Chicago Executive Order establishes timeline for additional data center regulation

Chicago Mayor Brandon Johnson has issued Executive Order (EO) No. 2026-5, an immediate administrative action that establishes a timeline for data center regulation and calls for the Chicago City Council to enact a formal moratorium.

The EO follows the release of the Sustainable Data Centers Report in July 2026, which recommended sweeping changes to the regulatory framework for data center development in the City of Chicago.

Key details and implementation dates

Both the EO and the Sustainability Report identify noise from cooling systems, air pollution, and potential public cost impacts associated with data center development as key concerns. The EO builds on the report’s recommendations by setting deadlines for action. The forthcoming restrictions apply to all new and existing data center developments in the City of Chicago.

Effective immediately

• Any project requiring a new Planned Development will face enhanced multi-agency review, specifically considering electricity demand, water consumption, backup power generation, air emissions, noise, cumulative environmental impacts, transportation impacts, emergency response capacity, and community impacts.
  
  
• The Chief Sustainability Officer must impose conditions on air pollution control permits for any regulated equipment or area at a data center. These conditions have not yet been announced.

Within 60 days (on or about October 10, 2026)

• Relevant Commissioners, including the Buildings, Business Affairs and Consumer Protection, Environment, and Water Management Commissioners, must provide the Department of Planning and Development (DPD) with additional written recommendations identifying conditions appropriate to protect public health, safety, affordability, the environment, and general welfare. Any proposed Planned Development ordinance must include these conditions moving forward.

Within 90 days (on or about November 9, 2026)

• The Chief Sustainability Officer must publish rules for data center air pollution control permits and the enforcement of noise standards applicable to data centers.

By March 15, 2027

• The Interdepartmental Task Force must 1) provide recommendations to the Mayor, 2) draft proposed amendments to the Municipal Code, and 3) draft proposed rules governing data centers, including permitting, impact controls, licensing standards, zoning regulations, and reporting requirements.

Surrounding regulatory framework

The City's regulatory actions come amid several state-level policies affecting data centers in Illinois.

The State of Illinois previously introduced a sales tax exemption (20 ILCS 605/605-1025) and construction tax credits (35 ILCS 5/229) to support data center development. However, through an EO, Governor JB Pritzker directed the Illinois Department of Commerce and Economic Opportunity to pause processing new agreements under the program beginning July 1, 2026. During the ongoing pause, existing agreements will continue to be honored.

The Protecting Our Water, Energy, and Ratepayers (POWER) Act (HB 5513/SB 4016) stalled during the spring session, but it could return in the fall veto session. That act would require data centers to fund their own energy generation from renewable sources, track and report their water use, pay into an environmental justice fund, and sign community benefits agreements with local stakeholders.

In March 2026, the Illinois Commerce Commission (ICC) ordered a formal investigation to evaluate potential measures to protect ratepayers’ utility cost burdens. The City of Chicago is participating in the investigation, which is set to conclude by early 2027. Currently, large-demand projects are subject to Commonwealth Edison (ComEd)’s Large Demand Tariffs, which fund ComEd’s costs for engineering, planning, and long-lead materials for projects requesting at least 50 megawatts of electrical service.

Looking ahead

The EO signals greater scrutiny for noise, grid, water, and community-benefit concerns for all data center projects in Chicago.

Market participants are encouraged to consider the EO as both an immediate permitting development and a preview of forthcoming statutory regulation. Those affected by the EO may consider focusing on project-specific permitting status, noise and water impact analyses, and community-benefit strategies.

For more information, please contact the authors.