One of the last remaining data center bills pending in the South Dakota Legislature — a measure that would impose new regulations — passed the state House on Thursday and now heads back to the Senate for consideration of a House committee’s amendment. 

Senate Bill 135 is labeled the “Data Center Bill of Rights for Citizens” by its prime sponsors, Senate President Pro Tempore Chris Karr, R-Sioux Falls, and House Speaker Jon Hansen, R-Dell Rapids. 

The bill would require data centers with peak electrical use of 10 megawatts or greater to cover any costs associated with meeting their power demands, including costs if the data center unexpectedly leaves. It would also bar the state from preempting local laws limiting, banning or regulating data centers. 

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Data centers would additionally have to notify local water providers of their proposed projects and the amount of water they would require for uses such as cooling. Data centers would need determinations from local providers that the project’s water consumption would be compatible with the local water supply. 

“We’re putting some basic protections in place for consumers, for South Dakota ratepayers,” Hansen said. “They’ve seen the headlines. They’ve seen the concerns.”

The bill passed on a 60-7 vote. It passed the Senate 34-0 last month, and it will have to go back to the Senate for consideration of an amendment made by a House committee. That amendment inserted the 10-megawatt or greater applicability standard.

The bill originally banned data center tax exemptions at the state and local levels, but the Senate voted to strike that language, even as Karr said the language was under review and could return later.

Data centers — rooms or buildings full of computer servers — have been storing cellphone pictures, emails and social media accounts for years. What’s new are 100- to 1,000-acre warehouses full of servers for cryptocurrency and artificial intelligence. Those massive data centers, often needing 30 to 1,000 megawatts of energy, have electricity consumption equivalent to 29,000 to 800,000 residential customers. There is a 30-megawatt data center in South Dakota, but the state has none of the larger data centers that have proliferated elsewhere.

During the House debate, the bill’s supporters said the legislation protects ratepayers from subsidizing massive electric loads, without banning data centers from coming to the state. 

Opponents said utilities and local officials already have tools to manage large electric loads and warned the bill tells businesses that South Dakota has an anti-growth mindset that undermines economic development.

“This comes from a good place, but focusing on what government can block is the wrong path,” said Rep. Will Mortenson, R-Fort Pierre. “We need to start focusing on what people can build.”

Most other data center-related measures have failed this legislative session. Those include bills to give data centers sales tax refunds or rebates, and another to remove the need for Public Utilities Commission permitting of large backup generators. 

One data center bill that’s still pending would allow the Public Utilities Commission to make companies pay for regulatory studies related to data centers with peak electrical demands of 10 megawatts or more. 

With one week left in the annual legislative session, there’s still time for failed proposals to come back as amendments to other bills.