North Dakota Drafts New Rules for Data Centers

Proposed legislation seeks to protect residential power rates and water resources ahead of the 2027 session.

Updated on Oct. 21, 2026 in Data Centers

North Dakota Drafts New Rules for Data Centers

Live Poll

Should states pass specific laws to regulate the electricity and water use of local data centers?

North Dakota lawmakers are drafting new legislation to regulate data centers, focusing on electricity costs, water usage, and facility decommissioning. The proposal, currently in the interim committee stage, would establish state-level requirements ahead of the January 2027 legislative session.

Why it matters

The bill aims to shield residential electricity ratepayers from the high energy demands of data centers while addressing concerns about long-term infrastructure abandonment. It marks a significant shift as North Dakota moves toward direct oversight of an industry that currently lacks specific state regulation.

The proposed tax reform seeks to reduce the value of current data center exemptions from tens of millions of dollars to a few million by restricting benefits to computing equipment only. The framework also mandates closed-loop water cooling systems to address regional resource consumption.

The players

Anna Novak

State Representative representing Hazen who is sponsoring the data center regulatory framework.

David Hogue

Senate Majority Leader advocating for county-level zoning authority regarding data center facility placement.

Dean Rummel

State Senator who proposed narrowing sales tax exemptions specifically to computing equipment.

Jose Castaneda

State Senator who proposed that counties should be required to draft local ordinances for data center development.

The details

The proposed bill introduces structural mandates including closed-loop water cooling systems, which recycle water to minimize consumption, and a bonding requirement to cover decommissioning costs after standard 15-year lease agreements expire. Legislators are evaluating policies to decouple data center power usage from residential grid costs. Additional proposals include shifting zoning authority to county-level ordinances, as supported by Senate Majority Leader David Hogue.

October 20, 2026: Representative Anna Novak briefed legislative colleagues on the framework.
January 2027: The state legislative session begins.

The Tech Race

This legislation places North Dakota among states reassessing the regional economic trade-offs of large-scale computing infrastructure. The proposal addresses long-term decommissioning risks inherent in the industry's standard 15-year lease duration.

The proposed bill aims to protect residential electricity ratepayers by prohibiting the transfer of data center energy costs to the public. If passed, the legislation would likely influence where and how these facilities operate within local North Dakota communities.

The takeaway

Legislators are working to finalize bill language ahead of the January 2027 session to mitigate long-term resource and infrastructure risks. Residents should track committee hearings and official legislative filings as stakeholders negotiate the final scope of these requirements.