Editor’s note: This is a developing story. The Rapid City Sentinel will update this report as the Sequitor Edge land transaction closes, city building permits are filed, and additional records become available. Corrections or new information can be sent to the Sentinel directly.
Rapid City is about to get its first data center.
The facility isn’t built yet. The land hasn’t closed. It hasn’t cleared city permits. But in February, Sequitor Edge — a Nebraska-based company founded in 2024 — announced plans to construct a 30,000-square-foot computing facility on a 10-acre site in the Black Hills Industrial Center, south of Old Folsom Road near Highway 79. The announcement was made at Elevate Rapid City.
As of this week, the parties are still operating under a Letter of Intent and completing final due diligence, with the land transaction expected to close later this spring. Groundbreaking is anticipated for late summer, pending that closing. If construction stays on schedule, the doors open in 2027.
The timing is notable, because one month after that announcement, Congress published a report explaining exactly what communities should understand when a data center comes to town. And six weeks after that, Governor Rhoden signed two bills into law that address almost every concern the federal report raised. South Dakota moved faster on this than most of the country.
But there’s a gap — and Rapid City is sitting right in it.
What Pierre Did, and Why it Mattered
Data center legislation dominated the 2026 session in ways that surprised even some veteran Capitol watchers. By the time the session ended, lawmakers had fielded a 50-year sales tax exemption for data center equipment — which failed — a one-year construction moratorium — which also failed — and two competing visions of whether South Dakota should be courting this industry or protecting its residents from it.
What emerged was Senate Bill 135, which its prime sponsors called the “Data Center Bill of Rights for Citizens.” Governor Rhoden signed it, along with House Bill 1038, on March 24.
The new law requires data centers to:
- Pay for any electrical infrastructure costs their operations create — not spread those costs across the existing ratepayer base.
2. It requires that water use not overburden local resources.
3. And it explicitly prohibits the state from overriding local ordinances that limit or regulate data centers. A companion bill allows the Public Utilities Commission to assess regulatory review costs directly to data center companies.
None of that happened by accident. Residents in Sioux Falls, Toronto, and Sully County had shown up to crowded public meetings raising exactly those concerns. The legislature listened.
A Federal Report That Validated the Worry
In the middle of that legislative fight, the Congressional Research Service — the nonpartisan research arm of Congress — published a detailed FAQ on data centers and their energy consumption. It is, in plain terms, the federal government’s attempt to explain what the rest of the country is dealing with.
The numbers are not small. U.S. data centers consumed approximately 176 terawatt-hours of electricity in 2023 — about 4.4 percent of total national consumption. Some projections have that figure doubling or tripling by 2028, driven largely by artificial intelligence applications. According to the report, artificial intelligence alone accounted for 10 to 20 percent of data center energy use in 2023, and that share is growing.
On Water: the report cites International Energy Agency estimates that a 100-megawatt data center may consume roughly 530,000 gallons of water per day through its cooling systems. EPA figures put total U.S. data center water consumption at 17.4 billion gallons in 2023, projected to reach between 38 and 73 billion gallons by 2028. For context, a city in Oregon reported that Google’s data centers were responsible for nearly 30 percent of the entire city’s water consumption — a figure that had tripled over five years.
On ratepayer costs: the report confirms what Rapid City residents have been asking about. If a utility builds new infrastructure to accommodate data center demand, those costs can be passed to existing customers through rate increases. That is exactly what the new South Dakota law is designed to prevent.
On federal regulation: there are no legally binding energy or water standards that apply to private-sector data centers anywhere in the country. None. The ENERGY STAR certification program is voluntary, and here is the part that rarely makes the news release — ENERGY STAR’s calculation method excludes the energy used by the actual IT equipment. It only rates the building shell. The servers, the processors, the storage drives — not counted.
South Dakota’s new law addresses what the federal government hasn’t gotten around to yet.
What Rapid City is Actually Getting
Sequitor Edge is not Google. It is not a hyperscale facility. That distinction matters and deserves honest treatment.
A megawatt is a unit of electrical power equal to one million watts — enough to continuously power roughly 800 homes. The Sequitor Edge facility will start at 2 megawatts, the equivalent of a small neighborhood’s power load. At full build-out across five data halls, it could reach 10 megawatts — roughly the continuous power demand of a small town. Black Hills Energy representatives at the announcement compared Phase 1’s energy draw to a grocery store or a big-box retailer. That comparison is reasonable.
On water, the company’s numbers are also genuinely different from what the federal report describes for large facilities. Sequitor Edge says its closed-loop cooling system requires a one-time fill of approximately 19,000 to 20,000 gallons — about the same as filling a residential swimming pool — with no ongoing daily consumption unless additional data halls are built. The 530,000-gallons-per-day figure in the federal report applies to facilities using evaporative cooling towers, which is a fundamentally different technology. The closed-loop claim, at this scale, is not misleading.
The facility will create three full-time positions averaging $100,000 annually. That is what it is.
The Gap We Need to Know
Here is where Rapid City residents should pay attention.
South Dakota’s new law — the one that requires data centers to cover infrastructure costs and protect local water supplies — applies to facilities with a peak electrical demand of 10 megawatts or greater. Sequitor Edge’s Phase 1 starts at 2 megawatts. Phase 1 falls below the threshold entirely. Even at full expansion to 10 megawatts, the facility is right at the line where the law’s protections begin.
That is not an accusation of bad faith by anyone. Sequitor Edge’s stated plans are modest compared to what is being built elsewhere. But the question is worth asking before the permits are signed: if Phase 1 is below the threshold, and Phase 2 expands the facility, at what point do the ratepayer protections in SB 135 actually apply? The law was designed to protect Rapid City residents. Whether it does depends on a number neither the city nor the state has formally addressed in the context of this specific project.
The city permitting process is the moment to ask it.
The Sovereign Land Question
There is a thread in this story that the legislature did not pick up. In December, a tribal council passed a resolution at its 5th annual conference — held here in Rapid City — opposing the construction and operation of data centers in treaty territory. In April, the Standing Rock Sioux Tribe hosted a public hearing where the Indigenous-led nonprofit Honor the Earth argued for a moratorium on data centers in tribal lands, stating that the new state law was passed without consultation of any tribal government.
Treaty territory water rights and state utility regulation do not operate on the same legal framework. That tension does not disappear because a facility is small or locally focused. It is an open question the new law does not answer, and it was raised here, in this city, months before the permits were filed.
While South Dakota protected Ratepayers, Washington Did the Opposite
On the same day this article was being reported, the federal government moved in the other direction. The U.S. Environmental Protection Agency proposed rolling back wastewater discharge limits for coal-fired power plants — explicitly because of data center demand. EPA Administrator Lee Zeldin stated that “the AI and data center revolution is creating an electricity and baseload power demand that cannot be met under the overly restrictive policies of past administrations.”
To be direct about what that means: Washington is loosening environmental standards on coal plants to generate more power for data centers, while South Dakota is requiring data centers to pay their own infrastructure costs and protect local water supplies. Those two things are moving in opposite directions on the same week. One of them protects Rapid City residents. The other one doesn’t.
What Rapid City Should Be Asking
Rapid City is not a cautionary tale waiting to happen. The scale of what is proposed here is genuinely different from the facilities that have overwhelmed water systems and utility grids in other parts of the country. The state legislature took the issue seriously before the problem arrived. That is not nothing.
But the questions a small facility raises are the same ones a large facility raises — they are just easier to ask before the concrete is poured.
1.What are the thresholds at which the new law’s protections kick in for this specific project?
2. What is Black Hills Energy’s formal capacity assessment for the Black Hills Industrial Center corridor?
3. What does the city’s permitting process require Sequitor Edge to disclose about expansion plans?
A federal report just told us what the rest of the country learned the hard way. We have the advantage of asking the questions first.
The Rapid City Sentinel will follow this story as the land transaction closes, building permits are filed with the city, and Black Hills Energy’s capacity planning for the Black Hills Industrial Center corridor becomes clearer. If you have information relevant to this story, contact the Sentinel directly.
Sources: Congressional Research Service Report R48646, “Data Centers and Their Energy Consumption: Frequently Asked Questions” (May 2026); South Dakota Senate Bill 135 and House Bill 1038 (signed March 24, 2026); Elevate Rapid City press release, February 11, 2026; U.S. EPA proposed rule on steam electric power plant effluent limitations guidelines (May 14, 2026); Fortune, “America’s data centers are thirsty” (May 13, 2026); Rapid City Journal, NewsCenter1, KOTA Radio, South Dakota Searchlight, and KELO reporting on Sequitor Edge announcement and state legislative session; Buffalo Today/National Today reporting on tribal responses.
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