Data centers provisions modifications

A bill for an act

relating to data centers; modifying the criteria for preapplication evaluations of

water appropriations for certain data centers; exempting certain data centers'

electricity sales in calculating a utility's solar energy standard; exempting certain

data centers from paying a fee; exempting certain data centers from paying sales

tax on electricity purchases; providing for data center energy generation

redundancy; amending Minnesota Statutes 2024, sections 116D.04, subdivision

4a; 216B.02, by adding a subdivision; 216B.243, subdivision 8; 216I.02, by adding

a subdivision; 216I.07, subdivision 2; Minnesota Statutes 2025 Supplement, sections

103G.265, subdivision 5; 216B.02, subdivision 12; 216B.1623; 216B.1691,

subdivision 2f; 216B.72; 216I.07, subdivision 3; 297A.68, subdivision 42.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2025 Supplement, section 103G.265, subdivision 5, is

amended to read:

Subd. 5.

Preapplication evaluation of certain water appropriation projects.

(a) This

subdivision applies to a data center, as defined in section
216B.02, subdivision 11
, whose

proposed
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net increase in
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consumptive use exceeds 100,000,000 gallons per year and which

requires a permit amendment or a new individual permit.

(b) In response to a contact from a data center regarding a project that is likely to be

subject to this subdivision, the department may request preapplication information from the

data center that is helpful in assisting the department to assess the factors affecting the ability

of a water source to meet a project's water use needs at a proposed location, including:

(1) a project description;

(2) the project's estimated water use rates and volumes for the maximum day, maximum

month, and average year;

(3) the anticipated source of water; and

(4) water quality or temperature requirements.

(c) The department may request any additional information necessary from the data

center to assist it to assess the ability of a water source to meet a project's water use needs.

(d) The commissioner shall evaluate the information supplied under this subdivision

and shall respond in writing, which may be electronically transmitted, describing potential

water availability constraints at each proposed project site.

(e) In determining the impact of a potential project on water quality and quantity, the

commissioner may consult with the commissioners of health, agriculture, and the Pollution

Control Agency, and other state agencies.

(f) Any communication made or information exchanged under this subdivision between

a data center and a government agency, or between government agencies, is nonpublic data,

as defined in section
13.02, subdivision 9
.

(g) None of the discussions, filings, or evaluations made under this subdivision preclude

or supplant environment review, preliminary well-construction approval, appropriation

permit review, or any other requirements under federal, state, or local law.

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(h) For purposes of this subdivision, "net increase in consumptive use" means the

estimated net increase in annual water consumption by a data center after subtracting

documented reductions in consumption from the same water source by other entities that

occurred within the past ... years or are scheduled to occur within ... years of the date the

data center initiates operations.

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(i) This section does not apply to a qualified large-scale data center, as defined in section

297A.68, subdivision 42, that:

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(1) files an application on or before January 1, 2035, with a county, town, or municipality

for a permit or approval that is necessary to allow for construction; or

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(2) is located in an eligible community, as defined in section 116J.55, subdivision 1.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 2.

Minnesota Statutes 2024, section 116D.04, subdivision 4a, is amended to read:

Subd. 4a.

Alternative review.

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(a)
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The board shall by rule identify alternative forms of

environmental review which will address the same issues and utilize similar procedures as

an environmental impact statement in a more timely or more efficient manner to be utilized

in lieu of an environmental impact statement.

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(b) Upon adoption by the responsible governmental unit of the environmental document

and plan for mitigation under an alternative urban areawide review process, and

notwithstanding additional environmental review that may otherwise be required for a

phased action, connected action, or project component that was not evaluated in the

alternative urban areawide review process, environmental review is complete and the

prerequisites under subdivision 2b are satisfied with respect to the anticipated residential,

commercial, warehousing, and light industrial development projects that are consistent with

development assumptions within the established boundaries of the geographic area to which

the alternative urban areawide review applies.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 3.

Minnesota Statutes 2025 Supplement, section 216B.02, subdivision 12, is amended

to read:

Subd. 12.

Qualified large-scale data center.

"Qualified large-scale data center" has the

meaning given in section
297A.68, subdivision 42
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, paragraph (e)
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.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 4.

Minnesota Statutes 2024, section 216B.02, is amended by adding a subdivision to

read:

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Subd. 13.

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Emergency backup generator.

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"Emergency backup generator" means a

stationary compressed ignition or spark ignition engine described under Code of Federal

Regulations, title 40, parts 60.4211(f) and 60.4243(d), respectively, installed with equipment

that prevents the flow of electricity to the electric grid.

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Sec. 5.

Minnesota Statutes 2025 Supplement, section 216B.1623, is amended to read:

216B.1623 CLEAN ENERGY AND CAPACITY TARIFF.

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Subdivision 1.

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Tariff offer.

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The commission shall require each public utility to offer a

clean energy and capacity tariff for commercial and industrial customers. The clean energy

and capacity tariff shall require a special contract between the utility and one or more

customers that shall:

(1) be optional for participating customers;

(2) permit participating customers to elect to serve some or all of their energy or capacity

usage from new clean energy or capacity resources as long as reliability is maintained;

(3) require the participating customers to pay all proportional costs associated with the

addition of the new clean energy or capacity resources, including any utility costs caused

by the addition of the new clean energy or capacity resources to the grid;

(4) develop an appropriate energy and capacity credit;

(5) prohibit cost shifting from the participating customers to other utility customers or

vice versa; and

(6) allow a utility with an applicable tariff on file to demonstrate their existing tariff's

compliance with this section.

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Subd. 2.

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Exemptions.

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This subdivision does not apply to a qualified large-scale data

center that:

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(1) files an application on or before January 1, 2035, with a county, town, or municipality

for a permit or approval that is necessary to allow for construction; or

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(2) is located in an eligible community, as defined in section 116J.55, subdivision 1.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 6.

Minnesota Statutes 2025 Supplement, section 216B.1691, subdivision 2f, is amended

to read:

Subd. 2f.

Solar energy standard.

(a) In addition to the requirements of subdivisions 2a

and 2g, each public utility shall generate or procure sufficient electricity generated by solar

energy to serve its retail electricity customers in Minnesota so that by the end of 2020, at

least 1.5 percent of the utility's total retail electric sales to retail customers in Minnesota is

generated by solar energy.

(b) For a public utility with more than 200,000 retail electric customers, at least ten

percent of the 1.5 percent goal must be met by solar energy generated by or procured from

solar photovoltaic devices with a nameplate capacity of 40 kilowatts or less.

(c) A public utility with between 50,000 and 200,000 retail electric customers:

(1) must meet at least ten percent of the 1.5 percent goal with solar energy generated by

or procured from solar photovoltaic devices with a nameplate capacity of 40 kilowatts or

less; and

(2) may apply toward the ten percent goal in clause (1) individual customer subscriptions

of 40 kilowatts or less to a community solar garden program operated by the public utility

that has been approved by the commission.

(d) The solar energy standard established in this subdivision is subject to all the provisions

of this section governing a utility's standard obligation under subdivision 2a.

(e) It is an energy goal of the state of Minnesota that, by 2030, ten percent of the retail

electric sales in Minnesota be generated by solar energy.

(f) For the purposes of calculating the total retail electric sales of a public utility
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serving

fewer than 200,000 retail electric customers
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under this subdivision, there shall be excluded

retail electric sales to customers that are:

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(1) served by a public utility with fewer than 200,000 retail electric customers and are:

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(1)
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(i)
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an iron mining extraction and processing facility, including a scram mining facility

as defined in Minnesota Rules, part
6130.0100
, subpart 16;

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(2)
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(ii)
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a qualified large-scale data center; or

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(3)
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(iii)
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a paper mill, wood products manufacturer, sawmill, or oriented strand board

manufacturer
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.
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; or
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(2) a qualified large-scale data center that:

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(i) files an application on or before January 1, 2035, with a county, town, or municipality

for a permit or approval that is necessary to allow for construction; or

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(ii) is located in an eligible community, as defined in section 116J.55, subdivision 1.

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Those
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(g) The
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customers
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identified in paragraph (f), clause (1) or (2),
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may not have

included in the rates charged to them by the public utility
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serving fewer than 200,000 retail

electric customers
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any costs of satisfying the solar standard specified by this subdivision.

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(g)
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(h)
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A public utility may not use energy used to satisfy the solar energy standard under

this subdivision to satisfy its standard obligation under subdivision 2a. A public utility may

not use energy used to satisfy the standard obligation under subdivision 2a to satisfy the

solar standard under this subdivision.

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(h)
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(i)
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Notwithstanding any law to the contrary, a solar renewable energy credit associated

with a solar photovoltaic device installed and generating electricity in Minnesota after

August 1, 2013, but before 2020 may be used to meet the solar energy standard established

under this subdivision.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 7.

Minnesota Statutes 2024, section 216B.243, subdivision 8, is amended to read:

Subd. 8.

Exemptions.

(a) This section does not apply to:

(1) cogeneration or small power production facilities as defined in the Federal Power

Act, United States Code, title 16, section 796, paragraph (17), subparagraph (A), and

paragraph (18), subparagraph (A), and having a combined capacity at a single site of less

than 80,000 kilowatts; plants or facilities for the production of ethanol or fuel alcohol; or

any case where the commission has determined after being advised by the attorney general

that its application has been preempted by federal law;

(2) a high-voltage transmission line proposed primarily to distribute electricity to serve

the demand of a single customer at a single location, unless the applicant opts to request

that the commission determine need under this section or section
216B.2425
;

(3) the upgrade to a higher voltage of an existing transmission line that serves the demand

of a single customer that primarily uses existing rights-of-way, unless the applicant opts to

request that the commission determine need under this section or section
216B.2425
;

(4) a high-voltage transmission line of one mile or less required to connect a new or

upgraded substation to an existing, new, or upgraded high-voltage transmission line;

(5) conversion of the fuel source of an existing electric generating plant to using natural

gas;

(6) the modification of an existing electric generating plant to increase efficiency, as

long as the capacity of the plant is not increased more than ten percent or more than 100

megawatts, whichever is greater;

(7) a large wind energy conversion system, as defined in section
216I.02, subdivision

12
, or a solar energy generating system, as defined in section
216I.02, subdivision 18
, for

which a site permit application is submitted by an independent power producer under chapter

216I;

(8) a large wind energy conversion system, as defined in section
216I.02, subdivision

12
, or a solar energy generating system, as defined in section
216I.02, subdivision 18
,

engaging in a repowering project that:

(i) will not result in the system exceeding the nameplate capacity under its most recent

interconnection agreement; or

(ii) will result in the system exceeding the nameplate capacity under its most recent

interconnection agreement, provided that the Midcontinent Independent System Operator

has provided a signed generator interconnection agreement that reflects the expected net

power increase;

(9) energy storage systems, as defined in section
216I.02, subdivision 6
;

(10) transmission lines that directly interconnect large wind energy conversion systems,

solar energy generating systems, or energy storage systems to the transmission system;
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or
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(11) relocation of an existing high voltage transmission line to new right-of-way, provided

that any new structures that are installed are not designed for and capable of operation at

higher voltage
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.
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; or
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(12) a combination of emergency backup generators at a single site with a combined

capacity of 50,000 kilowatts or more that provides power to a data center and is eligible for

permitting as a single stationary source under Minnesota Rules, part 7007.0200, 7007.0250,

7007.1100, or 7007.1110 to 7007.1141.

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(b) For the purpose of this subdivision, "repowering project" means:

(1) modifying a large wind energy conversion system or a solar energy generating system

that is a large energy facility to increase its efficiency without increasing its nameplate

capacity;

(2) replacing turbines in a large wind energy conversion system without increasing the

nameplate capacity of the system; or

(3) increasing the nameplate capacity of a large wind energy conversion system.

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EFFECTIVE DATE; APPLICATION.

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This section is effective the day following

final enactment and applies to applications under Minnesota Statutes, section 216B.243,

that are pending before or submitted to the Public Utilities Commission on or after that date.

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Sec. 8.

Minnesota Statutes 2025 Supplement, section 216B.72, is amended to read:

216B.72 QUALIFIED LARGE-SCALE DATA CENTER FEE.

(a)
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Except as provided in paragraph (d),
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the commissioner must collect an annual fee

from
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the
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a
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qualified large-scale data center
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,
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on a schedule prescribed by the commissioner

and
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deposited
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must deposit the fee
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in the energy and conservation account established in

section
216B.241, subdivision 2a
.

(b) The fee is based on
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the
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a
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qualified large-scale data center's peak demand the utility

arranges to serve, reflecting the qualified large-scale data center's peak demand forecast

provided to the utility, expressed in megawatts (MW), as follows:

Peak Demand

Fee

(1) 100 to 250 MW

$2,000,000

(2) above 250 MW but below 500 MW

$3,000,000

(3) 500 MW but below 750 MW

$4,000,000

(4) 750 MW or greater

$5,000,000

(c) The fee data collected under this section must be treated as nonpublic data, as defined

under section
13.02, subdivision 9
.

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(d) This section does not apply to a qualified large-scale data center that:

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(1) files an application on or before January 1, 2035, with a county, town, or municipality

for a permit or approval that is necessary to allow for construction; or

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(2) is located in an eligible community, as defined in section 116J.55, subdivision 1.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 9.

Minnesota Statutes 2024, section 216I.02, is amended by adding a subdivision to

read:

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Subd. 5a.

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Emergency backup generator.

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"Emergency backup generator" has the

meaning given in section 216B.02, subdivision 13.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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Sec. 10.

Minnesota Statutes 2024, section 216I.07, subdivision 2, is amended to read:

Subd. 2.

Applicable projects.

The requirements and procedures under this section apply

to projects for which the applicant's proposal is:

(1) large electric power generating plants with a capacity of less than 80 megawatts;

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(2) a combination of emergency backup generators designed to serve one person and

located on property owned or controlled by the person that is contiguous with the facility

the emergency backup generators serve;

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(2)
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(3)
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large electric power generating plants that are fueled by natural gas;

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(3)
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(4)
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high-voltage transmission lines with a capacity between 100 and 300 kilovolts;

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(4)
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(5)
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high-voltage transmission lines with a capacity in excess of 300 kilovolts and

less than 30 miles in length in Minnesota;

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(5)
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(6)
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high-voltage transmission lines with a capacity in excess of 300 kilovolts, if at

least 80 percent of the distance of the line in Minnesota, as proposed by the applicant, is

located along existing high-voltage transmission line right-of-way;

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(6)
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(7)
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solar energy systems;

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(7)
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(8)
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energy storage systems; and

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(8)
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(9)
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large wind energy conversion systems.

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EFFECTIVE DATE; APPLICATION.

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This section is effective July 1, 2026, and

applies to applications under Minnesota Statutes, section 216I.07, that are pending before

or submitted to the Public Utilities Commission on or after that date.

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Sec. 11.

Minnesota Statutes 2025 Supplement, section 216I.07, subdivision 3, is amended

to read:

Subd. 3.

Environmental review.

(a) For the projects identified in subdivision 2 and

following the procedures under this section, the applicant must prepare and submit an

environmental assessment with the application. A draft of the environmental assessment

must also be provided to commission staff as part of the preapplication review under section

216I.05, subdivision 6
. The environmental assessment must (1) contain information regarding

the proposed project's human and environmental impacts, and (2) address mitigating measures

for identified impacts.
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The environmental assessment for projects identified in subdivision

2, clause (2), must include a discussion of reasonable alternatives to the proposed project

that considers: (i) the appropriateness of the size and type of the proposed method of

generation compared to those of reasonable alternatives; (ii) the cost to the proposer of

energy that would be supplied by the project compared to the cost of energy that would be

supplied by reasonable alternatives; (iii) the effect of the proposed project upon the natural

and socioeconomic environments compared to the effect of reasonable alternatives; and (iv)

the expected reliability of the proposed facility compared to the expected reliability of

reasonable alternatives.
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The environmental assessment is the only state environmental

review document that must be prepared for the proposed project.

(b) If after the public meeting the commission identifies other sites or routes or potential

impacts for review, the commission must prepare an addendum to the environmental

assessment that evaluates (1) the human and environmental impacts of the alternative site

or route, and (2) any additional mitigating measures related to the identified impacts

consistent with the scoping decision made pursuant to section
216I.05, subdivision 10
,

clause (2). The public may provide comments on the environmental assessment and any

addendum to the environmental assessment at the public hearing and comment period under

subdivision 4. When making the commission's final decision, the commission must consider

the environmental assessment, the environmental assessment addendum, if any, and the

entirety of the record related to human and environmental impacts.

Sec. 12.

Minnesota Statutes 2025 Supplement, section 297A.68, subdivision 42, is amended

to read:

Subd. 42.

Data centers.

(a) Purchases of enterprise information technology equipment

and computer software for use in a qualified data center, a qualified refurbished data center,

or a qualified large-scale data center are exempt, except that computer software maintenance

agreements are exempt for purchases made after June 30, 2013. The tax on purchases exempt

under this paragraph must be imposed and collected as if the rate under section
297A.62,

subdivision 1
, applied, and then refunded after June 30, 2013, in the manner provided in

section
297A.75
. This exemption includes enterprise information technology equipment

and computer software purchased to replace or upgrade enterprise information technology

equipment and computer software in a qualified data center, a qualified refurbished data

center, or a qualified large-scale data center.

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(b) Purchases of electricity used or consumed to operate a qualified large-scale data

center located in an eligible community, as defined in section 116J.55, subdivision 1, are

exempt.

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(b)
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(c)
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For purposes of this subdivision, "qualified data center" means a facility in

Minnesota:

(1) that is comprised of one or more buildings that consist in the aggregate of at least

25,000 square feet, and that are located on a single parcel or on contiguous parcels, where

the total cost of construction or refurbishment, investment in enterprise information

technology equipment, and computer software is at least $30,000,000 within a 48-month

period. The 48-month period begins no sooner than July 1, 2012, except that costs for

computer software maintenance agreements purchased before July 1, 2013, are not included

in determining if the $30,000,000 threshold has been met;

(2) that is constructed or substantially refurbished after June 30, 2012, where

"substantially refurbished" means that at least 25,000 square feet have been rebuilt or

modified, including:

(i) installation of enterprise information technology equipment; environmental control,

computer software, and energy efficiency improvements; and

(ii) building improvements; and

(3) that is used to house enterprise information technology equipment, where the facility

has the following characteristics:

(i) uninterruptible power supplies, generator backup power, or both;

(ii) sophisticated fire suppression and prevention systems; and

(iii) enhanced security. A facility will be considered to have enhanced security if it has

restricted access to the facility to selected personnel; permanent security guards; video

camera surveillance; an electronic system requiring pass codes, keycards, or biometric scans,

such as hand scans and retinal or fingerprint recognition; or similar security features.

In determining whether the facility has the required square footage, the square footage

of the following spaces shall be included if the spaces support the operation of enterprise

information technology equipment: office space, meeting space, and mechanical and other

support facilities. For purposes of this subdivision, "computer software" includes, but is not

limited to, software utilized or loaded at a qualified data center, qualified refurbished data

center, or qualified large-scale data center, including maintenance, licensing, and software

customization.

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(c)
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(d)
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For purposes of this subdivision, a "qualified refurbished data center" means an

existing facility that qualifies as a data center under paragraph
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(b)
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(c)
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, clauses (2) and (3),

but that is comprised of one or more buildings that consist in the aggregate of at least 25,000

square feet, and that are located on a single parcel or contiguous parcels, where the total

cost of construction or refurbishment, investment in enterprise information technology

equipment, and computer software is at least $50,000,000 within a 24-month period.

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(d)
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(e)
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For purposes of this subdivision, "enterprise information technology equipment"

means computers and equipment supporting computing, networking, or data storage,

including servers and routers. It includes, but is not limited to: cooling systems, cooling

towers, and other temperature control infrastructure; power infrastructure for transformation,

distribution, or management of electricity used for the maintenance and operation of a

qualified data center or qualified refurbished data center, including but not limited to exterior

dedicated business-owned substations, backup power generation systems, battery systems,

and related infrastructure; and racking systems, cabling, and trays, which are necessary for

the maintenance and operation of the qualified data center, qualified refurbished data center,

or qualified large-scale data center.

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(e)
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(f)
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For purposes of this subdivision, "qualified large-scale data center" means a

facility in Minnesota:

(1) that is comprised of one or more buildings connected to each other by fiber and

associated equipment that consist in the aggregate of at least 25,000 square feet, and that

are located in one physical location or multiple locations; and

(2) for which the total cost of construction or refurbishment, investment in enterprise

information technology equipment, and computer software is at least $250,000,000

collectively by the facility and its tenants within a 60-month period beginning after June

30, 2025.

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(f)
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(g)
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A qualified data center, qualified large-scale data center, or qualified refurbished

data center may claim the exemptions in this subdivision for purchases made within 35

years of the date of its first purchase qualifying for the exemption under paragraph (a).

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(g)
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(h)
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The exemption in this subdivision is allowed for qualified data centers, qualified

large-scale data centers, and qualified refurbished data centers that were certified under

paragraph
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(h)
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(i)
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before July 1, 2042.

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(h)
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(i)
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The commissioner of employment and economic development must certify to the

commissioner of revenue, in a format approved by the commissioner of revenue, when a

qualified data center has met the requirements under paragraph
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(b)
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(c)
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, a qualified refurbished

data center has met the requirements under paragraph
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(c)
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(d)
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, or a qualified large-scale data

center has met the requirements under paragraph
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(e)
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(f)
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. The certification must provide the

following information regarding each qualified data center or qualified refurbished data

center:

(1) the total square footage amount;

(2) the total amount of construction or refurbishment costs and the total amount of

qualifying investments in enterprise information technology equipment and computer

software;

(3) the beginning and ending of the applicable period under paragraph
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(b), (c), or (e)
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(c), (d), or (f)
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in which the qualifying expenditures and purchases under clause (2) were

made, but in no case shall the period begin before July 1, 2012; and

(4) the date upon which the qualified data center first met the requirements under

paragraph
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(b)
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(c)
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, a qualified refurbished data center first met the requirements under

paragraph
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(c)
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(d)
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, or a qualified large-scale data center first met the requirements under

paragraph
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(e)
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(f)
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.

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(i)
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(j)
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Any refund for sales tax paid on qualifying purchases under this subdivision must

not be issued unless the commissioner of revenue has received the certification required

under paragraph
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(h)
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(i)
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issued by the commissioner of employment and economic

development.

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(j)
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(k)
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The commissioner of employment and economic development must annually

notify the commissioner of revenue of the qualified data centers that are projected to meet

the requirements under paragraph
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(b)
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(c)
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, the qualified refurbished data centers that are

projected to meet the requirements under paragraph
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(c)
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(d)
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, and the qualified large-scale

data centers that are projected to meet the requirements under paragraph
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(e)
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(f)
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, in each of

the next four years. The notification must provide the information required under paragraph
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(h)
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(i)
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, clauses (1) to (4), for each qualified data center, qualified refurbished data center,

or qualified large-scale data center.

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(k)
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(l)
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Laborers and mechanics performing work to construct or refurbish qualified

large-scale data centers must be paid the prevailing wage rate for the work as defined in

section
177.42
, subdivision 6. Work performed to construct or refurbish qualified large-scale

data centers is subject to the requirements and enforcement provisions of sections
177.27
,

177.30
,
177.32
, and
177.41
to
177.45
. For purposes of this paragraph, "refurbish" does not

include maintenance or equipment refreshment or replacement. The commissioner of

employment and economic development must not certify a qualified large-scale data center

under paragraph
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(h)
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(i)
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unless the entity seeking an exemption certifies to the commissioner

of employment and economic development that it has complied with this paragraph for all

covered work after June 30, 2025.

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(l)
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(m)
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Within three years after being placed in service, a qualified large-scale data center

must certify to the commissioner of commerce that the facility has attained certification

under one or more of the following sustainable design or green building standards:

(1) BREEAM for new construction or BREEAM in-use;

(2) Energy Star;

(3) Envision;

(4) ISO 50001-energy management;

(5) LEED for building design and construction or LEED for operations and maintenance;

(6) green globes for new construction or green globes for existing buildings;

(7) UL 3223; or

(8) other reasonable standards approved by the commissioner of employment and

economic development.

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(m)
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(n)
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Notwithstanding section
289A.38, subdivision 1
, the amount of the exemption

allowed to a qualified large-scale data center must be repaid to the commissioner of revenue

if the commissioner of commerce determines that a qualified large-scale data center has not

met the requirements under paragraph
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(l)
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(m)
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. Nothing in this paragraph prohibits the

commissioner of revenue from making an assessment of tax, interest, or penalties if the

commissioner of revenue determines that sales to and purchases made by a qualified

large-scale data center do not qualify for the exemption under this subdivision.

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EFFECTIVE DATE.

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This section is effective the day following final enactment.

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