A bill

 

TO AMEND THE SOUTH CAROLINA CODE OF LAWS SO AS TO ENACT THE "DATA CENTER SITING ACT"; BY ADDING SECTION 58-44-10 SO AS TO DEFINE TERMS PERTAINING TO DATA CENTER SITING; BY ADDING SECTION 58-44-20 SO AS TO REQUIRE A CERTIFICATE ISSUED BY THE PUBLIC SERVICE COMMISSION BEFORE A DATA CENTER MAY BEGIN OPERATIONS IN SOUTH CAROLINA AND TO PROVIDE FOR THE APPLICATION PROCESS; BY ADDING SECTION 58-44-30 SO AS TO PROVIDE FOR THE CERTIFICATION PROCEEDING PROCESS; BY ADDING SECTION 58-44-40 SO AS TO PROVIDE FOR THE PARTIES TO A CERTIFICATION PROCEEDING; BY ADDING SECTION 58-44-50 SO AS TO PROVIDE FOR THE EVALUATIVE CRITERIA FOR CONSIDERATION OF AN APPLICATION; BY ADDING SECTION 58-44-60 SO AS TO PROVIDE FOR THE CREATION OF A RECORD OF ANY HEARING AND TESTIMONY TAKEN CERTIFICATION PROCEEDING; BY ADDING SECTION 58-44-70 SO AS TO PROVIDE FOR THE REQUIREMENTS FOR GRANTING OR DENYING AN APPLICATION; BY ADDING SECTION 58-44-80 SO AS TO PROVIDE FOR THE ISSUANCE OF AN ORDER BY THE COMMISSION; BY ADDING SECTION 58-44-90 SO AS TO PROVIDE FOR OPERATIONAL EFFICIENCY STANDARDS; BY ADDING SECTION 58-44-100 SO AS TO PROVIDE FOR WATER EFFICIENCY STANDARDS; BY ADDING SECTION 58-44-110 SO AS TO PROVIDE FOR ANNUAL REPORTING ON COMPLIANCE WITH WATER EFFICIENCY STANDARDS AND OPERATIONAL EFFICIENCY STANDARDS; BY ADDING SECTION 58-44-120 SO AS TO PROVIDE FOR INFRASTRUCTURE ADEQUACY ASSESSMENTS, TO PROVIDE FOR ENVIRONMENTAL IMPACT ASSESSMENTS, AND TO PROVIDE FOR REASONABLE BUFFER REQUIREMENTS; BY ADDING SECTION 58-44-130 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 58-44-140 SO AS TO PROVIDE FOR DECOMMISSIONING PLANS AND FINANCIAL ASSURANCES ASSOCIATED WITH DECOMMISSIONING; BY ADDING SECTION 58-44-150 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 58-44-160 SO AS TO REQUIRE DATA CENTERS TO IMPLEMENT REASONABLE MEASURES TO MINIMIZE NOISE, VIBRATION, AND LIGHT IMPACTS RESULTING FROM THEIR OPERATION; BY ADDING SECTION 58-44-170 SO AS TO PROVIDE PROTECTIONS FOR CONFIDENTIAL INFORMATION SHARED BY DATA CENTER OPERATORS; BY ADDING SECTION 58-44-180 SO AS TO CLARIFY THE INTERACTION BETWEEN THIS CHAPTER AND OTHER ENVIRONMENTAL LAWS; BY ADDING SECTION 58-44-190 SO AS TO PROVIDE FOR ENFORCEMENT AND PENALTIES; TO PROVIDE FOR REGULATIONS FROM THE PUBLIC SERVICE COMMISSION, THE OFFICE OF REGULATORY STAFF, AND THE DEPARTMENT OF ENVIRONMENTAL SERVICES; 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; AUTHORIZE THE PUBLIC SERVICE COMMISSION TO CREATE A GENERIC DOCKET BY THE PUBLIC SERVICE COMMISSION TO IMPLEMENT THIS ACT AND DEVELOP REGULATIONS; AND PROVIDE FOR ANNUAL REPORTING BY THE PUBLIC SERVICE COMMISSION.

 

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

 

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

 

SECTION 2.  Title 58 of the S.C. Code is amended by adding:

 

CHAPTER 44

 

Data Center Siting Act

 

    Section 58-44-10.  For purposes of this chapter:

    (1) "Commission" means the Public Service Commission.

    (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) "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.

    (7) "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.

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

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

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

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

 

    Section 58-44-20.  (A) A data center may not begin operations within this State unless the data center first receives a certificate issued by the Public Service Commission certifying that the provisions of this chapter have been met. This obligation to receive a certificate from the commission 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 commission for a certificate to operate a data center in this State, a data center operator must provide the commission and all statutory parties listed in Section 58-44-40(A)(2) with a notice of its intention to open a location in this State. The notice of intention shall be filed at least 15 calendar days prior to filing an application for a certificate. The notice of intention shall contain a statement requesting a pre-application consultation intended to provide the operator with a clear understanding of the certification requirements. Upon receipt of the notice of intention with a request for a pre-application consultation, the statutory parties listed in Section 58-44-40(A)(2) shall schedule a pre-application consultation with the proposed data center operator.

    (C) An applicant for a certificate shall file an application with the commission, in such form as the commission may prescribe. The application must contain the following information:

       (1) a description of the location and of the data center to be built;

       (2) a summary of any studies which have been made by or for the applicant of the environmental impact of the data center;

       (3) a summary of the applicant's plan for compliance with applicable operational efficiency standards in Section 58-44-90;

       (4) a summary of the applicant's plan for compliance with applicable water efficiency standards in Section 58-44-100;

       (5) a summary of the applicant's plan for compliance with applicable site location and infrastructure adequacy requirements in Section 58-44-120;

       (6) a summary of the applicant's plan for compliance with applicable electric service requirements in Section 58-44-130;

       (7) a summary of the applicant's plan for compliance with applicable decommissioning plan requirements outlined in Section 58-44-140;

       (8) a summary of the applicant's plan for compliance with applicable noise, vibration, and light restrictions outlined in Section 58-44-160; and

       (9) any other information the applicant may consider relevant or as the commission may by regulation require.

    (D) Each application shall be accompanied by proof of service of a copy of the application on the statutory parties listed in Section 58-44-40(A)(2), the chief executive officer of each municipality, and the head of each state and local government agency, charged with the duty of protecting the environment or of planning land use, in the area in the county in which any portion of the facility is to be located. The copy of the application shall be accompanied by a notice specifying the date on or about which the application is to be filed.

    (E) Each application also must be accompanied by proof that public notice was given to persons residing in the municipalities entitled to receive notice under subsection (D) of this section, by the publication of a summary of the application, and the date on or about which it is to be filed, in newspapers of general circulation as will serve substantially to inform such persons of the application.

    (F) Inadvertent failure of service on, or notice to, any of the municipalities, government agencies, or persons identified in subsections (D) and (E) of this section may be cured pursuant to orders of the commission designed to afford them adequate notice to enable their effective participation in the proceeding. In addition, the commission may, after filing, require the applicant to serve notice of the application or copies thereof, or both, upon such other persons, and file proof thereof, as the commission may deem appropriate.

    (G) An application for an amendment of a certificate shall be in such form and contain such information as the commission shall prescribe. Notice of the application shall be given as set forth in subsections (D) and (E) of this section.

 

    Section 58-44-30.  (A) Upon the receipt of an application complying with Section 58-44-20, the commission shall promptly fix a date for the commencement of a public hearing, not less than sixty nor more than ninety days after the receipt, and complete the hearing and issue an order on the merits within one hundred eighty days of receipt of the application.

    (2) The testimony presented at the hearing may be presented in writing or orally, provided that the commission may make rules designed to exclude repetitive, redundant or irrelevant testimony; however, all expert testimony must be prefiled with the commission, with responsive expert testimony of non-applicants being received with enough time for the applicant to meaningfully respond, and in no case would expert testimony be filed less than twenty days before the hearing.

    (3) On an application for an amendment of a certificate, the commission shall hold a hearing in the same manner as a hearing is held on an application for a certificate if the proposed change in the facility would result in any significant increase in any environmental impact of the facility or a substantial change in the location of all or a portion of the facility; provided, that the Public Service Commission shall forward a copy of the application to all parties upon the filing of an application.

 

    Section 58-44-40.  (A) The parties to a certification proceeding shall include:

       (1) the applicant;

       (2) the Office of Regulatory Staff, the Department of Environmental Services, the Department of Natural Resources, and the Department of Parks, Recreation and Tourism;

       (3) each municipality and government agency entitled to receive service of a copy of the application under subsection (D) of Section 58-44-20 if it has filed with the commission a notice of intervention as a party within thirty days after the date it was served with a copy of the application; and

       (4) any person residing in a municipality entitled to receive service of a copy of the application under subsection (D) of Section 58-44-20, any domestic nonprofit organization, formed in whole or in part to promote conservation or natural beauty, to protect the environment, personal health, or other biological values, to preserve historical sites, to promote consumer interest, to represent commercial and industrial groups, or to promote the orderly development of the area in which the facility is to be located; or any other person, if such a person or organization has petitioned the commission for leave to intervene as a party, within thirty days after the date given in the published notice as the date for filing the application, and if the petition has been granted by the commission for good cause shown.

    (B) Any person may make a limited appearance in the sixty days after the date given in the published notice as the date for filing the application. No person making a limited appearance shall be a party or shall have the right to present oral testimony or argument or cross-examine witnesses.

    (C) The commission may, in extraordinary circumstances for good cause shown, and giving consideration to the need for timely start of construction of the facility, grant a petition for leave to intervene as a party to participate in subsequent phases of the proceeding, filed by a municipality, government agency, person, or organization which is identified in paragraphs (2) or (3) of subsection (A) of this section, but which failed to file a timely notice of intervention or petition for leave to intervene, as the case may be.

 

    Section 58-44-50.  (A)(1) When evaluating an application, the commission shall consider the tier in which the data center falls, energy demands, 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 hearing being held within forty-five days of the data center's completed application being received by the commission, and a decision made within seventy-five days of the data center's completed application being received by the commission. 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 hearing being held within seventy-five days of the data center's completed application being received by the commission, and a decision made within one hundred-five days of the data center's completed application being received by the commission. When assessing a Tier 2 data center application the commission 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 commission 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 commission 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 hearing being held within one hundred-twenty days of the data center's completed application being received by the commission and a decision made within one hundred-fifty days of the data center's completed application being received by the commission. 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 certificate decision by the commission must be rendered may be extended by mutual agreement between the parties of record and the applicant or in extraordinary circumstances. Certificates 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 58-44-60.  A record shall be made of any hearing and of all testimony taken and the cross-examination thereon. The commission may provide for the consolidation of the representation of parties having similar interests.

 

    Section 58-44-70.  (A)(1) The commission shall render a decision upon the record either granting or denying the application as filed, or granting it upon such terms, conditions or modifications of the construction, operation or maintenance of the data center as the commission may deem appropriate; such conditions shall be as determined by the applicable State agency having jurisdiction or authority under statutes, rules, regulations or standards promulgated thereunder, and the conditions shall become a part of the certificate. The commission may only grant a certificate, either as proposed or as modified by the commission, if it finds and determines that the applicant has shown:

       (a) The nature of the probable environmental impact.

       (b) That the impact of the facility upon the environment is justified, considering the state of available technology and the nature and economics of the various alternatives and other pertinent considerations.

       (c) That the impact of data center upon the electric grid and existing utility ratepayers is justified, including, but not limited to, the costs of maintaining system reliability and the allocation of fixed costs and capacity costs.

       (d) That there is reasonable assurance that the proposed data center will conform to applicable state and local laws and regulations issued thereunder, including any allowable variance provisions therein, except that the commission may refuse to apply any local law or local regulation if it finds that, as applied to the proposed data center, such law or regulation is unreasonably restrictive in view of the existing technology, or of factors of cost or economics.

    (2) If the commission determines that the location of all or a part of the proposed facility should be modified, it may condition its certificate upon such modification, provided that the municipalities and persons residing therein affected by the modification shall have been given reasonable notice.

    (3) A copy of the decision and any order shall be served by the commission upon each party.

 

    Section 58-44-80.  In rendering a decision on an application for a certificate, the commission shall issue an order stating its reasons for the action taken. If the commission has found that any regional or local law or regulation, which would be otherwise applicable, is unreasonably restrictive pursuant to paragraph (D) of subsection (A)(1) of Section 58-44-70, it shall state in its order the reasons therefor.

 

    Section 58-44-90.  The Office of Regulatory Staff shall establish performance-based operational efficiency standards applicable to all data centers. 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.

 

    Section 58-44-100. (A)(1) The Department of Environmental Services 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 Department of Environmental Services 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 Department of Environmental Services may employ alternative compliance metrics if the department demonstrates that the alternative metrics measure water use efficiency as effectively as the WUE standard. The Department of Environmental Services shall report any compliance issues to the commission and the Office of Regulatory Staff.

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

 

    Section 58-44-110. (A)(1) Data centers shall submit an annual report to the commission, the Department of Environmental Services, and the Office of Regulatory Staff concerning:

           (a) total water consumption;

           (b) WUE metrics; and

           (c) any significant operational changes affecting resource use.

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

       (3) The commission, the Department of Environmental Services, and the Office of Regulatory Staff 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 58-44-120. (A) Data centers may only be developed and operated in locations within this State that are equipped with adequate infrastructure to support efficient operations.

    (B) Applicants shall conduct an infrastructure adequacy assessment of proposed locations prior to filing an application. The Office of Regulatory Staff and the Department of Environmental Services shall consult with the applicant on solutions to any deficiencies identified in the applicant's infrastructure adequacy assessment. 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 of Regulatory Staff 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. The commission 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 borne by the operator.

       (3) The Office and Regulatory Staff and Department of Environmental Services may collaborate to identify alternative suitable locations for development of the applicant's proposed data center in the event of that material deficiencies identified in the applicant's infrastructure adequacy assessment are unable to be cured within a reasonable time.

    (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; electric service requirements; 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 of Regulatory Staff shall provide clear guidance to proposed data center operators on the scope of the assessment during the pre-application consultation.

    (E)(1) The Department of Environmental Services 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 58-44-130. (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. 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 58-44-140. (A) Tier 2 and Tier 3 data centers shall file with the commission 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 commission's discretion based upon site specific factors, must also file with the commission 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 commission 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 commission's approval.

 

    Section 58-44-150. (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 commission shall coordinate with local governments but commission certification 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 58-44-160. (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 58-44-170. (A) The commission 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 commission 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 58-44-180. 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 58-44-190. (A) The commission 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 jurisdiction of the commission, then that agency shall be the primary enforcement agency and shall provide notice of all violations to the commission. The commission shall take such steps as are necessary to ensure timely compliance with the provisions of this chapter.

    (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 commission 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 certificate after an opportunity for a hearing on the matter if the commission 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 certificate, or other penalties.

    (E) When assessing the appropriate civil penalty for a violation of this chapter, the commission 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 commission 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 3.  The Public Service Commission, Office of Regulatory Staff, and 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.

 

SECTION 4.  For two years after the effective date of this act, the Office of Regulatory Staff and Department of Environmental Services shall prioritize technical assistance and guidance over enforcement to facilitate industry transition to the new requirements.

 

SECTION 5.  The commission is authorized to open a generic docket for the purposes of implementation of this Chapter and the development of applicable regulations.

 

SECTION 6.  (A) Two years after the effective date of this act, the Public Service Commission must prepare a report, to be filed on an annual basis with the State Regulation of Public Utilities Review Committee and the General Assembly, to address the implementation of this chapter.

    (B) The Public Service Commission may engage a qualified, independent third party to assist in the preparation of the report.

 

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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