HF4990

Purpose

• The bill modifies how large data centers are evaluated for water use and adds legal and financial provisions intended to attract data centers while ensuring oversight of water resources. It also adjusts how data centers are treated under electricity-related standards, taxes, and energy reliability requirements.

Main Provisions

• Preapplication evaluation for water use
  • Applies to a data center definition that has a proposed net increase in consumptive use exceeding 100,000,000 gallons per year and requires a permit amendment or a new permit.
  • When a data center contact initiates a likely project, the agency may request information to assess water source capacity, including:
  • Project description
  • Estimated water use rates and volumes (maximum day, maximum month, average year)
  • Anticipated water source
  • Water quality or temperature requirements
  • The agency may ask for additional information needed to evaluate the project.
  • The commissioner's written evaluation will describe potential water availability constraints at each proposed site and may involve consultation with other state agencies (health, agriculture, Pollution Control Agency, etc.).
  • Communications and exchanged information in this process are considered nonpublic data.
  • These discussions do not replace or supersede other required reviews or approvals (environmental review, well construction, permits, etc.).
  • Net increase in consumptive use means the estimated annual increase in water consumption after subtracting documented reductions from other entities that occurred or are scheduled to occur in a defined recent/p near-term window.
  • The process does not apply to a Qualified Large-Scale Data Center if it files an application by January 1, 2035 with a county, city, or town for any necessary permit and is located in an eligible community.
• Exemptions and financial considerations for data centers
  • Exemption from certain fees for data centers.
  • Exemption from paying sales tax on electricity purchases for certain data centers.
  • Data center electricity sales may be treated as exempt when calculating a utility’s solar energy standard (i.e., data centers’ electricity contributions are not counted toward meeting or evaluating the standard).
  • Provision of data center energy generation redundancy (requirements or allowances to ensure reliable, redundant energy generation for data centers).
• Definitions and scope
  • Data center defined in statute; net increase in consumptive use defined for purposes of preapplication evaluation.
  • Clarifies that the preapplication evaluation relates specifically to water supply for data centers and does not eliminate other regulatory processes.
• Related statutory amendments
  • Adds or amends multiple statutory sections to implement these changes, including sections that deal with water use evaluations, energy standards, licensing/permits, and taxation related to electricity purchases and data centers.

Significant Changes to Existing Law

• Establishes a new preapplication evaluation framework specifically for data centers with large water use increases, creating a formal process to assess water availability before permits are issued or amended.
• Creates data center-specific exemptions from certain fees and from sales tax on electricity purchases, as a means to incentivize data center development.
• Modifies how data centers affect a utility’s solar energy standard by excluding their electricity sales from the standard’s calculations.
• Introduces requirements for data center energy generation redundancy, aiming to improve reliability and resilience of operations.
• Expands or adds new subdivisions across several Minnesota Statutes to incorporate these data center-focused provisions, including provisions governing water use, electricity-related standards, and related regulatory processes.
• Includes a sunset/transition provision for Qualified Large-Scale Data Centers related to deadlines for permit filings, aligned with eligible communities.

Definitions and Key Terms

• Data center: a facility defined in the bill for purposes of regulated water use and energy standards.
• Net increase in consumptive use: the projected annual increase in water consumption after accounting for reductions by other entities within a defined timeframe.
• Consumptive use: water use that is not returned to the source in a form or amount that can be reused.
• Preapplication evaluation: a Department process to gather information and assess water availability before formal permitting decisions.
• Qualified Large-Scale Data Center: a specific category that has a separate transition/filing provision.
• Eligible community: a defined set of communities meeting criteria in the bill for certain exemptions or allowances.
• Nonpublic data: communications and documents exchanged during the preapplication process that are not public.
• Solar energy standard: a regulatory metric for solar energy contributions by utilities, with data center electricity sales exempt from calculation.
• Energy generation redundancy: requirements or provisions to ensure continuous power reliability for data centers.

Implementation Considerations

• Nonpublic nature of preapplication communications helps protect sensitive business information during initial evaluations.
• The preapplication process does not replace other required reviews; it complements environmental and permitting processes.
• The exemptions and solar-standard adjustments are designed to attract data centers while balancing resource management and grid reliability.

Relevant Terms - data center - preapplication evaluation - water appropriation - consumptive use - net increase in consumptive use - maximum day/maximum month/average year water use - water source - water quality - nonpublic data - permit amendment - permit - Qualified Large-Scale Data Center - eligible community - solar energy standard - electricity sales tax - exemptions - energy generation redundancy - department (Minnesota Department of Natural Resources/Environmental Resources) - health, agriculture, Pollution Control Agency (as consultative agencies)