A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS SO AS TO ENACT THE "DATA CENTER DEVELOPMENT ACT"; BY ADDING SECTION 49-35-10 SO AS TO DEFINE TERMS PERTAINING TO DATA CENTER DEVELOPMENT; BY ADDING SECTION 49-35-20 SO AS TO ESTABLISH THE DATA CENTER DEVELOPMENT OFFICE IN THE DEPARTMENT OF ENVIRONMENTAL SERVICES, TO PROVIDE FOR THE POWERS AND DUTIES OF THE OFFICE, TO ESTABLISH THE DATA CENTER INDUSTRY ADVISORY COMMITTEE, TO PROVIDE FOR THE ADVISORY COMMITTEE'S MEMBERSHIP, AND TO PROVIDE FOR THE ADVISORY COMMITTEE'S POWERS AND DUTIES; BY ADDING SECTION 49-35-30 SO AS TO REQUIRE A SITING PERMIT BEFORE A DATA CENTER MAY LOCATE A FACILITY AT A PARTICULAR LOCATION, TO PROVIDE FOR THE PERMIT APPLICATION PROCESS, AND TO PROVIDE FOR THE TIMELINE FOR CONSIDERATION OF APPLICATIONS; BY ADDING SECTION 49-35-40 SO AS TO PROVIDE FOR PERFORMANCE-BASED OPERATIONAL EFFICIENCY STANDARDS, WATER EFFICIENCY STANDARDS, AND TO REQUIRE ANNUAL REPORTS; BY ADDING SECTION 49-35-50 SO AS TO PROVIDE FOR INFRASTRUCTURE ADEQUACY ASSESSMENTS, TO PROVIDE FOR ENVIRONMENTAL IMPACT ASSESSMENTS, AND TO PROVIDE FOR REASONABLE BUFFER REQUIREMENTS; BY ADDING SECTION 49-35-60 SO AS TO PROVIDE FOR THE PUBLIC SERVICE COMMISSION'S ROLE CONCERNING RATES, AGREEMENTS BETWEEN UTILITIES AND DATA CENTERS, AND COST ALLOCATION METHODOLOGIES; BY ADDING SECTION 49-35-70 SO AS TO PROVIDE FOR DECOMMISSIONING PLANS AND FINANCIAL ASSURANCES ASSOCIATED WITH DECOMMISSIONING; BY ADDING SECTION 49-35-80 SO AS TO PROVIDE FOR THE INTERACTION BETWEEN THE PROVISIONS OF THIS CHAPTER AND LOCAL GOVERNMENTS AND LOCAL GOVERNMENT LAND USE PLANNING; BY ADDING SECTION 49-35-90 SO AS TO REQUIRE DATA CENTERS TO IMPLEMENT REASONABLE MEASURES TO MINIMIZE NOISE, VIBRATION, AND LIGHT IMPACTS RESULTING FROM THEIR OPERATION; BY ADDING SECTION 49-35-100 SO AS TO PROVIDE PROTECTIONS FOR CONFIDENTIAL INFORMATION SHARED WITH THE OFFICE BY DATA CENTER OPERATORS; BY ADDING SECTION 49-35-110 SO AS TO CLARIFY THE INTERACTION BETWEEN THIS CHAPTER AND OTHER ENVIRONMENTAL LAWS; BY ADDING SECTION 49-35-120 SO AS TO PROVIDE FOR ENFORCEMENT AND PENALTIES; TO PROVIDE THAT THE PROVISIONS OF THIS CHAPTER ARE PROSPECTIVE; TO PROVIDE FOR REGULATIONS FROM THE DEPARTMENT OF ENVIRONMENTAL SERVICES; AND TO PROVIDE THAT FOR TWO YEARS AFTER ENACTMENT THE DEPARTMENT OF ENVIRONMENTAL SERVICES SHALL PRIORITIZE TECHNICAL ASSISTANCE AND GUIDANCE OVER ENFORCEMENT TO FACILITATE INDUSTRY TRANSITION TO THE NEW REQUIREMENTS.

 

Be it enacted by the General Assembly of the State of South Carolina:

 

SECTION 1.  This act may be cited as the "The Data Center Development Act".

 

SECTION 2.  The General Assembly finds that:

    (1) Data centers represent critical infrastructure for the modern digital economy and provide significant economic benefits to South Carolina through substantial capital investment, high-quality job creation, tax revenue generation, and support of essential digital services.

    (2) South Carolina seeks to be a nationally competitive location for data center development by providing regulatory certainty, efficient permitting processes, and clear operational standards.

    (3) Data centers require extraordinary amounts of electricity, and traditional utility rate structures must be adapted to accommodate this new class of customer while ensuring existing ratepayers are protected from infrastructure cost allocation.

    (4) Clear, predictable, regulatory requirements benefit both data center operators and existing ratepayers by preventing disputes over cost allocation and establishing transparent expectations for facility development and operations.

    (5) Modern data center technologies offer significant opportunities for water conservation, energy efficiency, and environmental stewardship that should be encouraged through reasonable standards rather than prescriptive mandates.

    (6) Brownfield sites and previously developed industrial properties offer significant advantages for data center development by utilizing existing infrastructure, reducing environmental impact on undeveloped lands, and revitalizing economically distressed areas, and the State has a strong interest in encouraging data center location at such sites through appropriate financial incentives.

    (7) Strategic collaboration between data center operators, utilities, and state agencies can achieve both economic development objectives and ratepayer protection through innovative rate structures and cost allocation methodologies.

    (8) Streamlined, coordinated permitting and review processes serve the interests of data center operators, ratepayers, and the public by reducing regulatory uncertainty and transaction costs.

    (9) Establishing reasonable operational standards and infrastructure adequacy requirements protects both ratepayers and data center operators by ensuring facilities are appropriately sited and efficiently operated.

 

SECTION 3.  Title 49 of the S.C. Code is amended by adding:

 

CHAPTER 35

 

Data Center Development

 

    Section 49-35-10.  For the purposes of this chapter:

    (1) "Data center" means a facility comprised of one or more buildings that houses computer systems and associated components, including telecommunications and data storage systems, and that has a combined connected electrical load of one megawatt or more.

    (2) "Data center operator" means any person, corporation, partnership, or other legal entity that owns, operates, or controls a data center facility.

    (3) "Direct to chip cooling technology" means liquid cooling methods that remove heat directly from a processor package, rather than cooling the surrounding air in a server or device.

    (4) "Electrical infrastructure costs" means all costs associated with generating, transmitting, or distributing electricity to serve a data center, including but not limited to:

       (a) generation facility construction, expansion, or upgrade costs;

       (b) transmission line construction or upgrade costs;

       (c) substation construction or upgrade costs;

       (d) distribution system improvements;

       (e) grid reliability and stability improvements necessitated by data center load;

       (f) interconnection costs; and

       (g) any other capital or operational costs directly or indirectly resulting from serving the data center's electrical load.

    (5) "Infrastructure adequacy" means the existence of sufficient electrical generation, transmission, distribution, water supply, wastewater treatment, and transportation infrastructure to serve a proposed data center.

    (6) "Office" means the Data Center Development Office.

    (7) "Operational efficiency standards" means reasonable, technology-neutral requirements for data center water use, cooling technologies, measures to control noise, vibration, and light, and facility operations that reflect industry best practices other than standards for electricity consumption which shall remain the sole responsibility of the Public Service Commission.

    (8) "Minimum contract obligations" means a long-term commercial agreement that requires the customer to pay its fair share of cost of service based on the customer's requested amount of power for a duration of time regardless of actual usage, as determined by the Public Service Commission.

    (9) "Tier 1 data center" means a data center facility with a connected electrical load between one and ten megawatts.

    (10) "Tier 2 data center" means a data center facility with a connected electrical load between eleven and fifty megawatts.

    (11) "Tier 3 data center" means a data center facility with a connected electrical load in excess of fifty megawatts.

    (12) "Utility" means any electric utility as defined in Section 58-27-10 or 58-31-10, or any water or wastewater utility subject to commission jurisdiction.

 

    Section 49-35-20.  (A) There is created within the Department of Environmental Services a Data Center Development Office. The office shall be headed by a director appointed by the Director of the Department of Environmental Services. The office shall not have any jurisdiction over electricity consumption, which shall remain the sole obligation of the Public Service Commission.

    (B)(1) The data center development office shall:

            (a) conduct pre-application consultations with data center operators who would like to locate a data center in this State;

           (b) accept and process data center siting permits;

           (c) approve or deny data center siting permits;

           (d) serve as a single point of contact for data center operators;

            (e) develop and regularly update best practices and guidance documents for data center operators;

            (f) coordinate review processes among affected State agencies;

            (g) provide technical assistance and guidance to data center operators;

            (h) timely process applications;

            (i) assist in resolving issues that arise between data center operators and affected State and local authorities;

           (j) conduct comprehensive reviews of this chapter's implementation every three years;

            (k) perform other duties and responsibilities related to the effective and efficient operation of this chapter assigned to the office by the department; and

           (l) maintain an inventory of suitable sites.

       (2) The office shall annually report to the General Assembly, the Governor, the Public Service Commission, and the Office of Regulatory Staff concerning data center development and operations. The report shall include recommendations for improving competitiveness.

    (C) The best practices and guidance documents required pursuant to subsection (B)(1)(e) shall be developed in consultation with the data center industry advisory committee established pursuant to subsection (E) and must address:

       (1) application requirements for each data center tier;

       (2) operational efficiency and compliance strategies other than standards for electricity consumption which shall remain the sole responsibility of the Public Service Commission;

       (3) infrastructure adequacy assessment procedures; and

       (4) environmental review expectations;

    (D) When conducting comprehensive reviews of this chapter's implementation pursuant to subsection (B)(1)(j), the office shall evaluate this State's competitiveness for data center investment, operational efficiency of the review processes, technological developments in the data center industry and how those developments affect standards, and recommendations for statutory or regulatory improvements. The results of each comprehensive review must be compiled in a report submitted to the General Assembly, the Governor, the Public Service Commission, and the Office of Regulatory Staff.

    (E)(1) The office shall establish a data center industry advisory committee composed of ten members as follows:

           (a) one data center industry representative appointed by the Governor;

           (b) one utility industry representative appointed by the Governor;

           (c) one representative from a ratepayer-advocacy organization appointed by the President of the Senate;

           (d) one representative from an environmental-advocacy organization appointed by the President of the Senate;

           (e) one representative from a water utility or water management district appointed by the Speaker of the House of Representatives;

           (f) one representative from local government with experience in land use planning appointed by the Speaker of the House of Representatives;

           (g) one representative from the South Carolina Energy Office;

           (h) one representative from the Office of Regulatory Staff;

           (i) one representative from the Public Service Commission; and

           (j) one staff member from the office serving ex officio as a nonvoting member.

       (2) Members of the committee shall serve terms of four years, except that of the initial appointments, the Governor, the President of the Senate, and the Speaker of the House of Representatives shall each designate two members to serve two-year terms, and the remaining members shall serve four-year terms. Members may be reappointed for one additional term. Vacancies shall be filled in the same manner as original appointments for the remainder of the unexpired term.

       (3) The committee shall elect a chair from among its voting members. The office shall provide administrative support to the committee.

       (4) The advisory committee shall meet at least twice a year. The meetings shall focus on reviews of the implementation of the provisions contained in this chapter, identifying areas where the office's policies and procedures may be streamlined, identifying and deliberating emerging issues relevant to data centers, sharing best practices from among the data center operators, and advising on regulatory updates.

 

    Section 49-35-30.  (A) A data center may not begin operations within this State unless the data center first receives a permit from the office certifying that the provisions of this chapter have been met. This obligation to receive a permit from the office is in addition to and not in lieu of other local and state governmental approvals that a data center must receive.

    (B) Prior to applying to the office for a permit to operate a data center in this State, a data center operator must provide the office with a notice of its intention to open a location in this State. The notice shall contain a statement requesting a pre-application consultation intended to provide the operator with a clear understanding of the permitting requirements. Upon receipt of the notice of intention with a request for a pre-application consultation, the office shall schedule a pre-application consultation with the proposed data center operator.

    (C)(1) When evaluating an application, the office shall consider the tier in which the data center falls, infrastructure requirements for that tier, water conservation requirements for that tier, financial assurance requirements for that tier, and environmental review requirements for that tier.

       (2) Applications from Tier 1 data centers shall be subject to an expedited review with a permitting decision made within sixty days of the data center's completed application being received by the office. Tier 1 data center applications shall:

           (a) satisfy infrastructure requirements without a detailed assessment if the proposed data center is located within existing industrial parks or areas with demonstrated infrastructure adequacy;

           (b) not require an environmental review statement; and

           (c) satisfy water conservation requirements through certification by the applicant that it intends to implement industry best practices rather than prescriptive technology mandates.

       (3) Applications for Tier 2 data centers shall be subject to a standard review with a permitting decision made within ninety days of the data center's completed application being received by the office. When assessing a Tier 2 data center application the office shall:

           (a) focus its infrastructure adequacy review on major infrastructure systems such as electrical, water, and wastewater without requiring a detailed assessment of every infrastructure component;

           (b) require a site-specific environmental review statement addressing:

               (i) water source capacity and projected consumption rates;

               (ii) wastewater discharge volume and treatment compliance;

               (iii) stormwater management adequacy;

               (iv) noise mitigation for cooling and backup power systems;

               (v) vibration control measures for mechanical equipment;

               (vi) measures to mitigate unreasonable light pollution from exterior lighting and facility operations; and

               (vii) compatibility with surrounding land uses. The office may waive specific review elements where site conditions demonstrate minimal impact; and

           (c) assess the applicant's water conservation plan which must be derived from available technology options published by the office that satisfy water efficiency objectives provided for in this chapter.

       (4) Applications for Tier 3 data centers shall be subject to a comprehensive review with a permitting decision made within one hundred-twenty days of the data center's completed application being received by the office. Tier 3 data center applications shall require a:

           (a) detailed infrastructure adequacy assessment;

           (b) comprehensive environmental review statement addressing all factors identified in subsection (C)(3)(b) and additionally including:

               (i) the cumulative impact on regional water resources;

               (ii) air quality considerations including emergency generator emissions;

               (iii) traffic impact during construction and operation; and

               (iv) mitigation measures for identified impacts; and

           (c) demonstration that the applicant has fully complied with all relevant provisions contained in this chapter.

    (D) The time in which a permitting decision must be rendered may be extended by mutual agreement between the office and the applicant or in extraordinary circumstances. If the office fails to timely make a permitting decision, then the permit is approved subject to standard conditions. Permits shall be issued for the duration of the data center's operations if a data center has a contract for electrical service in place.

 

    Section 49-35-40.  (A) The office shall establish performance-based operational efficiency standards applicable to all data centers. The office shall not have jurisdiction over electricity consumption, which shall remain the sole responsibility of the Public Service Commission. The operational efficiency standards shall:

       (1) allow data center operators flexibility in meeting objectives;

       (2) recognize technological innovation and evolution; and

       (3) reflect recognized industry best practices.

    (B)(1) The office shall establish water efficiency standards applicable to all data centers. The water efficiency standards shall achieve water efficiency through the implementation of any of the following or combination of any of the following:

           (a) closed-loop liquid cooling systems that recirculate coolants with minimal evaporative loss;

           (b) direct-to-chip cooling technologies;

           (c) immersion cooling technologies;

           (d) air cooling with high-efficiency heat rejection systems;

           (e) hybrid cooling approaches optimizing water and energy efficiency;

           (f) water recycling and reuse systems meeting or exceeding industry benchmarks; or

           (g) alternative technologies demonstrated to achieve equivalent efficiency outcomes.

       (2) The office shall measure compliance with the water efficiency standards through water use effectiveness (WUE) metrics. Tier 1 and Tier 2 facilities' WUE shall not exceed 2.0 liters/kWh. Tier 3 facilities' WUE shall not exceed 1.5 liters/kWh. The office may employ alternative compliance metrics if the office demonstrates that the alternative metrics measure water use efficiency as effectively as the WUE standard.

       (3) Data centers may apply for variances from the water efficiency standards. A variance may be granted if:

           (a) climate conditions make standard metrics inappropriate;

           (b) alternative methods achieve superior environmental performance; or

           (c) site-specific factors justify different requirements.

       (4) Water efficiency standards do not apply to:

           (a) emergency backup cooling systems;

           (b) humidification systems required for equipment protection;

           (c) fire suppression systems; or

           (d) other non-cooling water uses.

    (C)(1) Data centers shall submit an annual report to the office concerning:

            (a) total water consumption;

            (b) WUE metrics; and

            (c) any significant operational changes affecting resource use.

       (2) Reports shall be filed with the office on standardized forms prescribed by the office to minimize administrative burden on data center operators. The office shall provide Tier 1 data centers with a simplified form.

       (3) The office shall maintain the confidentiality of all proprietary operational information contained in the reports and the proprietary operational information shall not be subject to the provisions of Chapter 4, Title 30, the Freedom of Information Act.

 

    Section 49-35-50.  (A) Data centers may be developed and operated in locations within this State that are equipped with adequate infrastructure to support efficient operations. The office shall proactively work with data center operators to identify suitable locations for the data centers to operate rather than only review locations identified by data center operators. The office shall not have any jurisdiction over electricity consumption, which shall remain the sole responsibility of the Public Service Commission.

    (B) The office shall conduct an infrastructure adequacy assessment of proposed locations subject to the provisions contained in Section 49-35-30(C). The review shall focus primarily on the adequacy of major systems as provided in this subsection.

       (1) An infrastructure adequacy assessment with regards to a specific potential site shall evaluate the availability of:

           (a) an adequate water supply that does not deplete critical resources;

           (b) adequate wastewater treatment capacity or the feasibility of on-site wastewater treatment;

           (c) adequate fiber optic connectivity; and

           (d) reasonable access to major roads and highways.

       (2) The assessment shall identify deficiencies in the existing infrastructure at a potential location. The office shall provide an applicant with written notice of deficiencies in the existing infrastructure at the potential location. The notice shall contain potential solutions to the deficiencies, and the applicant shall be given a reasonable opportunity to cure the deficiencies. An application may not be denied until after identified deficiencies are not cured within a reasonable time. The office shall find that infrastructure at a particular site is adequate for locating a data center at that site if the identified deficiencies are cured by the data center operator within a reasonable time and the cost of required actions to cure the deficiencies are reasonable and born by the operator.

    (C) The following locations are presumptively suitable for data center development:

       (1) existing industrial parks with demonstrated utility capacity;

       (2) previously developed industrial or commercial sites; and

       (3) brownfield sites identified by the Department of Environmental Services.

    (D) The environmental impact of a proposed data center's development shall be considered during the application process and shall focus on the proposed data center's material impact on water and wastewater infrastructure; significant environmental resources on or adjacent to the proposed location; and transportation on major roads and highways. The environmental impact assessment shall also take into consideration any proposed mitigation for identified significant impacts. The environmental impact assessment shall disregard minor impacts or speculative concerns. The office shall provide clear guidance to proposed data center operators on the scope of the assessment during the pre-application consultation.

    (E)(1) A data center operator that locates a facility on a brownfield site identified by the Department of Environmental Services pursuant to Section 44-56-710, et seq., or on a site requiring environmental remediation under state or federal environmental cleanup programs, is eligible for a tax credit against state income taxes equal to:

           (a) twenty-five percent of documented environmental remediation costs actually incurred by the operator, not to exceed five million dollars per facility; and

           (b) an additional investment tax credit equal to two percent of the total capital investment in the facility, not to exceed ten million dollars per facility.

       (2) To qualify for the credits provided for in subsection (E)(1):

           (a) the operator must obtain certification from the Department of Environmental Services that the site meets the definition of a brownfield site or requires environmental remediation;

           (b) all environmental remediation must be completed in accordance with applicable state and federal requirements and approved by the Department of Environmental Services;

           (c) the data center facility must meet all requirements of this chapter; and

           (d) the operator must apply for the credit within twelve months of commencing commercial operations at the facility.

       (3) Tax credits authorized pursuant to this subsection may be carried forward for ten years from the year in which they are earned but may not be carried back to prior taxable years.

       (4) Tax credits authorized pursuant to this subsection are in addition to any other tax credits, incentives, or economic development benefits for which the operator may qualify under state law.

       (5) The Department of Revenue, in consultation with the Department of Environmental Services, shall promulgate regulations necessary to administer the tax credits authorized by this subsection, including documentation requirements, application procedures, and verification of eligible remediation costs.

       (6) The total amount of tax credits issued under this subsection may not exceed fifty million dollars in any fiscal year. Credits shall be allocated on a first-come, first-served basis based on the date a complete application is received by the Department of Revenue.

    (F)(1) The office shall establish reasonable buffer requirements for a particular proposed location, including those for environmentally sensitive areas, based upon site-specific factors, including but not limited to:

           (a) the nature and sensitivity of adjacent environmental resources;

           (b) proposed mitigation measures;

           (c) existing development patterns in the general area surrounding the proposed data center; and

           (d) engineering and operational considerations.

       (2) The buffer requirements in the following environmentally sensitive areas are presumed to be reasonable:

           (a) one-half mile, or less depending on mitigation measures employed, from national wildlife refuges and heritage preserves;

           (b) one-quarter mile, or less depending on mitigation measures employed, from a critical habitat for endangered species; and

           (c) the distance imposed by state and federal permits for wetlands.

       (3) The required buffers may include, but are not limited to, setbacks, vegetative screening, and operational controls rather than requiring uniform distances.

 

    Section 49-35-60.  (A) The Public Service Commission shall have jurisdiction over:

       (1) all rates charged by utilities to data center operators;

       (2) agreements between utilities and data center operators regarding electrical service, infrastructure cost recovery;

       (3) the determination of appropriate cost allocation methodologies that protect existing ratepayers; and

       (4) approval of utility infrastructure investments undertaken to serve data centers.

    (B)(1) The commission shall encourage on- and off-site energy efficient practices from data centers to reduce system peaks, including but not limited to improvements to power usage effectiveness (PUE) metrics, on-and off-site generation, energy storage resources, weatherization, load flexibility, demand data center-funded demand response programs, and energy efficiency technologies.

       (2) Data centers achieving superior energy efficiency, a PUE below 1.3, may receive preferential treatment in rate agreement approval.

    (C) The commission shall approve rate agreements that ensure data center operators bear reasonable infrastructure costs to ensure that the directly attributable cost of providing electrical service to data centers is not borne by non-participating customers while providing flexibility in rate structures and cost recovery mechanisms. Acceptable rate structures include, but are not limited to:

       (1) traditional cost-of-service rates with separate accounting for data center infrastructure;

       (2) upfront infrastructure contributions with ongoing service rates reflecting operational costs;

       (3) hybrid approaches combining partial upfront contributions with rates including infrastructure cost recovery;

       (4) minimum contract obligations guaranteeing sufficient minimum revenue to utilities to cover fixed costs based on load requests made by data center operators;

       (5) graduated rate structures with lower initial rates increasing over time as infrastructure is amortized; or

       (6) other approaches proposed by utilities and data center operators that satisfy ratepayer protection objectives.

    (D)(1) The commission shall establish expedited approval procedures for rate agreements that:

           (a) demonstrate that no cross-subsidization will occur;

           (b) include adequate financial assurances; and

           (c) meet operational efficiency standards.

       (2) Rate agreements shall be approved within sixty days absent material concerns.

       (3) The commission may approve rate agreements subject to conditions working collaboratively with parties to address concerns.

    (E) The commission shall direct utilities to develop standard contracts for electric service to the extent not already available for data centers that:

       (1) provide predictable cost structures; and

       (2) reasonably and fairly allocate the costs of dedicated facilities to data center operators.

    (F)(1) Contracts for electric service must ensure data center operators bear the fair cost of utility service, including but not limited to:

           (a) infrastructure costs directly attributable to serving the data center;

           (b) appropriate allocation of fixed costs and capacity costs;

           (c) costs of maintaining reliability for existing customers; and

           (d) reasonable return on utility investments, if applicable.

       (2) Starting with the next rate case after the effective date of this act, the commission shall, after notice and hearing, evaluate whether existing cost allocation methodologies are sufficient to ensure:

           (a) economically sound and based on cost causation principles;

           (b) fairness to both data center operators and existing ratepayers;

           (c) transparency and predictability; and

           (d) consistency with accepted regulatory practice.

    (G)(1) Utilities and data center operators may structure infrastructure investments through:

           (a) utility construction with cost recovery through rates;

           (b) data center operator direct construction with utility ownership;

           (c) third-party infrastructure development with service agreements;

           (d) public-private partnerships; or

           (e) other arrangements approved by the commission.

       (2) The commission shall approve infrastructure approaches that protect ratepayers while providing operators with flexibility and cost efficiency.

    (H)(1) Data centers may utilize self-generation or private power purchase agreements with the utility that has site jurisdiction. The commission shall establish reasonable interconnection requirements and standby service charges that:

           (a) reflect actual costs of providing backup service;

           (b) avoid penalizing self-generation; and

           (c) ensure grid reliability and safety.

       (2) Interconnection review shall be expedited using established IEEE and industry standards.

    (I) In reviewing agreements between utilities and data center operators regarding electrical service and infrastructure investment, the commission shall require that the data center operators provide reasonable financial assurances regarding their ability to discharge their contractual obligations. Financial assurance amounts shall not exceed one hundred percent of unrecovered infrastructure costs for investment-grade operators, with reduced requirements for operators with strong credit profiles. Financial assurance may be reduced over time as infrastructure costs are recovered. Multiple data centers operated by the same entity may share consolidated financial assurance arrangements. The commission shall accept one or more, or a combination, of the following as financial assurance instruments:

       (1) corporate parent guarantees for investment grade entities;

       (2) letters of credit;

       (3) surety bonds;

       (4) escrow accounts; or

       (5) other financial instruments acceptable to the commission.

 

    Section 49-35-70.  (A) Tier 2 and Tier 3 data centers shall file with the office decommissioning plans. Tier 1 data centers are exempt from the requirements in this section. The decommissioning plans may be a general framework rather than a detailed plan, but they must include:

       (1) general procedures for facility removal;

       (2) estimated decommissioning costs; and

       (3) the timeline required to decommission the facility.

    (B) Tier 2 data centers and Tier 3 data centers, at the office's discretion based upon site specific factors, must also file with the office financial instruments providing decommissioning financial assurance. The amount of financial assurance required pursuant to this subsection shall be equal to the estimated decommissioning costs without multipliers. Decommissioning financial assurance may be phased in over the first five years of the data center's operation. Decommissioning financial assurance required pursuant to this subsection shall account for the salvage value of the equipment and materials utilized by the data center. The office shall accept one or more, or a combination, of the following as financial assurance instruments:

       (1) corporate guarantees for investment grade entities;

       (2) letters of credit;

       (3) surety bonds; or

       (4) escrow accounts.

    (C)(1) Upon the cessation of operations, data center operators shall:

           (a) remove above-ground structures and equipment if the site is not repurposed for similar use;

           (b) restore the site to a condition suitable for future development;

           (c) properly dispose of or recycle materials as required by environmental regulations; and

           (d) clean-up environmental contamination resulting from operations.

       (2) Below-ground infrastructure, including but not limited to, foundations and utility lines may remain if they are not creating safety hazards or environmental concerns.

       (3) If a data center site is sold for continued data center or similar industrial use, decommissioning obligations shall be transferred to the new operator or owner upon the office's approval.

 

    Section 49-35-80.  (A)(1) Local governments retain full authority over zoning, land use, building codes, and other related matters within the jurisdiction of local governments. Therefore, data centers must comply with local zoning and land use regulations. Local governments shall not have any jurisdiction over electricity consumption, which shall remain the sole responsibility of the Public Service Commission.

       (2) Local governments may impose additional, reasonable requirements addressing local concerns through the proper exercise of land use authority. However, local governments cannot impose requirements that are more restrictive than those imposed by this chapter relating to:

           (a) operational efficiency standards; or

           (b) state-level infrastructure adequacy determinations.

       (3) The office shall coordinate with local governments but office permitting decisions shall not be delayed due to local government zoning or land use processes.

    (B) Local governments shall undertake comprehensive data center planning and establish clear data center development policies.

    (C) The provisions contained in this chapter do not preempt local government land use authority.

 

    Section 49-35-90.  (A) Data centers shall implement reasonable measures to minimize noise, vibration, and light impacts on surrounding communities.

    (B)(1) Data centers shall comply with the following noise level limits measured at the property boundary with residential property:

           (a) a maximum of 60 dBA Leq between the hours of 7:00 am to 10:00 pm;

           (b) a maximum of 50 dBA Leq between the hours of 10:00 pm to 7:00 am.

       (2) Noise limits contained in item (1) may be adjusted on a case-by-case basis based upon:

           (a) existing ambient noise levels exceeding standards;

           (b) industrial zoning allowing higher noise levels;

           (c) the distance from residential areas; or

           (d) agreement with affected property owners.

       (3) Noise monitoring shall be conducted:

           (a) prior to the data center commencing operations to set a baseline;

           (b) within six months of commencing operations; and

           (c) every three years thereafter.

       (4) Data centers shall install noise reduction measures as needed. Appropriate noise reduction measures include, but are not limited to:

           (a) acoustic barriers or enclosures for the loudest equipment;

           (b) selection of lower-noise equipment where feasible and cost-effective;

           (c) strategic building orientation considering nearest residential areas;

           (d) vegetative buffers where practical; and

       (e) regular equipment maintenance.

    (C)(1) Data centers shall minimize light pollution while maintaining necessary security lighting through:

           (a) limitation of outdoor lighting intensity to reasonable levels;

           (b) the use of shielded, downward-directed light fixtures;

           (c) the use of motion sensors and timers where consistent with security requirements;

           (d) interior window treatments to minimize light transmission during the night; and

           (e) the use of warmer color temperature lighting where practical.

       (2) Light standards shall not require lighting levels that compromise facility security. Security lighting necessary for facility protection is exempt from the restrictions in item (1).

    (D) Data centers shall minimize vibration impacts on surrounding properties through:

       (1) installation of vibration isolation systems for mechanical equipment, cooling systems, and backup generators;

       (2) proper foundation design to prevent transmission of vibration beyond the property boundary;

       (3) selection of equipment with lower vibration profiles where feasible and cost-effective;

       (4) regular equipment maintenance to prevent excessive vibration from worn or imbalanced components; and

       (5) structural engineering review to ensure adequate isolation from adjacent properties and infrastructure.

    (E) Data center operators and neighboring property owners and local communities may enter into voluntary agreements addressing site-specific concerns. Light restrictions in voluntary agreements that are different than the restrictions imposed by this subsection shall govern the use of lighting at the facility subject to the agreement.

 

    Section 49-35-100. (A) The office may require confidential information for review purposes but shall not publicly disclose confidential information except as required by law. Confidential information shall be clearly marked and filed under seal. The office shall protect confidential information submitted by data center operators, and that information shall not be subject to Chapter 4, Title 30, the Freedom of Information Act. Confidential information that must be protected pursuant to this section includes, but is not limited to:

       (1) detailed facility designs and specifications;

       (2) customer information;

       (3) security plans and protocols;

       (4) proprietary technology specifications;

       (5) detailed operational data; and

       (6) financial information qualifying for protection as trade secrets.

    (B) The following information shall be available to the public and subject to Chapter 4, Title 30, the Freedom of Information Act:

       (1) confirmation of compliance with operational efficiency standards;

       (2) confirmation of compliance with environmental permits;

       (3) aggregate annual energy consumption and water usage data reported by each data center; and

       (4) a summary of enforcement actions without proprietary operational details.

 

    Section 49-35-110. The provisions contained in this chapter are intended to supplement, not supersede, other environmental laws. However, compliance with the provisions contained in this chapter satisfies any state-level environmental review specifically addressing data center operations. Data centers remain subject to:

    (1) federal environmental requirements;

    (2) air quality permitting;

    (3) stormwater management requirements;

    (4) wetlands protection requirements; and

    (5) other applicable environmental laws and regulations.

 

    Section 49-35-120. (A) The office shall be primarily responsible for enforcing the provisions contained in this chapter. If another state agency is involved with a particular aspect of this chapter that falls outside the office's jurisdiction, then the office and that agency shall collaborate on enforcement. The office shall not have any jurisdiction over electricity consumption, which shall remain the sole responsibility of the Public Service Commission.

    (B) Enforcement actions shall be proportionate to the severity of the violation and shall consider a violator's good faith compliance efforts. When a violation occurs, violators shall receive written notices of noncompliance stating the nature of the violation with all relevant information related to the violation. The notice of noncompliance shall also require that the violator submit a corrective action plan. The violator shall have the opportunity to cure the violation within a reasonable cure period before penalties are imposed unless the violation is the result of willful misconduct on the part of the operator.

    (C) In carrying out its enforcement authority under this section, the office may:

       (1) issue notices of non-compliance with reasonable cure periods;

       (2) require corrective action plans with reasonable implementation timelines;

       (3) conduct inspections and audits with reasonable advance notice unless the inspection or audit is undertaken or performed for cause;

       (4) suspend or revoke a permit after an opportunity for a hearing on the matter if the office finds that the violation is serious enough; and

       (5) impose civil penalties.

    (D) First-time violations of non-material requirements of this chapter shall result in a written warning to the violator and not a civil penalty, loss or suspension of permit, or other penalties.

    (E) When assessing the appropriate civil penalty for a violation of this chapter, the office shall take into consideration:

       (1) the severity and duration of the violation;

       (2) whether the violator undertook good faith efforts to comply despite the violation;

       (3) the economic impact of the violation;

       (4) the violator's history of compliance with the provisions of this chapter;

       (5) whether and to what extent the violator cooperates with enforcement of the provisions of this chapter; and

       (6) corrective actions taken by the violator.

    (F)(1) Civil penalties imposed pursuant to this section shall not exceed:

           (a) ten thousand dollars per day for Tier 1 data centers;

           (b) twenty-five thousand dollars per day for Tier 2 data centers; and

           (c) fifty thousand dollars per day for Tier 3 data centers.

       (2) Penalties may be waived by the office if violations are cured within applicable cure periods.

    (G) Operators may appeal penalties imposed by this section through established administrative appeals processes with stays of penalties pending appeal for non-willful violations when the operator posts reasonable security.

 

SECTION 4.  The provisions of this act are prospective and apply to data centers for which applications are submitted after the effective date. However, data centers existing as of the effective date of this act are subject to the act's provisions if they increase electrical load capacity by more than fifty percent over the load capacity utilized as of the effective date of this act or increase the data center's floor area by more than fifty percent.

 

SECTION 5.  The Department of Environmental Services shall promulgate regulations necessary to implement the provisions of this act within one hundred eighty days of the effective date of this act. Regulations shall be promulgated after industry consultation through the advisory committee process.

 

SECTION 6.  For two years after the effective date of this act, the Department of Environmental Services shall prioritize technical assistance and guidance over enforcement to facilitate industry transition to the new requirements.

 

SECTION 7.  If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, such holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.

 

SECTION 8.  This act takes effect upon approval by the Governor.

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