressively behind the scenes to weaken HB 2515, and that Amazon is currently “neutral” on the bill. The company, which has historically concentrated its Pacific Northwest data center footprint in Oregon, has not testified publicly on the legislation.

The legislation

HB 2515 has passed the House and is edging closer to a vote from the full Senate — though tech sector opposition could sink the measure. The bill is shifting and evolving with different amendments and new language under consideration. The legislation’s main components include:

• Ratepayer Protection: Utilities must create tariffs or policies that insulate ratepayers from short- and long-term financial risks associated with data center energy use.
• Transparency: Date centers must publish annual reports on water, energy, refrigerant use, and air pollution, with a comprehensive sustainability report every three years.
• Resource Forecasting: Data centers must coordinate with regulators and utilities on energy load forecasting.
• Carbon Credits: The availability of free carbon credits to meet state regulations would be limited.
• Clean Energy Certification: Facilities that open or expand after July 1, 2026, must certify their use of new clean energy, using 80% clean power by 2030 and all clean energy by 2045.

MacDonald raised concerns at the hearing about the legislation preventing a data center in Malaga, Wash., that was built in 2023 from being able to open later this year, presumably due to the clean energy requirements.

One particularly controversial piece — which was not included in the version of the bill that passed the House but is still being discussed — requires data centers to curtail or stop drawing power from the grid in energy emergency situations. Opponents said the rule could disable facilities that support essential operations such as access to electronic medical records or tech to dispatch first responders.

Seeking statewide standards

Proponents of HB 2515 frame the measure as a necessary step to put rules in place for a sector that is rapidly expanding, stoked by the soaring use of artificial intelligence.

“The game is changing on data centers before our very eyes,” Zach Baker, policy director for the nonprofit NW Energy Coalition, told lawmakers. “The common sense guardrails in this bill are needed to protect affordability, grid reliability and the environment.”

Washington is currently home to approximately 126 data centers and related facilities. Microsoft has the most data centers in the state out of any company, while Sabey Data Centers has eight of the facilities, according to the research firm Baxtel.

Rep. Beth Doglio, D-Olympia, lead sponsor of the legislation, earlier this month testified that 16 new data center projects are planned for Walla Walla and an expansion underway in Vantage is tapping new gas-powered energy.

The bill would create a statewide standard for utilities siting new facilities in their communities, she said. “I just hope that we are able to make sure that we do data centers right in this state.”

RELATED:

• Washington state has embraced data centers – but now it’s looking to set terms of engagement
• ‘Meaningless’ theater? As tech giants pledge ratepayer protections in D.C., others question real-world impact
• Microsoft responds to AI data center revolt, vowing to cover full power costs and reject local tax breaks