South Dakota just advanced a “Data Center Bill of Rights for Citizens” that focuses squarely on water use, power costs, and keeping local control over siting rules.
The bill forces data center operators to prove they won’t strain local water supplies and to directly pay their incremental electricity costs, which matters as AI and crypto campuses push into the 30–1,000 MW range.
State preemption is off the table here, so counties and cities keep leverage over AI-scale builds, from noise and diesel backup to zoning and community impact.
Lawmakers stripped out a broad ban on tax exemptions for now, but the sponsor wants to come back with narrower language that curbs new giveaways while preserving existing incentive tools like the Reinvestment Payment Program.
Two notable pushbacks: a bill to exempt large backup generators from state PUC review failed, and another to ban NDAs on data center deals died as “overbroad,” signaling the state is not ready to fully deregulate or fully expose negotiations.
A separate effort to create a 50-year sales tax holiday on data center equipment is already dead, but a more nuanced incentive framework for very large projects is still in play.
For AI infra builders, this is an early signal that states like South Dakota want megawatt- and water-heavy AI data centers, but with explicit guardrails and a live debate over how rich the incentive packages should be, making the full article worth a read for anyone modeling site strategy in secondary markets.
Source: Data Center Regulation Bill Passes State South Dakota Senate Sans Tax Incentive Ban
