Data center standards
for the 2027 session

Seven proposed bills. What each one is trying to achieve, what it would require, and draft language you can hand to Legislative Council.

DISCUSSION DRAFT  ·  SEPTEMBER 2026  ·  NOT YET INTRODUCED

OVERVIEW

The problem, in one paragraph

North Dakota is attracting large data center investment because power is cheap, the climate cuts cooling costs, and land is available near transmission. Those advantages are real and the state should keep them. But the rules governing these facilities were written before hyperscale computing existed, and the gap is being filled one county at a time, unevenly, under time pressure, by boards negotiating against developers who have done this many times before.

Three things counties cannot fix themselves

Four design choices worth knowing before you read further

BillWhat it doesTier
1Water efficiencyEfficiency ceiling and public reporting for large facilitiesCore
2Decommissioning securityPlan and bond before construction, on the oil and gas modelCore
3Large load cost allocationSeparate rate class so big customers pay their own incremental costCore
4Cooperative member noticeDisclosure to co-op members on very large load contractsSupporting
5Disclosure before votesConfidentiality during site selection, facts public before any voteSupporting
6Exemption conditionsTies the sales tax exemption to compliance with 1 through 3Supporting
7Minimum standards floorBaseline noise, setback, and application contentsSupporting

If only one bill moves, make it Bill 2

Decommissioning is the easiest to explain, has the closest North Dakota precedent, carries essentially no general fund exposure, and is the hardest to argue against in public. Passing it first establishes that the package is reasonable and makes the rest easier.

Fiscal shape

Bills 4, 5, and 7 should carry no state fiscal note at all. Their obligations run to cooperatives, political subdivisions, and applicants. Bills 1 and 2 need a fee structure worked out with the assigned agency before introduction; both are largely fee-offsettable, and Bill 2's fund is a continuing appropriation fed by forfeitures and penalties rather than the general fund. Bill 3 is absorbable within the Public Service Commission's existing ratemaking function. Bill 6 extends reporting the Tax Department already performs.

Timing

The interim Artificial Intelligence and Data Center Committee reports to Legislative Management in November 2026. The regular session convenes in January 2027. Anything intended to move through the interim committee needs attention before the November report.

WHAT I AM ASKING YOU FOR

Where I need your read

This is a discussion draft prepared outside the Legislature. It has not been reviewed by Legislative Council and the statutory language is not the work of a drafting attorney. Four questions would be most useful:

Bracketed and highlighted values like [50] are deliberate blanks, not oversights.

APPLIES TO ALL SEVEN

Shared definitions

Council may prefer a new chapter collecting all data center provisions, which would keep these consistent across the package rather than repeating them in each bill.

The threshold is the most consequential definition. Several North Dakota counties already use 50 megawatts to separate large facilities from small, so this aligns with existing local practice. A lower number captures more facilities but sweeps in ordinary commercial server rooms. The work group that produced the state model ordinance noted it had not yet developed standards appropriate to smaller facilities, and this package deliberately leaves that space alone. Note also that the definition keys on full build-out, which is what prevents a developer from permitting a series of 49 megawatt phases.
Draft definitions

Definitions. As used in [this chapter]:

1. "Covered data center" means a facility, or a group of facilities under common ownership or control on contiguous or adjacent parcels, used primarily for the storage, management, processing, or transmission of digital data, and having a designed electrical demand of [50] megawatts or more at full build-out.

2. "Full build-out" means the maximum designed capacity of a covered data center at completion of all planned phases, whether or not all phases have been permitted or constructed.

3. "Consumptive use" means water withdrawn that is not returned to the source watershed.

4. "Water usage effectiveness" means the annual consumptive water use of a facility in liters divided by the annual energy consumption of its information technology equipment in kilowatt-hours.

5. "Operator" means the person owning or controlling the operation of a covered data center.

6. "Sensitive receptor" means a residence, school, licensed child care facility, health care facility, place of worship, campground, manufactured home park, or public park.

BILL 1

Water efficiency standardCORE

WHAT IT PROTECTS

The water supply of the county hosting the facility. It prevents a single building from consuming a rural water system's capacity in a state where wells and river allocations are already spoken for.

THE PROBLEM

Cooling method, not facility size, drives water use. Evaporative cooling boils water into the air and industry-wide 70 to 80 percent never returns to the local supply. Closed-loop and air cooling use almost none. A typical evaporative enterprise facility runs 300,000 to 500,000 gallons a day and a large campus can reach into the millions, against tens of thousands for a comparable closed-loop site.

North Dakota currently sets no standard. A facility drawing its own water needs an appropriation permit under N.D.C.C. 61-04-02, but a facility buying from a municipal system is covered by the city's existing permit and its consumption never reaches a state proceeding at all.

WHAT IT WOULD REQUIRE

  • Covered facilities to hold annual water usage effectiveness under a set ceiling, measured on a rolling twelve-month basis
  • Annual public reporting of water withdrawn by source, consumptive use, effectiveness achieved, and cooling technology in use
  • Reporting whether or not the facility holds its own water permit, which closes the municipal-purchase gap
  • A time-limited variance route where compliance is not technically achievable, with the variance itself public

WHY IT WORKS

It names a result rather than a brand of equipment, so it does not go obsolete when cooling technology changes and it cannot be gamed by a system that technically qualifies but performs poorly.

The North Dakota argument: non-evaporative cooling trades water for electricity. In hot states that trade is expensive, which is why most have not required it. This state's climate makes the penalty far smaller. North Dakota can afford a standard Arizona cannot, and can adopt one without meaningfully damaging its competitive position.

Be honest about the number. A performance standard set tightly enough becomes a technology mandate in everything but name, and industry will say so. Set near 0.20 L/kWh it is achievable with closed-loop, direct-to-chip, and air cooling and not with conventional evaporative, which is close to a mandate. A looser figure leaves room for hybrid designs that use evaporative cooling only during limited peak hours, which in this climate may be a reasonable engineering choice. The defensible posture is to have the assigned agency recommend the figure after a hearing, against current reported industry performance, rather than defending a number the Legislature picked.

Drafting intent for Legislative Council

Outcome sought: large data centers in North Dakota do not consume water at evaporative-cooling volumes, and the state knows how much every covered facility actually uses regardless of where it buys water.

Must survive drafting: the standard is expressed as a performance metric, not a required technology. Reporting reaches facilities served by municipal systems. Reports are public records.

Policy decisions open: the numeric ceiling; whether Water Resources or Environmental Quality administers; the variance term and who decides; penalty structure and whether it is fee-offset.

If my language is unusable, the essential architecture is: definition of the metric, a ceiling set by rule rather than in statute, a reporting duty independent of permit status, and a public variance path.

Draft language, Bill 1
Section 1. Water efficiency standard.

1. An operator of a covered data center that commences construction on or after [effective date] shall design and operate the facility to achieve an annual water usage effectiveness not exceeding [0.20] liters per kilowatt-hour, calculated on a rolling twelve-month basis.

2. The standard in subsection 1 does not apply to water used for potable, sanitary, fire suppression, or landscaping purposes.

3. An operator may petition the [department] for a variance from subsection 1 for a period not exceeding [24] months upon a showing that compliance is not technically achievable for the specific facility. A variance granted under this subsection is a public record and must state the alternative standard applicable during its term.

Section 2. Reporting.

1. Beginning with the first full calendar year of operation, an operator shall annually report to the [department], on a form prescribed by the [department]: a. Total water withdrawn, by source; b. Total consumptive use; c. Water usage effectiveness for the reporting year; and d. The cooling technology or technologies in use.

2. Reports submitted under this section are public records.

3. An operator that purchases water from a municipal or rural water system shall report the volumes described in subsection 1 notwithstanding that the supplier holds the water permit.

Section 3. Enforcement.

[Civil penalty structure and enforcement authority, consistent with comparable environmental reporting provisions.]

BILL 2

Decommissioning securityCORE

WHAT IT PROTECTS

The county and the landowner from inheriting an abandoned industrial building. If a facility closes, the money to clear the site is already set aside.

THE PROBLEM

Data centers are windowless, heavily reinforced, single-purpose structures that are difficult to lease to anyone else if the operator fails or the technology moves on. What remains is the building plus batteries, cabling, cooling infrastructure, and thousands of servers. Nothing in North Dakota law or in the state model zoning ordinance addresses this. The obligation currently falls on whoever owns the land, or in practice on the county.

WHAT IT WOULD REQUIRE

  • A decommissioning plan filed before a building permit issues, covering equipment removal, hazardous materials, electronic waste through certified recyclers, and site restoration
  • Security posted before site construction begins, held at the state level, in an amount set by a published statewide schedule
  • A state-commissioned cost study within eighteen months, producing that schedule by facility size, reviewed every five years
  • Security that is not released by transfer of the property; a successor posts replacement security before transfer is effective
  • An abandonment trigger after a defined period of non-operation, with a cure window and a temporarily-inactive status option
  • A decommissioning fund fed by forfeited security, fees, and civil penalties, for cases where security proves insufficient
  • Suspension of new approvals statewide for an operator in default, which is a compliance lever costing the state nothing

WHY IT WORKS

Every structural element has a direct analog in North Dakota's oil and gas program under N.D.C.C. ch. 38-08 and N.D.A.C. 43-02-03-15: security before site construction, bond enduring through completed reclamation, periodic review with authority to increase, transfer not releasing the obligation, surety forfeiting face value on failure, and an abandonment trigger with a cure period. The Abandoned Oil and Gas Well Plugging and Site Reclamation Fund, created in 1983, is the model for the fund. Members already accept this logic for extractive industry.

Learn the precedent's lesson, do not repeat its mistake. The oil and gas program is the right structure with the wrong numbers. Fixed statutory amounts of $50,000 per well and $100,000 for a blanket bond fell far below real plugging and reclamation costs, and in 2020 the state used federal funds to plug wells whose owners were solvent. Expect this to be raised and answer it directly: the failure was underbonding by fixed statute, and this bill avoids it by setting amounts through a rule-based schedule tied to a real cost study and updated on a cycle. Adopting the structure and repeating the fixed-amount error would be worse than doing nothing, because it creates the appearance of protection without the substance.
Existing facilities are the first question you will be asked. Several large facilities are already operating or under construction here with no security in place. Three options: prospective only, which is cleanest and leaves the existing stock uncovered; prospective plus a trigger on expansion, major modification, or transfer, which reaches existing facilities through voluntary acts and avoids the retroactivity objection; or full application with a compliance window, which is most protective and most likely to draw a takings argument. The middle option is the one I would draft.

Drafting intent for Legislative Council

Outcome sought: when a covered data center closes, funds sufficient to demolish it, handle its electronic waste, and restore the site already exist and are accessible to the public body that has to do the work.

Must survive drafting: security posted before construction rather than before operation. Amount set by rule against real cost data, never a fixed statutory figure. Transfer does not release. A cure-period structure so an ordinary business interruption is not treated as abandonment.

Policy decisions open: which agency holds and administers; the abandonment period and cure window; the revaluation cycle; treatment of existing facilities; whether forfeited funds remit to the jurisdiction or stay with the state fund.

If my language is unusable, the closest working template already in North Dakota code is the oil and gas bonding and reclamation scheme. Drafting it as a parallel chapter, with the cost-schedule mechanism substituted for the fixed bond amounts, would achieve the intent.

Draft language, Bill 2
Section 1. Decommissioning plan required.

1. Before a building permit may be issued for a covered data center, the operator shall file with the permitting jurisdiction a decommissioning plan providing for: a. Removal of all information technology equipment, batteries, energy storage systems, cabling, cooling infrastructure, and backup generation equipment; b. Management and lawful disposal or recycling of hazardous materials, cooling fluids, and electronic waste through certified facilities; c. Removal or repurposing of structures and foundations; and d. Restoration of the site as closely as practicable to its condition before construction, or to an alternative condition specified in an agreement with the permitting jurisdiction and recorded in the public record.

2. The plan must state the required security amount determined under section 2.

Section 2. Statewide cost schedule.

1. The [department] shall, within [eighteen] months of the effective date, complete a study of the cost of decommissioning covered data centers in this state, addressing demolition, removal of information technology equipment and energy storage systems, electronic waste processing, and site restoration.

2. Based on the study, the [department] shall by rule publish a schedule establishing the required security amount by facility size and configuration.

3. The [department] shall review and update the schedule not less than once every [five] years.

4. An operator or a permitting jurisdiction may petition for a facility-specific amount differing from the schedule upon a showing that site conditions materially differ from the assumptions used in the schedule.

Section 3. Financial assurance.

1. Before commencing site construction, an operator shall submit to the [department] and obtain its approval of a surety bond, cash bond, or other security in the amount established under section 2. The [department] shall consult the permitting jurisdiction before approving the security.

2. The security must be executed by a surety authorized to transact business in this state and must remain in force until decommissioning is completed and approved.

3. Transfer of the facility or of any interest in the facility does not release the security. A successor operator shall post replacement security before the transfer is effective, and the original security may not be released until replacement security is approved.

4. If the operator fails to complete decommissioning as required, the surety shall satisfy the obligation or forfeit the face value of the security.

Section 4. Trigger for decommissioning.

1. A covered data center that has not operated for a continuous period of [twelve] months is deemed to be in abandoned status.

2. Within [six] months after entering abandoned status, the operator shall return the facility to operation, obtain approval for temporarily inactive status, or complete decommissioning in accordance with the approved plan.

3. Temporarily inactive status may be granted for a period not exceeding [twenty-four] months upon a showing of a credible plan to return the facility to operation. Security must remain in force throughout.

Section 5. Decommissioning fund.

There is created a data center decommissioning fund, consisting of moneys received from forfeiture of security under this chapter, application and service fees, civil penalties assessed under this chapter, and any moneys appropriated or donated for the purposes of this section. Moneys in the fund are appropriated on a continuing basis to the [department] for completing decommissioning where security is insufficient or unavailable, and for costs of administering this chapter.

Section 6. Suspension of approvals.

If an operator fails to comply with section 4 as to any covered data center, the [department] shall notify each permitting jurisdiction, and no approval may be issued to that operator or an affiliate for a covered data center not yet under construction until the failure is cured or adequate security is posted.

BILL 3

Large load cost allocationCORE

WHAT IT PROTECTS

Every other ratepayer on the system. It keeps the cost of substations, transmission, and generation built for one enormous customer from being spread across households, farms, and existing industry.

THE PROBLEM

Serving a several-hundred-megawatt load requires infrastructure costing in the hundreds of millions. If those costs are recovered through general rates, everyone subsidizes one customer. There is a second exposure: if AI demand softens and a facility scales back or leaves, the plants and lines built for it do not disappear, and without contract terms the remaining ratepayers carry them. More than twenty states have adopted large load tariff structures addressing this. North Dakota has not.

WHAT IT WOULD REQUIRE

  • The Public Service Commission to require a separate rate class or tariff for customers at or above a defined demand
  • Recovery from the customer of the incremental cost of facilities built to serve its load
  • Minimum contract term, minimum billing obligation, collateral proportionate to committed investment, and an exit fee
  • An explicit bar on recovering the same costs from other customer classes
  • Optional rate treatment recognizing a commitment to curtail during system peaks
  • Authority to require evidence that a proposed load is contracted rather than speculative before it enters a resource plan

WHY IT WORKS

It decides in advance who pays, rather than litigating it after the infrastructure is built. The anti-double-recovery provision is the operative protection and should not be traded away in negotiation. The speculative-load provision addresses a real and documented phenomenon where the same project secures interconnection positions with several utilities at once and is counted in each of their forecasts.

Drafting intent for Legislative Council

Outcome sought: a very large electric customer pays the incremental cost of serving it, and if it departs early the utility holds contractual recourse rather than shifting stranded cost to other classes.

Must survive drafting: the prohibition on recovering the same costs from other customer classes. Everything else can flex.

Policy decisions open: the megawatt threshold; whether the Commission proceeds by rule or by order; whether demand response treatment is permissive or required; how far the load verification authority extends.

Note on scope: this reaches investor-owned utilities only. Cooperatives fall outside Commission rate jurisdiction, which is what Bill 4 addresses. Passing this alone protects urban ratepayers and leaves rural members out.

Draft language, Bill 3
Section 1. Large load service.

1. The commission shall, by rule or order, require each public utility providing electric service to establish a separate rate class or tariff applicable to customers with a contracted or designed demand of [50] megawatts or more.

2. A tariff established under this section must provide for: a. Recovery from the customer of the incremental cost of facilities constructed or upgraded to serve the customer's load, including substations, transmission, and generation capacity attributable to that load; b. A minimum contract term; c. A minimum billing obligation, whether or not the customer takes the contracted quantity; d. Collateral or other credit assurance proportionate to the utility's committed investment; and e. An exit fee or continuing obligation applicable to a customer that terminates or materially reduces service before the end of the contract term.

3. The commission shall ensure that costs recovered under a tariff established pursuant to this section are not also recovered through rates charged to other customer classes.

Section 2. Demand response.

A tariff established under section 1 may provide rate treatment recognizing a customer's commitment to reduce demand during system peak conditions or in response to reliability events.

Section 3. Load verification.

The commission may require a public utility to obtain evidence that a proposed large load is contracted rather than speculative before including the load in a resource plan or seeking cost recovery for facilities to serve it.

SUPPORTING BILLS

Bills 4 through 7

These are worth passing on their own terms, but each one primarily closes a gap the three core bills leave open. Bill 4 extends their reach to cooperatives. Bill 5 makes the facts available in time to use them. Bill 6 gives the core standards an enforcement hook. Bill 7 gives jurisdictions with no ordinance a starting position.

BILL 4

Cooperative member noticeSUPPORTING

WHAT IT PROTECTS

Rural members specifically. Cooperatives serve much of the countryside and sit outside Commission rate jurisdiction, so without this every ratepayer protection the state passes stops at the edge of investor-owned territory.

THE PROBLEM

A cooperative can commit to serving a several-hundred-megawatt load, and to the generation and transmission investment that requires, without its member-owners knowing until after the fact. Member governance is the only accountability mechanism cooperatives have, and it cannot function on information members do not receive.

WHAT IT WOULD REQUIRE

  • Written notice to members before executing a very large load agreement, stating the general nature and location of the load, contracted demand, whether new facilities will be built, their estimated cost, and how that cost will be recovered
  • Notice a set number of days in advance, by the cooperative's ordinary member communication method, and posted publicly
  • A written response to a member's written inquiry within a defined period
  • No requirement to disclose the end user's identity before execution

WHY IT WORKS

It is deliberately modest. It does not extend Commission rate jurisdiction over cooperatives, which would be a much larger fight and would likely fail. It requires notice and an answer, which is the minimum member governance needs to function. The confidentiality carve-out addresses the cooperatives' genuine commercial concern and is what makes the bill passable.

Anticipated objection. Cooperatives will argue that publishing estimated facility costs in advance telegraphs their negotiating position. That has some merit. If raised, the workable concession is to permit cost disclosure as a range or in aggregate rather than line-item, while keeping demand, location, and cost recovery treatment specific. Do not concede the cost recovery item; it is the one members actually need.

Drafting intent for Legislative Council

Outcome sought: a cooperative member learns, before it is done, that their cooperative is committing to a very large customer and to infrastructure investment on that customer's behalf, and can find out how the cost will be recovered.

Must survive drafting: notice precedes execution. Cost recovery treatment is disclosed. No extension of Commission rate authority over cooperatives.

Policy decisions open: notice period; the demand threshold, which may reasonably differ from the threshold in Bill 3; whether cost may be stated as a range; enforcement mechanism, if any beyond member remedies.

Draft language, Bill 4
Section 1. Notice of large load agreements.

1. Before executing an agreement to provide electric service to a customer with a contracted or designed demand of [50] megawatts or more, an electric cooperative shall provide written notice to its members stating: a. The general nature and location of the load to be served; b. The contracted demand; c. Whether new generation, transmission, or distribution facilities will be constructed to serve the load; and d. The estimated cost of those facilities and the manner in which that cost will be recovered.

2. Notice must be provided not less than [thirty] days before execution, by the method the cooperative ordinarily uses to communicate with members, and must be posted publicly.

3. This section does not require disclosure of the identity of the end user before execution of the agreement.

Section 2. Member inquiry.

A cooperative shall respond in writing to a member's written inquiry regarding the cost recovery treatment of a load described in section 1 within [thirty] days.

BILL 5

Disclosure before public votesSUPPORTING

WHAT IT PROTECTS

The public's ability to participate at all. You cannot ask a question about a project whose basic facts are sealed until after the vote.

THE PROBLEM

Nondisclosure agreements between developers and public officials have been used in multiple North Dakota counties, and residents in at least one community learned of a major project roughly six weeks before groundbreaking. Even where every underlying decision is defensible, secrecy destroys the ability to defend it, and the damage lands on good projects as much as bad ones.

SB 2406 in the September 2026 special session would have barred such agreements outright through July 2027. A joint committee recommended do-not-pass and the Senate rejected it 32 to 15. The stated objections were about process and drafting rather than principle, with the committee chair noting a three-day session was too short for full hearings and votes in both chambers.

WHAT IT WOULD REQUIRE

  • Confidentiality during site selection remains lawful
  • A political subdivision may not take final action on a zoning approval, conditional use permit, development agreement, or tax incentive unless specified information has been publicly available for a set period beforehand
  • That information: operator and end user identity, demand at full build-out with phasing, cooling technology and water plan, all studies, and the existence and general subject matter of any confidentiality agreement
  • The applicant must disclose the end user as a condition of a complete application, so a subdivision cannot avoid the requirement by not asking
  • Any provision purporting to restrict required disclosure is void and unenforceable

WHY IT WORKS

It answers the objections raised against SB 2406 directly. It does not ban confidentiality agreements, which was the provision that drew opposition. It ties disclosure to the moment the public actually needs the information, which is before a vote rather than during negotiation. The governor testified in 2026 that existing transparency laws were sufficient while acknowledging enforcement could be debated, so this is best framed as an enforcement provision rather than a new prohibition.

Drafting intent for Legislative Council

Outcome sought: no public body votes on a data center approval while the operator, the load, the water plan, or the studies are unknown to the public, and no agreement can be used to prevent that.

Must survive drafting: the void-and-unenforceable provision, which is the entire enforcement mechanism. Without it the section is advisory. Also the complete-application hook, which closes the "we were never told" loophole.

Policy decisions open: the disclosure period before action; whether to extend beyond data centers to large industrial projects generally, as SB 2406 did; whether any penalty attaches to an official who signs a non-conforming agreement.

Interaction: preserve the existing trade secret exception and any federally required confidentiality.

Draft language, Bill 5
Section 1. Confidentiality during site selection.

A state agency or political subdivision may enter into an agreement to maintain the confidentiality of information relating to a proposed data center or large industrial project during site selection, subject to section 2.

Section 2. Disclosure before action.

1. Notwithstanding any agreement entered under section 1, a political subdivision may not take final action on a zoning approval, conditional use permit, development agreement, or tax incentive relating to a covered data center unless the following have been available for public inspection for not less than [fourteen] days before the action: a. The identity of the operator and of the end user. An applicant shall disclose the end user to the political subdivision as a condition of a complete application, and a political subdivision may not determine an application complete without it; b. The designed electrical demand at full build-out and the phasing schedule; c. The cooling technology, anticipated water source, and anticipated withdrawal; d. Any acoustic, traffic, or utility study prepared for the project; and e. The existence and general subject matter of any confidentiality agreement executed by the political subdivision or its officials relating to the project.

2. An agreement entered under section 1 may not restrict disclosure required by subsection 1, and any provision purporting to do so is void and unenforceable.

Section 3. Construction.

This chapter does not require disclosure of trade secrets as defined in [N.D.C.C. 47-25.1-01] or of information whose disclosure is prohibited by federal law.

BILL 6

Conditions on the sales tax exemptionSUPPORTING

WHAT IT PROTECTS

The value of the deal the state is already making. North Dakota gives up real revenue to attract these projects, and this ensures it gets a well-behaved project in return.

THE PROBLEM

North Dakota has exempted data center equipment and software from sales and use tax since 2015, for facilities over 15,000 square feet using at least half that space for data processing. Reported claims grew from about $5.4 million in 2021 to $7.8 million in 2023, $15.3 million in 2024, and more than $65 million in 2025. The exemption carries no performance conditions.

SB 2038 in 2025 made itemized claims public for data center owners beginning in 2025, but the disclosure does not reach tenants, so the actual operator of a facility can remain unnamed while the exemption is claimed.

WHAT IT WOULD REQUIRE

  • Eligibility conditioned on compliance with the water standard, decommissioning security, and certification that incremental electric facility costs are not recovered from other customer classes
  • Annual reporting of permanent full-time employment at the facility
  • Publication by facility of exemption claimed and employment reported, reaching tenants as well as owners
  • A recapture provision for a facility that falls out of compliance
  • Contingent application, so conditions referencing chapters that do not pass simply do not apply

WHY IT WORKS

It keeps the recruiting tool rather than repealing it, which is the difference between a bill that can pass and one that cannot. It also gives Bills 1 through 3 an enforcement mechanism that requires no new penalty structure: compliance becomes a condition of a benefit the operator wants.

Sequencing note. This bill is only as strong as the bills it references. If Bills 1 through 3 fail, the contingent application provision leaves this as a disclosure-and-employment-reporting bill, which is still worth passing but is a much smaller thing. Consider whether to carry it after the core bills rather than alongside them.

Drafting intent for Legislative Council

Outcome sought: the sales tax exemption remains available, and claiming it requires meeting the state's water, decommissioning, and grid cost standards, with claims and employment published by facility.

Must survive drafting: publication reaching tenants, which is the gap SB 2038 left. Contingent application, so this bill does not break if a referenced chapter fails.

Policy decisions open: recapture structure and lookback period; whether employment reporting affects eligibility or is disclosure only; whether an existing claimant gets a compliance window.

Draft language, Bill 6
Section 1.

The exemption provided under [existing citation] applies to a covered data center only if the operator: 1. Is in compliance with the water efficiency and reporting requirements of [Bill 1]; 2. Has filed a decommissioning plan and posted financial assurance as required by [Bill 2]; 3. Has certified that the incremental cost of electric facilities constructed to serve the facility is recovered from the operator and not from other customer classes; and 4. Files annually with the tax commissioner a statement of permanent full-time employment at the facility.

Section 2. Public disclosure.

The tax commissioner shall annually publish, by facility, the amount of exemption claimed and the employment reported under section 1, subsection 4. This section applies to operators and to tenants of covered data centers.

Section 3.

[Recapture provision for a facility that ceases to satisfy section 1.]

Section 4. Contingent application.

A condition stated in section 1 applies only if the referenced chapter is enacted and in effect. Failure of any referenced chapter to take effect does not affect the validity of the remaining conditions.

BILL 7

Statewide minimum standardsSUPPORTING

WHAT IT PROTECTS

Small jurisdictions. A township with no ordinance and no planning staff currently negotiates against a company that has done this many times, with nothing on its side of the table.

THE PROBLEM

Most rural North Dakota counties and townships have no numeric noise standard at all. The state model zoning ordinance published in January 2026 requires a rigorous engineer-signed acoustic study and then measures the result against "the jurisdiction's own noise ordinance," which in most places does not exist. The model also contains no setback distance, no decommissioning provision, no water quantity standard, and no cost allocation requirement. Its own authors describe it as a foundational framework rather than a finished product.

WHAT IT WOULD REQUIRE

  • A defined list of application contents: operator identity, demand at full build-out with phasing, electric capacity verification and cost responsibility, cooling and water figures, an engineer-signed acoustic report, generator count and permitted hours with air permit status, decommissioning plan, and traffic estimates
  • Numeric noise limits at the property line of a sensitive receptor, with a lower nighttime figure and a penalty for prominent tonal content
  • Generator testing restricted to daytime hours, one unit at a time, with an emergency exception
  • Post-construction verification measurement filed with the jurisdiction
  • A minimum setback, reducible only by an agreement recorded in the public record
  • A fixed reference date, so a later-built receptor does not retroactively put a compliant facility out of compliance
  • An explicit preservation of local authority to go further, deny, or adopt a moratorium

WHY IT WORKS

The noise figures match Divide County's ordinance, already in force in this state and among the lowest thresholds identified in national surveys. The setback matches Mercer County. Using existing North Dakota numbers rather than importing them is both defensible and politically easier. The tonal penalty is the technically important provision, because ordinary A-weighted limits under-count the low-frequency hum that actually generates complaints, and it is the provision most likely to be dropped by someone who does not know why it is there.

This bill fails if it reads as preemption. The local authority section is what makes it a floor, and county and township associations will oppose anything that looks like a ceiling. Put the floor framing in the title, not only in the text.

Drafting intent for Legislative Council

Outcome sought: a jurisdiction with no data center ordinance still has an enforceable baseline on noise, setback, and what an applicant must file, and a jurisdiction with a stronger ordinance is unaffected.

Must survive drafting: the local authority preservation section. The tonal penalty. The fixed reference date for receptors. Post-construction verification, without which the acoustic study is a modeling exercise with no consequence.

Policy decisions open: the decibel figures and setback distance; whether the application contents list is exclusive or a minimum; whether townships without adopted zoning administer this themselves or the county administers on their behalf, which is a real administrative gap worth resolving in drafting.

Draft language, Bill 7
Section 1. Application.

This chapter establishes minimum standards applicable to a covered data center. A city, county, or township may adopt standards more protective than those in this chapter. This chapter does not limit the authority of a political subdivision under N.D.C.C. ch. 11-33, ch. 40-47, ch. 40-48, or sections 58-03-11 through 58-03-15.

Section 2. Application contents.

An application for approval of a covered data center must include: 1. Identification of the operator and the owner of the facility; 2. Designed electrical demand at full build-out and a phasing schedule; 3. Written verification from the electric provider that capacity is or will be available, and documentation of responsibility for the cost of facilities constructed to serve the load at full build-out; 4. Cooling technology, anticipated water source, anticipated daily and annual withdrawal, and anticipated consumptive use; 5. An acoustic impact report prepared and signed by a licensed professional engineer with demonstrated acoustical expertise, reporting measured ambient conditions and predicted cumulative levels at each sensitive receptor, with results expressed in A-weighted decibels and notation of prominent tonality, and penalties applied in accordance with ANSI S12.9; 6. The number, capacity, and permitted annual operating hours of backup generation equipment, and the air permit status of that equipment; 7. A decommissioning plan as required by [Bill 2]; and 8. Estimated daily vehicle trips during construction and operation, by heavy truck and passenger vehicle.

Section 3. Noise.

1. Noise attributable to a covered data center may not exceed [50] dBA between 7 a.m. and 10 p.m., or [45] dBA between 10 p.m. and 7 a.m., measured at the property line of any sensitive receptor.

2. The limits in subsection 1 are reduced by [5] dBA where the sound contains a prominent tonal component as determined under ANSI S12.9.

3. Testing and maintenance of backup generation equipment may occur only between 7 a.m. and 9 p.m., and only one unit may be tested at a time.

4. The limits in subsection 1 may be exceeded during an actual emergency or grid outage.

5. Post-construction verification measurement shall be conducted within [twelve] months of commencing operation and the results filed with the permitting jurisdiction.

Section 4. Setback.

A covered data center may not be located within [2,640] feet of a sensitive receptor, or a greater distance if necessary to comply with section 3. A setback may be reduced by written agreement with the owner of the affected property only if the agreement is recorded in the public record of the permitting jurisdiction.

Section 5. Measurement reference.

For purposes of sections 3 and 4, sensitive receptors are those existing on the date the permitting jurisdiction determines an application to be complete. A covered data center in compliance on that date does not fall out of compliance solely because a sensitive receptor is later established nearer to the facility.

Section 6. Local authority preserved.

Nothing in this chapter limits the authority of a political subdivision to impose additional or more protective requirements, to deny an application, or to adopt a temporary moratorium for the purpose of developing standards.

PRACTICAL NOTES

Sequencing and opposition

Order. Bills 1, 2, and 3 are the substance. If committee time is short, lead with Bill 2 for the reasons above. Bill 6 is best carried after the core bills rather than alongside them.

Where opposition will come from. Bill 3 will draw utility attention. Bill 1 will draw industry attention on the numeric standard rather than on the concept. Bill 4 will draw cooperative attention, which the confidentiality carve-out is designed to blunt. Bill 7 may draw local government association opposition if it reads as preemption, which is why the floor framing has to be in the title.

Strongest supporting facts. Reported exemption claims grew more than tenfold in four years. North Dakota already requires reclamation bonding before site construction with amounts tied to actual costs and not released by transfer. More than twenty states have adopted large load tariffs. The state model zoning ordinance, written with industry participation, contains no decommissioning, water quantity, cost allocation, or setback provision, and its own authors call it a starting framework.

Known drafting problems I could not resolve

These are coordination issues across the package rather than defects in any single bill. Council will spot them immediately; flagging them here saves a round trip.

Verify before testifying. Three items in the background material come from secondary sources and should be confirmed before being cited in a hearing: the 2025 session bill descriptions for HB 1427, HB 1539, and HB 1579, which come substantially from a policy tracking site rather than the bill texts; the Divide County decibel figures, from a national ordinance survey rather than the ordinance itself; and company property tax and employment projections, which are company statements rather than audited figures.