The Wisconsin Department of Natural Resources and environmental groups announced a settlement Monday that will require closer environmental review of data center projects in the state.

The agreement resolves a lawsuit filed in June in Ozaukee County by the Sierra Club and Midwest Environmental Advocates. The groups argued the DNR approved permits for a large Vantage data center under construction in Port Washington without a proper environmental impact statement.

Under the settlement, the DNR will prepare full environmental impact statements for individual data center proposals going forward and will also complete a statewide strategic analysis of how data centers consume resources.

A state Public Service Commission report this summer found that data centers in Port Washington, Mount Pleasant and Beaver Dam are expected to drive about a 40 percent increase in statewide energy demand over the next six years, according to the groups.

Attorneys for the environmental groups said the broader review is meant to look at cumulative impacts across Wisconsin, not just one project at a time. Data center development and tax policy have also become a live debate in western Wisconsin, including in state Assembly races in the Chippewa Valley and St. Croix Valley.