House File 2001 - Introduced HOUSE FILE 2001 BY GEARHART A BILL FOR An Act relating to water efficiency of data centers, including 1 requirements for water-efficient cooling technologies and 2 encouragement for the use of nonpotable and recycled water 3 sources, providing civil penalties, and including effective 4 date and applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5151YH (3) 91 sb/js

H.F. 2001 Section 1. NEW SECTION . 455L.1 Purpose. 1 Water is Iowa’s most valuable natural resource. It is 2 the intent of the general assembly to protect Iowa’s water 3 by requiring data centers to adopt cooling technologies that 4 significantly reduce water consumption and by promoting the 5 use of nonpotable, recycled, and treated wastewater in cooling 6 systems. The general assembly encourages innovation in 7 water reuse and treatment to reduce strain on municipal water 8 supplies and safeguard Iowa’s rivers and streams. 9 Sec. 2. NEW SECTION . 455L.2 Definitions. 10 For purposes of this section: 11 1. “Cooling technology” means any system or process used to 12 regulate the temperature and humidity of data center equipment. 13 2. “Data center” means a facility used to house computer 14 systems and associated components that consume at least one 15 megawatt of electricity annually. 16 3. “Department” means the department of natural resources. 17 4. “Expansion or renovation” means any material upgrade to 18 an existing data center’s infrastructure that increases its 19 cooling capacity or floor space. 20 5. “New data center” means any facility applying for a 21 building permit for a data center on or after January 1, 2026. 22 6. “Nonpotable water” means water not suitable for human 23 consumption without treatment, including surface water, river 24 water, graywater, or treated wastewater. 25 7. “Treated wastewater” means effluent that has undergone 26 chemical, physical, or biological treatment and meets all 27 regulatory standards for noncontact industrial reuse. 28 8. “Water-efficient cooling technology” means any cooling 29 technology that achieves a water usage effectiveness rating of 30 two-tenths or lower. 31 9. “Water usage effectiveness rating” means a metric that 32 measures how efficiently water is used for cooling. The rating 33 is calculated by dividing annual water usage in liters by the 34 energy consumption of information technology equipment in 35 -1- LSB 5151YH (3) 91 sb/js 1/ 5

H.F. 2001 kilowatt hours. 1 Sec. 3. NEW SECTION . 455L.3 Cooling and water sourcing 2 requirements. 3 1. All new data centers, and any data center permitted but 4 not yet under construction as of January 1, 2026, must utilize 5 water-efficient cooling technology. 6 2. Any expansion or renovation of an existing data center 7 on or after January 1, 2026, must bring the entire facility 8 into compliance with a water usage effectiveness rating of 9 two-tenths liter per kilowatt hour. 10 3. To reduce potable water demand and protect the state’s 11 freshwater resources, data centers are encouraged to do the 12 following: 13 a. Utilize air-based or hybrid cooling systems. 14 b. Source water for cooling from nonpotable supplies, 15 including the following: 16 (1) Surface or river water. 17 (2) Storm water, graywater, or other recycled sources. 18 (3) Treated wastewater, especially where it would otherwise 19 be discharged directly to rivers or streams. 20 c. Install on-site or off-site water treatment systems that 21 bring such water described in paragraph “b” to the appropriate 22 quality for cooling system use. 23 4. Data centers utilizing treated wastewater shall 24 coordinate with local utilities to ensure that water is used 25 prior to discharge, and that all thermal and chemical discharge 26 complies with applicable environmental standards. 27 5. Facilities subject to this section must submit a cooling 28 and water sourcing plan to the department prior to construction 29 or expansion or renovation, and also annual compliance 30 reports for five years following commissioning or expansion or 31 renovation. 32 Sec. 4. NEW SECTION . 455L.4 Enforcement and penalties. 33 1. The department shall adopt rules establishing procedures 34 for monitoring, enforcement, and verification under this 35 -2- LSB 5151YH (3) 91 sb/js 2/ 5

H.F. 2001 chapter. 1 2. The department may conduct inspections and audits, order 2 the submission of water usage and sourcing documentation, and 3 review treatment and cooling system operations. 4 3. A data center found in violation of a rule or order 5 issued pursuant to this section or in violation of section 6 455L.3 is subject to the following: 7 a. A civil penalty of up to ten thousand dollars per day of 8 noncompliance. 9 b. A corrective action order with a compliance timeline. 10 c. Suspension or revocation of construction or operating 11 permits, if applicable. 12 Sec. 5. NEW SECTION . 455L.5 Exemptions. 13 1. Temporary exemptions of no greater than twelve months 14 may be granted by the department to new data centers or 15 data centers undergoing an expansion or renovation that 16 are required to meet the requirements of section 455L.3 for 17 demonstrated lack of feasible technology or water source access 18 or conditions that pose a risk to public health or safety. 19 2. Exemption requests must be supported by technical 20 documentation and include a proposed path to compliance. 21 Sec. 6. EFFECTIVE DATE. This Act, being deemed of immediate 22 importance, takes effect upon enactment. 23 Sec. 7. RETROACTIVE APPLICABILITY. This Act applies 24 retroactively to January 1, 2026, for all new data center 25 projects permitted on or after that date, any previously 26 permitted project that has not broken ground by that date, and 27 any data center expansion or renovation undertaken on or after 28 that date. 29 EXPLANATION 30 The inclusion of this explanation does not constitute agreement with 31 the explanation’s substance by the members of the general assembly. 32 This bill relates to the water efficiency of data centers, 33 including requirements to implement water-efficient cooling 34 technologies and encouragement for the use of nonpotable and 35 -3- LSB 5151YH (3) 91 sb/js 3/ 5

H.F. 2001 recycled water sources. 1 The bill defines “water usage effectiveness rating” as a 2 metric that measures how efficiently water is used for cooling. 3 The bill explains the rating is calculated by dividing annual 4 water usage in liters by the energy consumption of information 5 technology equipment in kilowatt hours. 6 The bill requires all new data centers not under 7 construction as of January 1, 2026, to utilize water-cooling 8 technologies to meet a water usage effectiveness rating of 0.2 9 liters per kilowatt hour or less. The bill also requires any 10 current data center undergoing expansion or renovation to bring 11 the entire data center into compliance with the 0.2 liters per 12 kilowatt hour requirement. 13 The bill encourages data centers to utilize air-based or 14 hybrid cooling systems, source water from nonpotable supplies, 15 and install water treatment systems that bring nonpotable water 16 to the appropriate quality for cooling system use. 17 The bill directs data centers using treated wastewater to 18 coordinate with utilities to ensure the water is used prior 19 to discharge and that all discharge is in compliance with 20 environmental standards. 21 The bill directs data centers subject to the requirements 22 of the bill to submit a cooling and water sourcing plan to the 23 department of natural resources (DNR) prior to construction, 24 expansion, or renovation and an annual compliance report for 25 five years following commissioning, expansion, or renovation. 26 The bill directs DNR to adopt rules establishing monitoring, 27 enforcement, and verification for provisions in the bill. 28 The bill allows DNR to conduct inspections and audits, order 29 the submission of water usage and sourcing documentation, and 30 review treatment and cooling center operations. 31 A data center found in violation of the bill is subject to 32 a civil penalty of up to $10,000 per day of noncompliance, 33 a corrective action order with a compliance timeline, or the 34 suspension or revocation of construction or operating permits. 35 -4- LSB 5151YH (3) 91 sb/js 4/ 5

H.F. 2001 The bill allows temporary exemptions of the bill’s 1 requirements to be granted to data centers for demonstrated 2 lack of feasible technology, water source access, or conditions 3 that pose a risk to public safety. The exemptions may be 4 granted for no longer than 12 months and must be supported by 5 technical documentation and a proposed path to compliance. 6 The bill takes effect upon enactment. The bill applies 7 retroactively to January 1, 2026, for all new data center 8 projects permitted on or after that date, any previously 9 permitted project that has not broken ground by that date, and 10 any data center expansion or renovation undertaken on or after 11 that date. 12 -5- LSB 5151YH (3) 91 sb/js 5/ 5