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Data center regulations in South Dakota

Graded Moderate and steady. 8 laws, orders, rulings and local actions, each with its source, reviewed 23 October 2026.

Reviewed 23 October 2026 · Part of the Data Center Rulebook

No tax break: lawmakers rejected incentives, passed ratepayer rules

Moderate→ SteadyGrid: MISOGrid: SPP8 items
3in force
3pending
1local pause
narrowedtax break
2.6combined index (5 most)
9.4cper kWh, industrial
23 October 2026reviewed
Regulation2.6 / 5
  1. Grid connection2

    HB 1038 (March 2026) lets the PUC bill customers above 10 MW for contract review and SB 135 (effective July 1, 2026) adds a water supply check before service.

  2. Power rates4

    SB 135 (effective July 1, 2026) makes electric providers set separate terms and recover costs attributable to 10 MW data centers, a cost-causation law.

  3. Siting and land use2

    Yankton County's six-month moratorium (July 21, 2026) is the only pause and sits outside the Sioux Falls market; Lincoln County rejected one.

  4. Tax treatment3

    South Dakota has no sales tax exemption and rejected creating one in February 2026, so this scores 3: nothing to lose, nothing to gain.

  5. Permits and water2

    SB 135 (effective July 1, 2026) has local water providers judge whether cooling use fits supply, a review rather than a reporting mandate or limit.

Scored on rules in force, 1 to 5. 5 is the most regulated. Pending rules set the arrow.

South Dakota has no sales tax exemption for data centers and its 2026 legislature rejected proposals to create one, including a 50-year exemption. It instead passed two laws signed in March 2026: one makes utilities set separate terms for large data centers and recover their costs, requires a water supply check and protects local ordinances, and the other lets the Public Utilities Commission bill large customers for contract reviews. Statewide moratorium bills failed, leaving the question to counties: Yankton County passed a moratorium in July 2026 while Lincoln County had rejected one in February. After the incentive votes Applied Digital shelved its 430 MW Deuel County plan, while Gemini says its Sioux Falls campus is unchanged.

Outlook for the next year

A Public Utilities Commission seat is on the 3 November 2026 ballot, with Democrat Frank Kloucek proposing a one-year moratorium on AI data centers and Republican Don Haggar backing case-by-case review under the 2026 laws. Citizen groups asked Sioux Falls on 5 October 2026 to halt hyperscale permits until it adopts ordinances, aimed at the 500 MW Gemini project; the mayor prefers guard rails to a moratorium, the council has scheduled no vote, and the city and Lincoln County co-host a public meeting on 27 October 2026. Yankton County's six-month pause, adopted 21 July 2026, runs to about January 2027 unless extended. Incentive bills are likely to return in the 2027 session, and Applied Digital has said it may revisit its plan after the elections.

Does South Dakota have a data center moratorium in force?

No statewide moratorium, but 1 local pause is in force as of 23 October 2026, in Yankton County. Proposals and expired pauses are not counted.

Is South Dakota tightening or loosening its rules on data centers?

Steady. South Dakota is graded Moderate, which means incentives alongside new costs, limits or local pushback. No tax break: lawmakers rejected incentives, passed ratepayer rules. The outlook above says what is pending.

Which grid operator covers South Dakota?

South Dakota sits in MISO and SPP. The grid operator decides how a new large load is studied, what it must bring or pay, and whether it can be curtailed first; the state decides siting, permits, tariffs and incentives.

Has South Dakota cut its data center tax incentive?

No. South Dakota's data center incentives were not pulled back in 2025 or 2026 as of 23 October 2026, though the items below show what is pending.

How regulated are data centers in South Dakota?

On Genloop's five-line rubric (1 least regulated, 5 most) South Dakota scores grid connection 2, power rates 4, siting and land use 2, tax treatment 3, permits and water 2, a mean of 2.6. The most regulated line is power rates: SB 135 (effective July 1, 2026) makes electric providers set separate terms and recover costs attributable to 10 MW data centers, a cost-causation law.

Every item, newest first

8 items: each is a law, order, tariff, ruling, utility action or local decision that changes what a data center must do, pay or disclose, or where it may be built. Failed and pending measures are marked. Each links to its source.

  1. LocalSioux FallsOct 2026moratoriaProposed

    Groups ask Sioux Falls for a hyperscale data center permit pause

    On 5 October 2026 South Dakota for Data Center Transparency, Let Sioux Falls Vote and Dakota Rural Action asked the city to halt building permits for hyperscale data centers until it adopts ordinances, aiming at the 500 MW Gemini project now in permitting. Mayor Christine Erickson prefers 'guard rails' to a moratorium and the council has not scheduled a vote; the city and Lincoln County are co-hosting a public meeting on 27 October 2026.

    Source: sdpb.org
  2. RegulatorSep 2026moratoriaProposed

    Public Utilities Commission election: moratorium proposed

    For the open commission seat on the 3 November 2026 ballot, Democrat Frank Kloucek proposes a one-year moratorium on new AI data centers; Republican Don Haggar opposes it and backs case-by-case review under the 2026 laws.

    Source: southdakotasearchlight.com
  3. LocalYankton CountyJul 2026moratoriaIn force

    County data center moratorium

    County commissioners voted unanimously on 21 July 2026 for a six-month moratorium on permits for data centers and bitcoin mining facilities, extendable by six months if the planning and zoning board has not finished a data center ordinance. A 12-month version died for lack of a second.

    Source: dakotanewsnow.com
  4. LocalDeuel County and Sioux FallsApr 2026incentivesPending

    Applied Digital shelves Deuel County campus; Gemini continues

    After the incentive bills failed, Applied Digital said its $5 billion, 430 MW campus near Toronto no longer made sense and it would let its land agreement lapse. Gemini said its 500 MW-capable Sioux Falls project was unchanged but needs a tenant.

    Source: southdakotasearchlight.com
  5. State lawMar 2026costs and tariffsIn force

    SB 135: cost, water and local control rules for large data centers

    Signed by Governor Rhoden, announced 24 March 2026, effective 1 July 2026. For data centers with peak demand of at least 10 MW, electric providers must set separate terms and recover the costs attributable to them, local water providers must judge whether cooling water use fits local supply, and the state may not preempt local data center ordinances. A proposed ban on state incentives was stripped before passage.

    Source: keloland.com
  6. State lawMar 2026costs and tariffsIn force

    HB 1038: large customers pay for commission contract reviews

    Signed in March 2026. Lets the Public Utilities Commission charge new large utility customers above 10 MW for the cost of reviewing their contracts instead of spreading it across ratepayers.

    Source: mwalliance.org
  7. State lawFeb 2026incentivesFailed

    Sales tax exemption, rebate and moratorium bills rejected

    In February 2026 lawmakers rejected a 50-year sales tax exemption for data center equipment and software, and later bills to exempt or rebate sales tax also died. Statewide moratorium proposals and bills on noise and setbacks were halted in committee.

    Source: southdakotasearchlight.com
  8. LocalLincoln CountyFeb 2026moratoriaFailed

    County commission rejects data center moratorium

    The Lincoln County Commission rejected a data center moratorium in February 2026 after residents pressed for one. The issue stayed live: a joint meeting of Lincoln County and Sioux Falls officials in late August 2026 was dominated by the data center debate.

    Source: thedakotascout.com

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