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The Data Center Divide

McKenzie County

For McKenzie County, see North Dakota’s statewide laws and regulations below. No additional county-specific measures are listed in our research.

Slightly Pro-Data Center Policies

North Dakota offers qualifying certified data centers tax breaks on equipment and software, while exempting onsite backup generators from a siting-related facility definition; a study of large energy users is also required.

Incentives

Tax benefits
2

Creates a sales and use tax exemption for enterprise information technology equipment and computer software used in a qualified data center.

North Dakota HB 1089 (2015)

Provides a sales and use tax exemption for qualifying data-center IT equipment and software, including upgrades and replacements.

North Dakota N.D.C.C. § 57-39.2-04.17

current law · Statewide
Directs the Legislative Management to conduct a 2025–26 interim study of how large energy consumers, including data centers, affect North Dakota’s electrical grid, regulatory structure, and economic development, including grid capacity, reliability, infrastructure costs, cost allocation, market participation, and grid-supportive practices.HB 1579 The study must obtain input from large energy consumers, utilities, power producers, regulators, transmission organizations, and other relevant agencies and report findings, recommendations, and proposed legislation to the seventieth Legislative Assembly.North Dakota HB 1579 (2025)

What this means

The measure would direct a study of large energy users, including data centers, and require recommendations to be reported to a future Legislature (study data centers’ grid impacts). It does not itself add rules, costs, delays, or incentives for building, expanding, or operating data centers.

People behind it

  • Representative and listed sponsor who introduced HB 1579

  • Representative and listed sponsor of HB 1579

  • Representative and listed sponsor of HB 1579

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  • Senator and listed sponsor of HB 1579

  • Senator and listed sponsor of HB 1579

  • Assigned to conduct the 2025-26 interim study and report its findings and recommendations to the seventieth Legislative Assembly

Sources

current law · Statewide
Exempts sales and use tax on enterprise information technology equipment and computer software purchased by an owner, operator, or tenant for use in a qualified North Dakota data center, including upgraded and replacement items that are incorporated into or physically located within the center.North Dakota N.D.C.C. § 57-39.2-04.17

What this means

The measure offers a meaningful tax break on data-center equipment and software, including upgrades and replacements, which can lower building and operating costs (eligible purchases). The benefit is limited to certified centers meeting size, use, security, and fire-system criteria, with an annual reporting requirement; these conditions limit who qualifies but do not broadly restrict data-center development.

People behind it

  • Identified as a sponsor of Senate Bill No. 2137.

  • Identified as a sponsor of Senate Bill No. 2137.

  • Identified as a sponsor of Senate Bill No. 2137.

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  • Identified as a sponsor of Senate Bill No. 2137.

  • Identified as a sponsor of Senate Bill No. 2137.

  • Identified as a sponsor of Senate Bill No. 2137.

  • Administers the exemption by certifying qualified data centers and qualifying purchases, issuing exemption certificates, and receiving required reports.

  • Administers the qualified data center sales-tax exemption and processes exemption applications.

Restrictions & requirementsHide restrictions & requirements9

  • The data center must be newly constructed or substantially refurbished after December 31, 2020; existing facilities that do not meet this condition cannot qualify for the exemption.

  • A qualifying data center must contain at least 15,000 square feet, use at least 50 percent of its area for data processing, and be located on a single parcel or on contiguous parcels.

  • The facility must have sophisticated fire-suppression and prevention systems and enhanced security, such as video surveillance, access controls, biometric systems, or similar features.

  • The facility must be certified as a qualified data center by the tax commissioner before it can qualify for the data-center sales-tax exemption.

  • An applicant for certification must respond to any request for additional information from the tax commissioner within 30 days, or the application may no longer be considered.

  • A qualified business must obtain a tax commissioner certificate before purchasing exempt enterprise information-technology equipment or software; otherwise, it must pay the tax first and apply for a refund.

  • Exempt equipment and software must be incorporated into or physically located within the qualified data center, limiting the exemption for items used elsewhere.

  • A qualified data center owner must file an annual report by January 31 showing the prior year's exemption amount, jobs created or retained, and the type and value of local incentives received.

  • Owners that plan to colocate operators or tenants must provide them with tax-commissioner documentation proving the facility qualifies, and each operator or tenant must submit that documentation with its exemption application.

Benefits & exceptionsHide benefits & exceptions8

  • A qualified business may claim a sales and use tax exemption for enterprise information technology equipment and computer software purchased for use in a qualified data center, including upgraded and replacement equipment and software, provided the items are incorporated into or physically located within the center (equipment and software exemption).

  • The exemption covers a broad range of data-center infrastructure, including servers, routers, cooling systems and towers, temperature-control and power infrastructure, dedicated substations, backup generators, battery systems, racking, raised flooring, cabling, and trays (eligible enterprise information technology equipment).

  • Eligible computer software includes software used or loaded at the data center, as well as software maintenance, licensing, and customization (software covered by the exemption).

  • The exemption applies retroactively to qualifying purchases made after December 31, 2020 (retroactive application).

  • If the required exemption certificate was not obtained before purchase, the business may pay the tax and apply to the tax commissioner for a refund (refund when certification was not obtained in advance).

  • When eligible equipment is purchased or installed by a taxable contractor, the qualified business may seek a refund of the difference between the tax paid by the contractor and the exemption amount (contractor-installed equipment refund).

  • Office, meeting, mechanical, and other support areas may count toward the qualified data center's required total square footage when they support the operation of enterprise information technology equipment, making it easier to satisfy the 15,000-square-foot threshold (support space included in square-footage calculation).

  • A data center owner that plans to colocate operators or tenants must receive documentation from the tax commissioner confirming the facility's qualification, which operators and tenants may submit with their own exemption applications (documentation for collocated operators and tenants).

Sources

current law · Statewide
Would define backup electric generation as temporary, off-grid generation used when the primary source is unavailable, and exclude onsite backup generation from the definition of an electric energy conversion facility.North Dakota HB 1539 (2025)

What this means

The measure excludes onsite backup generators from the definition of electric energy conversion facilities, which can ease siting requirements for data center backup power (“excluding onsite backup electric generation”). The benefit is limited to backup generation; it does not provide broader protections or incentives for data centers.

People behind it

  • Listed as a sponsor of House Bill No. 1539.

  • Listed as a sponsor of House Bill No. 1539.

  • Listed as a sponsor of House Bill No. 1539.

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  • Listed as a sponsor of House Bill No. 1539.

  • Listed as a sponsor of House Bill No. 1539.

Benefits & exceptionsHide benefits & exceptions1

  • Excludes qualifying onsite backup electric generation from the definition of an electric energy conversion facility, potentially keeping that backup generation outside the chapter’s facility-siting requirements. It must be not interconnected with the grid and generated temporarily to replace primary generation when unavailable.

Sources

failed · Statewide
HB 1427 proposed authorizing the Public Service Commission to regulate siting compatibility for data centers, which could have affected a proposed facility in Sheridan County.North Dakota HB 1427 (2025)

What this means

The bill would require data centers to obtain state siting approval before construction, adding review, fees, and possible delays; local zoning rules would still apply. Operating data centers would also have to meet specified industry standards and the state fire code, making this a significant new barrier overall.

People behind it

  • Named sponsor who introduced HB 1427

  • Named sponsor who introduced HB 1427

  • Named sponsor who introduced HB 1427

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  • Named sponsor who introduced HB 1427

Restrictions & requirementsHide restrictions & requirements15

  • A person may not begin constructing a data center without first obtaining a Public Service Commission certificate of site compatibility or route permit, and the data center must be built, operated, and maintained according to that authorization and its conditions.

  • Applications for data-center siting approval must include information such as the facility's size and type, environmental-impact studies, demonstrated need, preferred location, alternatives, economic and environmental impacts, and proposed mitigation measures.

  • The siting process includes Commission review, notice to affected persons and agencies, publication in each affected county, and notice by first-class mail to owners of record within the proposed site or corridor.

  • The Commission may take up to six months after a completed application to designate a data-center site, subject to extension for just cause.

  • A data-center site may not violate local land-use, zoning, or building rules, regulations, or ordinances; unlike certain transmission permits, a data-center certificate does not preempt those local requirements.

  • Data centers remain subject to any state permits required for construction and operation, and a site may not be designated in violation of a state agency's rules.

  • Before operations begin, the applicant must inform the Commission that it has executed or filed a generation-interconnection agreement or comparable transmission-services agreement with the affected regional transmission organization or transmission owner.

  • Data centers must comply with American National Standards Institute data-center design and implementation best practices and the state fire code under North Dakota Administrative Code chapter 45-18-01.

  • A certificate or permit may be revoked or suspended for a materially false application statement, failure to comply with authorization conditions, or violation of the chapter or Commission rules.

  • Willfully constructing, operating, or maintaining a data center without required authorization or outside its authorized conditions would be a class A misdemeanor.

  • Willful violations could also result in civil penalties of up to $10,000 per violation per day, capped at $200,000 for a related series of violations, plus injunctive enforcement.

  • Applicants must pay a site-compatibility application fee of $500 for each $1 million of investment, with a minimum of $10,000 and a maximum of $100,000; the same fee structure applies to a waiver application.

  • The Commission may require additional siting-process fees, with the application fee and required additional fees for a data center capped at $1,000 for each $1 million of investment.

  • Applicants for a site-compatibility certificate, and applicants seeking certain transfers or amendments, must pay an administrative fee of $200 for each $1 million of original investment, capped at $50,000.

  • A data center or existing data-center operation involving energy consumption is subject to the chapter's construction and siting requirements, although certain activities within a previously approved geographic location may qualify for an exclusion if specified certifications and conditions are met.

Benefits & exceptionsHide benefits & exceptions9

  • A person proposing a data center may ask the Public Service Commission to waive specified procedures and deadlines, including applications, notices, and hearings, when the project is expected to have minimal adverse effects or a demonstrable emergency exists. The Commission may then issue a certificate or permit with conditions. waive specified procedures and time schedules

  • Certain construction activities within a previously certified geographic area are excluded from the definition of construction, allowing a new data center or an energy-consuming improvement or expansion of an existing data center without obtaining new siting authority for that work. The exclusion requires written certification that the activity avoids known exclusion areas, complies with applicable conditions, and meets the bill's other requirements. a new data center or to improve or expand an existing data center operation

  • A data center may obtain Commission approval to affect a known avoidance area when there is no reasonable alternative. If the Commission does not act within 30 days after the required notification, the impact is deemed approved. If approval is denied, siting authority is required for the affected portion. Receives the commission's written approval

  • A data center may file a separate application or combine its application with another application for a certificate or permit, providing procedural flexibility. may file a separate application

  • The Commission must designate a data-center site no later than six months after a completed site-compatibility application is filed, subject to an extension for just cause. The deadline does not eliminate the Commission's jurisdiction if it is missed. no later than six months after the filing

  • The Commission may not condition a data-center certificate or permit on a mitigation payment assessed or requested by another state agency or entity to offset a negative impact on wildlife habitat. An applicant may still voluntarily conduct mitigation activities or elect to make a payment under the bill's environmental-mitigation provision. may not condition the issuance of a certificate or permit

  • State agencies must follow the Commission's site-designation decisions and other matters within the Commission's authority when processing a data center's permits. A proposed data center is presumed to comply with a state agency's rules if the agency does not state its position at least 30 days before the relevant public hearing. is bound to the decisions of the commission

  • The Commission may approve temporary operation of a data center or a temporary variance from approved construction, operation, or maintenance upon good cause and a certification that the activity will not adversely affect the state's citizens or environment. The approval or variance may be issued without notice, publication, or a public hearing. temporary operation of facilities or data centers

  • A data-center certificate or permit may be transferred to another person with Commission approval if the recipient agrees to comply with its terms, conditions, and modifications, allowing the project authorization to continue after a change in ownership or control. A certificate or permit may be transferred

Sources

expired · Statewide
HB 1089 enacted North Dakota's original data-center sales and use tax exemption, which can benefit a qualifying data center located in Sheridan County.North Dakota HB 1089 (2015)

What this means

The measure would lower costs by exempting qualifying data-center equipment and software from sales tax, including upgraded or replacement equipment (purchases are exempt). The benefit is limited to the first four certified centers that meet size and other requirements, so it is substantial for eligible projects but not broadly available.

People behind it

  • Representative and bill sponsor

  • Representative and bill sponsor

  • Representative and bill sponsor

Show 4 more peopleShow fewer people

  • Representative and bill sponsor

  • Senator and bill co-sponsor

  • Senator and bill co-sponsor

  • Administers the measure by certifying qualified data centers, issuing exemption certificates, and processing refund applications

Restrictions & requirementsHide restrictions & requirements11

  • The future owner must apply to the tax commissioner for certification before the facility can qualify for the exemption.

  • The exemption is limited to the first four facilities approved by the tax commissioner, with applications processed in the order received.

  • An applicant must respond to a tax commissioner request for additional information within 30 days or the application may no longer be considered.

  • A qualifying facility must generally contain at least 16,000 square feet, be located on a single parcel or contiguous parcels, and be newly constructed or substantially refurbished after December 31, 2014.

  • A qualified data center must have uninterrupted power supplies or generator backup, sophisticated fire suppression and prevention systems, enhanced security, and certification by the tax commissioner.

  • For a substantially refurbished facility, at least 16,000 square feet must be rebuilt, modified, or improved through specified improvements, including energy-efficiency or building improvements and installation of information-technology equipment, environmental controls, or software.

  • The tax exemption applies only to equipment and software incorporated into or physically located within the qualified data center; upgrades and replacements are eligible only when used in the qualified data center.

  • To obtain the exemption at purchase, the business must receive a tax commissioner certificate for the specific equipment or software beforehand; otherwise it must pay the tax and seek a refund.

  • When a contractor purchases or installs the equipment, the business must use the tax commissioner’s refund process and provide enough information to verify the taxes paid and the exempt status.

  • Owners that collocate operators or tenants must provide tax commissioner documentation showing that the center qualifies, and each operator or tenant must submit that documentation with exemption applications.

  • The exemption is temporary: it applies retroactively to taxable events after December 31, 2014, but the Act is effective only through December 31, 2020.

Benefits & exceptionsHide benefits & exceptions8

  • Provides a sales and use tax exemption for enterprise information technology equipment and computer software purchased by an owner, operator, or tenant for use in a qualified data center, including upgraded or replacement equipment and software. The items must be incorporated into or physically located within the data center. (equipment and software purchased for use)

  • Extends the exemption to infrastructure used to build and operate the facility, including cooling systems and towers; temperature-control and power infrastructure; dedicated substations; backup generators; batteries; racking; raised flooring; cabling; and trays. (enterprise information technology equipment includes)

  • Includes software used or loaded at the data center, software maintenance, software licensing, and software customization within the exempt definition of computer software. (software used or loaded at a qualified data center)

  • Allows the exemption to be obtained through a refund when tax was paid before the required certificate was received, and allows a qualified business to seek a refund when a taxable contractor purchased or installed the exempt equipment. (apply to the tax commissioner for a refund)

  • Makes the exemption retroactive to taxable events after December 31, 2014, but limits the program to the first four facilities approved by the tax commissioner. Applications are processed in the order received, and applicants generally must answer requests for additional information within thirty days. (applies to taxable events occurring after December 31, 2014)

  • Permits office space, meeting space, mechanical space, and other support areas to count toward the required sixteen-thousand-square-foot size when those areas support the operation of the information technology equipment. (square footage of office space, meeting space, mechanical space, and other support facility spaces)

  • Supports collocation by requiring qualified data center owners to provide operators and tenants with tax commissioner documentation confirming the facility's qualification, which those operators and tenants can submit with their exemption applications. (provide the operators or tenants with documentation)

  • Defines qualifying facilities broadly enough to include newly constructed or substantially refurbished in-state facilities, with refurbishment covering rebuilding, modification, energy-efficiency improvements, building improvements, equipment installation, environmental controls, and software. The facility must generally be at least sixteen thousand square feet, on one parcel or contiguous parcels, completed or refurbished after December 31, 2014, and have specified power, fire-suppression, and security features. (newly constructed or substantially refurbished facility)

Sources

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