Idaho Enacts Limitations on the Consumptive Use of Water for Data Centers

Idaho's House Bill 895 is an act "relating to data centers." The House passed it by 58 votes to 10, with 2 absent. The Senate passed it by 32 votes to 1, with 2 absent and excused. The Legislature's bill page reports that the Governor signed it on April 2, 2026. It became Session Law Chapter 291, effective July 1, 2026.

The act has three sections.

The Rule

The second section adds a new section, 42-252, to the Idaho Code. It covers data centers that begin construction on or after July 1, 2026. Those data centers "may not use water for cooling purposes as a consumptive use." The exception is where the water is supplied by a municipal, water district, or water and sewer district water system.

The third section declares an emergency. With it, the act is in full force and effect on and after July 1, 2026.

For a new site that would cool with water it consumes, the exception points to a municipal or district water system. That puts the local water system into the plan from the start.

The Legislature's Findings

The first section sets out the Legislature's findings and intent. It finds that data centers "require significant amounts of water." Then, for the purposes of sections 42-202A and 42-222 of the Idaho Code, it makes three findings about the water data centers require.

It conflicts with the local public interest, as the Idaho Code defines it. It is contrary to the conservation of water resources within the state. And where the water is used outside the watershed or local area it comes from, it will adversely affect the local economy of that watershed or area.

The Legislature further finds that the director of the Department of Water Resources is required to make findings on these criteria when evaluating a new appropriation, or a transfer of existing water rights, for data centers. The Legislature's intent is for the director to consider its findings on a data center's consumptive use and its impacts on Idaho's water supply.

Which Data Centers

The act does not define a data center itself. It points to section 63-3622VV of the Idaho Code, a section on a sales tax exemption, added in 2020.

That section defines a data center as a facility of one or more buildings in Idaho, used to house eligible server equipment for the transmission and storage of data. The facility must have uninterruptible power supplies, generator power or both. It must have sophisticated fire suppression and prevention systems. And it must have enhanced physical security and restricted access.

The same section defines eligible server equipment in turn. It is new server equipment acquired by a qualifying business entity. It must be maintained and operated in a data center in Idaho for the sole purpose of data transmission and storage, data and transaction processing, information technology or computer collocation services. A qualifying business entity certifies to the state tax commission that it will make capital investments in data centers of at least a set amount, and create and maintain at least a set number of new jobs, within set periods.

The water rule borrows its meaning of a data center from a tax break. Whether a site that never sought the tax break falls under it is a question the act leaves to those who apply it.