Data centers in South Dakota

📜 State laws

SB 135 (2026): 'Data Center Bill of Rights' is now law · March 24, 2026
This law covers data centers that use 10 megawatts or more at peak. (1) Power companies must set separate rules for data centers, and a data center must pay all costs it causes, even if it later leaves or uses much less power. (2) The state may not stop a county, city or other local government from limiting, banning or regulating data centers. (3) Before it opens, a data center must tell each local water provider how much water it expects to use. Each provider decides in writing if the local supply can handle it, and the state Water Management Board can set limits after homes and essential public services are served. (4) Data centers must report their water use twice a year, and the board makes the numbers public. The bill first also banned tax breaks for data centers, but the Senate removed that part. It passed the Senate 34-0 and the House 60-7, the Senate agreed to House changes 33-1, and Gov. Larry Rhoden signed it in March 2026. It took effect July 1, 2026, as SDCL chapter 49-50. News reports note the law has no penalties for breaking it. Source

HB 1038 (2026): data centers pay for the state's review of their power contracts · March 30, 2026
When a power company asks the Public Utilities Commission (PUC) to approve a special contract or service agreement for a data center of 10 megawatts or more, the PUC can bill that data center for the actual cost of the review, instead of other customers paying. This definition of data center includes crypto mining. The bill passed the House 60-5 and the Senate 32-2 (House agreed to changes 67-0), and the Governor signed it in March 2026. It took effect July 1, 2026. Source

SB 232 (2026): one-year statewide pause on hyperscale data centers failed · Feb 18, 2026
This bill would have stopped building or expanding very large ('hyperscale') data centers for one year. An amendment would have let projects with all permits and power hookup deals signed before July 1, 2026 go ahead. The Senate State Affairs Committee voted 3-5 against passing it and then tabled it 5-3 on February 18, 2026. A House bill with a pause and limits on power costs (HB 1301) also died in committee (10-2 vote to kill it on February 18). Source

HB 1246 (2026): ban on secret deals (NDAs) with data centers failed · Feb 20, 2026
Rep. John Hughes (R-Sioux Falls) proposed that no state agency, county, city or other local government could sign a secret deal (NDA) about building or locating a data center, and that any such deal would be a public record. The House State Affairs Committee passed it 9-3, but the full House voted it down 30-37 on February 20, 2026. Source

SB 127 (2026): state limits on data center nuisances failed · Feb 18, 2026
This bill aimed to limit nuisances caused by data centers. Committees in February also stopped bills on noise limits, minimum distances from homes, and water and power use. SB 127 was killed in the Senate State Affairs Committee 5-3 on February 18, 2026. Local governments can still set their own rules (see SB 135). Source

Data center tax break bills (2026) all failed · Feb 24, 2026
HB 1005 would have given a 50-year sales tax exemption on data center equipment and software; the House State Affairs Committee killed it 9-3 on February 4, 2026. SB 234 (data center purchases) was killed in Senate committee 5-4. SB 239 would have widened the state's Reinvestment Payment Program for large projects such as data centers; it passed the Senate 17-16 on February 23, but failed 16-17 when senators voted again the next day. Applied Digital said a tax break was needed for its planned Deuel County data center. Source

💡 Who pays for the power

Who sets power rates: the PUC for investor-owned utilities · Oct 8, 2026
The South Dakota Public Utilities Commission (PUC) sets rates for investor-owned power companies such as Xcel Energy, Black Hills Energy, NorthWestern Energy, Otter Tail Power, MidAmerican and Montana-Dakota Utilities (MDU). Since July 1, 2026, every power provider must have separate terms for data centers of 10 megawatts or more so they pay the costs they cause (SDCL 49-50-2). The PUC can also bill data centers for its review of their special power contracts (HB 1038). The PUC has three commissioners elected statewide; one seat is on the November 3, 2026 ballot. Source

Otter Tail Power: proposed data center rate (PUC docket EL26-021) · July 27, 2026
On July 27, 2026, Otter Tail Power asked the PUC to create a new customer class for loads over 25 megawatts and a special 'High Power Compute' rate for data centers of at least 75 megawatts. The data center would sign a contract of at least 15 years, pay for new power plants or power purchases built for it, and pay exit fees if it leaves early. Otter Tail says it filed this because of SB 135. Its whole system peak is about 1,000 megawatts, so one large data center could double it. Proposed start: January 1, 2027. The PUC staff sent first questions on October 7, 2026; no decision yet. Source

Black Hills Energy asks for a 25% rate increase (PUC docket EL26-003) · Feb 19, 2026
Black Hills Power asked the PUC on February 19, 2026 for $50.6 million more per year, a 25.1% rise in total revenue. A typical home using 650 kWh a month would pay $25.13 more per month (25.4%). The PUC suspended the new rates on March 13, 2026. In July 2026 Black Hills gave notice that it would start charging interim rates, which can be refunded if the PUC later approves less. The case is still open. Some customers wrote to the PUC worried that they would pay for data centers in Wyoming; in an April 2026 reply the PUC pointed to SB 135, which makes data centers pay the costs they cause. The case itself is about Black Hills' general costs. Source

NorthWestern Energy and Black Hills merger approved · June 26, 2026
NorthWestern Energy and Black Hills Corporation agreed to merge in August 2025. The South Dakota PUC approved the merger with two settlement agreements on June 26, 2026 (docket GE25-001). Source

💵 Tax breaks

No special state tax break for data centers · Oct 8, 2026
South Dakota has no sales tax exemption written for data centers. Lawmakers rejected every such bill in 2026 (HB 1005, SB 234, SB 239). Data centers can still apply for general programs, such as the Reinvestment Payment Program, and for local property tax deals. Source

Reinvestment Payment Program: sales tax paid back to big projects · Oct 8, 2026
The state Board of Economic Development (part of the Governor's Office of Economic Development, GOED) can pay a company back up to the state sales and use tax it paid on a new or bigger facility costing more than $20 million, or an equipment upgrade over $2 million. The board is supposed to approve only projects that would not happen without the payment. GOED lists approved projects by year on its website. News reports say data centers can use this program. Source

🤐 Secret deals and public records

South Dakota open records law: anyone can ask · Oct 8, 2026
Records of the state, counties, cities, school districts and other public bodies are open to the public unless a law says otherwise (SDCL 1-27-1 and 1-27-1.1). The law covers 'all citizens of this state, and all other persons interested', so you do not have to live in South Dakota. Start with an informal request. If that is denied, send a written request to the agency's public record officer. They must answer within 10 business days: give the records, deny in writing with reasons, or give an estimate of time. No answer in 10 business days counts as a denial (SDCL 1-27-37). Fees can apply. Source

If your records request is denied · Oct 8, 2026
Within 90 days of a denial (or if you object to the fee or time estimate) you can go to court, or file a free written 'notice of review' with the Office of Hearing Examiners by registered or certified mail. Include your name, address and phone, the name of the officer and agency that denied you, a copy of your request and of the answer (SDCL 1-27-38). Source

What can be kept secret: trade secrets and business information · Oct 8, 2026
The law lets public bodies hold back trade secrets and 'proprietary or commercial information' if releasing it would give an advantage to business competitors or serve no real public purpose. It also covers appraisals and negotiation records when a public body buys or sells land (SDCL 1-27-1.5). Companies often point to these rules to keep project details private. Source

Secret deals (NDAs) with data centers are still allowed · Feb 20, 2026
No South Dakota law bans local governments or state agencies from signing secret deals (NDAs) with data center developers. A ban (HB 1246) failed 30-37 in the House in February 2026. Data center company Applied Digital spoke against it. Source

💧 Water

New data center water rules (SDCL 49-50) · July 1, 2026
Since July 1, 2026, a data center of 10 megawatts or more must tell each local water provider how much water it expects to use before it opens. Each provider must decide in writing if the local supply can handle it, and the operator must give these papers to the state Water Management Board. The board then issues a public statement. The board can set limits so that homes and essential public services come first. Data centers must report water use twice a year, and the board publishes the numbers. Source

Water permits: Water Management Board and DANR Water Rights Program · Oct 8, 2026
Except for normal household use, taking water from wells, rivers or lakes needs a water permit (SDCL 46-5-8). The Water Rights Program of the Department of Agriculture and Natural Resources (DANR) reviews applications, and the chief engineer makes a recommendation. Each application is published as a notice in a local newspaper and on DANR's public notice page. Anyone can send a comment by the deadline. To become a party and get a hearing before the Water Management Board, you must file a written petition on the state's form, sent to both the applicant and the chief engineer, saying how the permit would harm you in a way different from the general public. Deadlines are short: in one 2025 notice, 11 days after it was published. If no one objects, the chief engineer can decide without a hearing. Source

🌫️ Air and generators

Air permits for generators and gas plants: DANR Air Quality Program · Oct 8, 2026
Backup diesel generators, gas turbines and power plants that release air pollution need an air quality permit from DANR's Air Quality Program (Title V, minor source or general permits). DANR posts air permit public notices on its public notice page, where you can comment before the deadline; some notices allow online comments or petitions. Source

Big power plants and power lines: PUC siting permits · Oct 8, 2026
A new power plant of 100 megawatts or more (not counting wind and solar, which have their own rules) and power lines over 115 kilovolts need a facility permit from the PUC (SDCL chapter 49-41B). Examples filed in 2026: NorthWestern Energy's Hub City Energy Park gas plant near Aberdeen (EL26-031, filed October 2, 2026) and the PowerOn Midwest 765-kV and 345-kV power lines by Xcel Energy and Otter Tail (EL26-026). Source

🙋 How to have your say

Who decides a data center near you · Oct 8, 2026
Inside a city or town, the city council (or commission) decides zoning, after its planning commission. Outside towns, the county commission usually decides zoning, after the county planning commission. Many counties let a Board of Adjustment or the planning commission decide 'conditional use permits' for specific projects (SDCL 11-2-17.3). Since July 1, 2026, state law says counties and cities may limit, ban or regulate data centers (SDCL 49-50-3), and several have passed pauses (moratoriums) or rules. Source

Zoning hearings: watch the legal newspaper · Oct 8, 2026
Before a county or city adopts or changes a zoning ordinance, it must hold at least one public hearing, announced at least 10 days ahead in the legal (official) newspaper (SDCL 11-2-19 for counties, 11-4-4 for cities). At a city hearing, any interested person must get a full and fair chance to speak. 20% of landowners in a zoning district can petition the county to change the zoning rules (SDCL 11-2-28). Source

Appeal deadline: 30 days · Oct 8, 2026
If you are harmed by a Board of Adjustment decision (for example a conditional use permit for a data center), you can ask circuit court to review it with a 'petition for writ of certiorari' within 30 days after the decision is filed (SDCL 11-2-61 for counties, 11-4-25 for cities). The court gives weight to how the local board reads its own rules (SDCL 11-2-61.1). You pay the transcript costs. Source

Put a rezoning or ordinance to a public vote (referendum) · Oct 8, 2026
Voters can refer a county or city ordinance or resolution (such as a rezoning) to a public vote. File a petition within 20 days after it is published (SDCL 7-18A-16 for counties, 9-20-6 for cities). A county petition needs signatures from 5% of the county's registered voters (SDCL 7-18A-15). Only 'legislative' decisions can be referred, not 'administrative' ones such as carrying out an existing plan (SDCL 7-18A-15.1, 9-20-19). Filing a petition on a county zoning ordinance puts it on hold until the vote (SDCL 11-2-22). Source

Comment at the Public Utilities Commission · Oct 8, 2026
Every PUC case has a docket page at puc.sd.gov with all filings. You can send written comments on a docket to the PUC (Capitol Building, 500 E. Capitol Ave., Pierre, SD 57501; phone (605) 773-3201). In a rate case, 25 customers together can file a written objection asking for a public hearing. To take part formally, you must file to intervene by the date on the docket page (for example August 14, 2026 for the Otter Tail data center rate, EL26-021). Source

Object to a big water permit · Oct 8, 2026
Watch DANR's public notice page and your local newspaper for water permit notices. Comment or file a petition (on the state's form) by the deadline in the notice; it can be less than two weeks. A petition must explain how the permit would harm you differently from the general public; only then do you get a contested hearing before the Water Management Board. Source

🧾 Help with your bills

Energy Assistance (LIEAP): help with heating bills · Oct 8, 2026
The South Dakota Department of Social Services helps low-income households pay home heating costs. The payment goes straight to your energy company. Apply online, with a printed form, by email (DSSHeat@state.sd.us) or by phone at 800-233-8503. Everyone 18 or older in the home must sign, and you need proof of income for the 3 months before you apply. Emergency help (ECIP) is for households with a shut-off notice, less than 20% fuel in the tank, or an eviction notice tied to heat. Source

Weatherization Assistance: free home energy fixes · Oct 8, 2026
The same DSS program can weather-strip windows and doors, add insulation and repair heating systems to lower energy bills for low-income households. Source

📞 Who to contact

South Dakota Public Utilities Commission (PUC) · Oct 8, 2026
Sets rates for investor-owned power companies, reviews data center power contracts and rates, and permits big power plants and power lines. Phone (605) 773-3201. Source

DANR Water Rights Program · Oct 8, 2026
Reviews water permit applications for the Water Management Board and posts notices. Phone (605) 773-3352. Source

Water Management Board · Oct 8, 2026
Decides contested water permits and, under SB 135, receives data center water notices and reports and can set water limits for data centers. Source

DANR Air Quality Program · Oct 8, 2026
Air permits for backup generators, gas turbines and power plants. Source

DANR Public Notices · Oct 8, 2026
All DANR public notices (air, water, and more) with comment deadlines. Email DANRMail@state.sd.us to get weekly notice updates. Source

Governor's Office of Economic Development (GOED) · Oct 8, 2026
Runs the Reinvestment Payment Program and other business incentives. Source

DSS Energy Assistance · Oct 8, 2026
Heating bill help and weatherization. Phone 800-233-8503. Source

South Dakota Legislature · Oct 8, 2026
Bills, votes and state laws (SDCL). The next regular session starts in January 2027. Source