A new Michigan law quietly limits which contractors can bid on data center projects that get utility rate breaks.
Most Michigan construction and trades owners haven't heard of SB1048, but if you work on data center projects—or want to—you need to understand one buried provision that could reshape how you bid and staff those jobs.
Here's what's happening: Michigan's legislature passed SB1048, which amends the Public Utilities Act (MCL 460.1 - 460.11). The bill adds a new section, 10ii(1)(c), that imposes a labor requirement on any construction work tied to qualified data centers that receive special utility rates or contracts approved by the Michigan Public Service Commission.
Before the PSC can approve a special rate deal or contract for a qualified data center, every construction contractor and subcontractor on that project must either:
• Sign a project labor agreement (PLA), or
• Already operate under a collective bargaining agreement
In plain terms: if your company doesn't have a union agreement in place, you cannot work on data center construction that benefits from a utility rate deal—unless you sign a PLA specifically for that project.
The rule targets non-union small and mid-sized contractors. If you're a general contractor, electrician, HVAC, concrete, or framing company without a union relationship, data center work funded through PSC-approved utility contracts is now off-limits unless you're willing to enter into a PLA.
PLAs typically require contractors to hire union labor, pay union wages and benefits, and comply with union work rules for the duration of the project. For many small shops, that's a significant operational and cost change.
Contractors already operating under collective bargaining agreements face no new barrier. Union shops can bid as usual.
The provision became effective on the effective date of the amendatory act. There is no sunset date stated in the law, meaning this requirement remains in place indefinitely unless the legislature amends it.
If data center work is part of your pipeline, you have a few paths:
• Decline to bid on PSC-approved data center contracts and pursue other work
• Explore whether a PLA makes financial sense for a specific large project
• Partner with a union contractor as a subcontractor (though you'd still be bound by PLA terms)
• Focus on data center work that doesn't involve PSC-approved utility rates
The last point matters: this rule only applies to contracts the PSC approves. Not all data center construction involves utility rate deals, so some opportunities may still be available outside this requirement.
If you're bidding data center work or planning to, review your contracts carefully to confirm whether a PSC-approved utility rate is involved. If it is, you'll need a PLA or union agreement in place before you can legally perform the work.
For a detailed breakdown of how SB1048 Section 10ii(1)(c) applies to your specific trade, contact your local construction association or review the full text of the bill through the Michigan Legislature website.