Data Soveriegnty Act

A bill to establish Michigan data sovereignty; to prioritize distributed edge computing and local data hubs over centralized hyperscale data centers; to require American and Michigan ownership and control of critical data infrastructure; to protect citizen privacy and prohibit foreign adversarial access; to tie state incentives to local jobs, wages, and community benefits; to ensure energy-responsible development; to create the Michigan Data Sovereignty Authority; and to promote distributed prosperity across Michigan communities.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Section 1. Short Title.

This act shall be known and may be cited as the “Michigan Data Sovereignty and Distributed Prosperity Act.”

Section 2. Legislative Findings.

The Legislature finds and declares all of the following:

(a) Large, centralized hyperscale data centers impose massive energy demands, create concentrated economic benefits for a small number of global corporations, raise significant privacy and foreign-ownership risks, and offer limited broad-based prosperity for Michigan communities.

(b) A distributed model of edge computing, regional data hubs, and locally controlled infrastructure better protects privacy, keeps control in American hands, spreads economic benefits, reduces energy intensity, and strengthens resilience.

(c) Sensitive citizen, government, and critical-infrastructure data belonging to Michigan residents and public entities should be stored and processed within Michigan on systems owned and controlled by Americans.

(d) Foreign adversarial ownership or access to Michigan data infrastructure constitutes an unacceptable risk to privacy, security, and sovereignty.

(e) State incentives must be conditioned on measurable local hiring, high wages, Michigan/American ownership, and community benefit.

(f) All provisions of this act shall be applied consistent with the Constitution of the United States and the Constitution of the State of Michigan.

Section 3. Definitions.

As used in this act:

(a) “Hyperscale data center” means a large centralized facility primarily designed for massive cloud or wholesale computing capacity serving national or global customers with high continuous power demand.

(b) “Edge computing facility” or “local data hub” means a small-to-medium scale, localized data-processing facility designed to serve regional, municipal, industrial, healthcare, agricultural, educational, or other Michigan-based needs with data remaining under local or in-state control.

(c) “Sensitive Michigan data” means personally identifiable information of Michigan residents, government records, critical-infrastructure operational data, and other categories designated by the Authority as requiring in-state residency.

(d) “Foreign adversarial entity” means any entity owned, controlled, or directed by a designated foreign adversary, including the People’s Republic of China or the Chinese Communist Party, or any other nation or organization so designated under federal law.

(e) “Authority” means the Michigan Data Sovereignty Authority created in this act.

Section 4. Michigan Data Residency and Privacy Protection.

(1) Sensitive Michigan data held by state agencies, local governments, and critical-infrastructure operators shall be stored and processed within the State of Michigan on systems that are majority-owned and controlled by United States persons.

(2) Foreign adversarial entities are prohibited from owning, controlling, or holding access rights to Michigan data infrastructure that handles sensitive Michigan data.

(3) Operators of data facilities receiving state support or handling sensitive Michigan data shall implement strong encryption, obtain affirmative user or data-owner consent where applicable, and submit to independent security and privacy audits.

(4) State and local government agencies are prohibited from using centralized data systems in a manner that enables warrantless mass monitoring of Michigan residents.

Section 5. Priority for Distributed and Edge Computing.

(1) It is the policy of this State to prioritize edge computing facilities and community or cooperative local data hubs over new hyperscale data centers.

(2) Tax credits, grants, expedited permitting, and other state incentives shall be preferentially available to projects that:

(a) Employ distributed or edge architecture;

(b) Serve regional Michigan needs in healthcare, manufacturing, agriculture, education, or government services; and

(c) Maintain full local or in-state operational control.

(3) Hyperscale data-center projects shall be subject to heightened review regarding energy impact, foreign ownership, data residency, and limited local economic benefit before any state incentive is awarded.

Section 6. Local Ownership, Jobs, and Prosperity Requirements.

(1) Any data-infrastructure project receiving state tax credits, grants, or other material support shall demonstrate:

(a) Majority American ownership, with preference for substantial Michigan ownership or control;

(b) High local hiring targets and prevailing or above-market wages for Michigan residents; and

(c) Measurable community benefits, including revenue sharing, small-business enablement, or support for regional manufacturing and AI applications.

(2) Incentives shall be conditioned on achievement of these outcomes and subject to claw-back if targets are not met.

(3) Priority shall be given to data infrastructure that supports Michigan’s advanced manufacturing, autonomous systems, and secure AI applications while keeping data local.

Section 7. Energy and Grid Responsibility.

(1) Data facilities seeking state support shall demonstrate energy-efficient design and reliance on reliable Michigan baseload power, including nuclear and natural gas resources.

(2) Projects shall contribute to grid resilience and shall not impose unsustainable strain on local electric infrastructure. The Authority shall evaluate power-demand impacts as a condition of approval for incentives or fast-track permitting.

Section 8. Michigan Data Sovereignty Authority.

(1) There is created the Michigan Data Sovereignty Authority as a lean coordinating body charged with reviewing, approving, and monitoring data-infrastructure projects for compliance with sovereignty, privacy, ownership, local-benefit, and energy standards.

(2) The Authority shall maintain public metrics on local jobs created, wages paid, data-security incidents, energy usage intensity, economic multiplier effects, and privacy-protection compliance.

(3) The Authority shall publish an annual report to the Governor and Legislature.

Section 9. Enforcement and Penalties.

Non-compliance with data-residency, ownership, disclosure, or incentive-condition requirements shall result in loss of state incentives, contract termination, civil penalties, and, where applicable, recovery of previously awarded funds.

Section 10. Severability.

If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act and the application of its provisions to other persons or circumstances shall not be affected.

Section 11. Effective Date.

This act takes effect 90 days after enactment. The Michigan Data Sovereignty Authority shall be operational and initial standards issued within 180 days.

Enacting Section.

This act is ordered to take immediate effect.

Data Sovereignty. Local Control. Real Prosperity.

Michigan First Means Michigan Data First.

Secure Data. Strong Communities. Free Michigan.