South Dakota governor signs new data center limits

South Dakota's governor has signed new legislation that imposes significant limits on large data centers operating within the state. The new law, which applies to data centers with a peak electrical demand of 10 megawatts or greater, mandates that these facilities must bear the costs of their own electrical infrastructure and ensure their water consumption does not strain local resources. Furthermore, the legislation explicitly prohibits the state from overriding local ordinances that limit, prohibit, or regulate data centers. This legislative action comes after a contentious period in the recently concluded session, during which lawmakers rejected several proposals aimed at incentivizing data center development. These rejected incentives included a 50-year sales tax exemption on equipment and software, and the expansion of an existing sales tax rebate program. Additionally, a bill that would have exempted large, off-grid backup generators (like those used by data centers) from state regulatory and siting review failed. Amidst these debates, economic developers and some legislators advocated for the incentives, citing potential job creation and increased property tax revenue for local governments. However, opponents raised significant concerns about the substantial water demands of data centers for cooling and the potential strain their electrical consumption could place on the state's power grid, potentially affecting rates for everyday customers. Another bill signed into law allows the state Public Utilities Commission to charge data center companies for regulatory review costs associated with their projects.