North Dakota doesn't regulate data center development directly today. That could change when the Legislature meets in January.
Rep. Anna Novak, R-Hazen, briefed fellow lawmakers Tuesday, Oct. 20, on the framework of a bill aimed at the parts of data center development that have drawn the most concern, the North Dakota Monitor reported. Her proposal focuses on three things: the cost of electricity, water use, and what happens when a facility is decommissioned.
"Those are the major concerns of the North Dakota citizens," Novak said.
For contractors who have been watching the data center boom reach the Upper Midwest, the bill matters because it would set statewide ground rules for how these projects are designed, powered and eventually taken apart.
'Bring your own power'
The first piece of Novak's bill would put the principle of "bring your own power" into state law. It would formally bar any costs tied to data centers from being passed on to ratepayers, according to the Monitor.
"We need to codify that rate shifting to residential customers cannot occur because of large loads or data centers," Novak said.
She is also looking for ways to make sure ratepayers get clear information about why rates are going up when a utility asks for an increase.
Closed-loop cooling
The bill would also require all data centers to use closed-loop water cooling systems, which use less water.
"We're just getting through a drought right now, and so this is a valid concern of citizens," Novak said.
For mechanical contractors, that's a significant design requirement. It would shape the cooling systems on any data center built in the state if it becomes law.
Decommissioning and bonding
Novak is also working on a section requiring a plan for repurposing a data center building when it's ready to be decommissioned. The Monitor reports the proposal will likely include a bonding requirement for the developer.
She does not want to require developers to tear buildings down and fully reclaim sites. "It seems wasteful to me," she said.
Not everyone on the committee agreed with singling out data centers. Rep. Mike Nathe, R-Bismarck, said other facilities, such as an Amazon distribution facility, ethanol plants, a soybean crushing plant and a battery plant in Fargo, aren't required to have reclamation plans.
Rep. Jonathan Warrey, the Casselton Republican who chairs the interim Artificial Intelligence and Data Centers Committee, said long-term decommissioning is a valid concern because most data centers sign 15-year lease agreements. "Year 16 and beyond becomes a question mark," he said.
Other ideas on the table
Other lawmakers floated their own proposals, according to the Monitor:
- Sen. Dean Rummel, R-Dickinson, suggested narrowing the sales tax exemption for data centers so it covers only computing equipment, not fiber optic, racking or cooling systems. He said that would cut the exemption's value from tens of millions of dollars to a few million.
- Sen. Jose Castaneda, R-Minot, said the state should consider requiring every county to adopt a local data center ordinance covering topics like setbacks and noise limits.
- Senate Majority Leader David Hogue, R-Minot, said in an interview that he thinks data center zoning decisions should be made at the county level, not by cities or townships.
Some lawmakers also warned that the ratepayer protections could have unintended effects on other big power users, such as oil refineries and ethanol plants.
Novak's bill is still a work in progress, and final language hasn't been set. She said she is working with agencies and stakeholders ahead of the session that begins in January.
Why it matters for contractors
Data center concerns have dominated public comment at the Legislature's new committee, and the rules being drafted now will shape the next wave of projects. A closed-loop cooling mandate would directly affect mechanical design and equipment. A bonding requirement for decommissioning would add cost to a developer's budget. And a narrower sales tax exemption on fiber, racking and cooling systems could change the economics of those packages.
Mechanical, electrical and site contractors in the state should follow this bill into the January session. Builders and suppliers who have bid on or are watching data center work in places like the Casselton area should know the ground rules could change, and should factor that into long-range planning.