Nevada Governor signs executive order setting new rules for state data center development

Nevada Governor signs executive order setting new rules for state data center development

LAS VEGAS (KSNV) — Nevada Gov. Joe Lombardo has signed an executive order establishing new requirements for data centers seeking state tax incentives, with provisions aimed at protecting school funding, water supplies and utility customers.

Executive Order 2026-005 establishes what the governor calls the “Nevada Standard for Responsible Data Center Development.” Under the order, data center developers seeking a partial tax abatement through the Governor’s Office of Economic Development, or GOED, must pay the Local School Support Tax in full and enter into a binding Nevada Community Support Commitment before their application can go before the Board of Economic Development.

The move comes amid growing debate in Nevada over the rapid expansion of data centers and their potential impact on the state's water and power resources.

Changes to data center tax incentives

Nevada's data center tax abatement program dates back to 2015. Under that legislation, qualifying data centers that met employment, wage, and investment requirements were eligible for tax abatements.

The governor's office says the original law did not include protections specifically addressing energy and water use and gave GOED no flexibility to deny abatements when applicants met the statutory requirements.

The Legislature expanded the GOED Board's authority in 2025, allowing it to deny applications, approve smaller abatements, or attach conditions.

Lombardo's order now requires applications seeking the partial abatement to provide for a combined sales and use tax rate of at least 4.6%, including the Local School Support Tax, with neither of those taxes abated.

“We have a responsibility to make sure our schools have the resources they need to educate Nevada’s children,” Lombardo said. “This executive order puts money back into our schools that otherwise would have been lost under outdated state law.”

Water and power requirements

The order also directs GOED to establish a standard Nevada Community Support Commitment that data center developers must sign to qualify for an abatement.

At a minimum, projects would have to meet water standards for the location where they are built and bear the costs associated with providing electricity to the facility so those expenses are not shifted to other utility customers.

The agreement must also address grid reliability. During a declared grid emergency, a data center could be required to reduce its electricity use under applicable utility tariffs or other programs approved by the Public Utilities Commission of Nevada. The order says operation of the facility during such an emergency cannot come at the expense of firm electric service to homes and existing businesses.

The Community Support Commitment will also cover issues including siting, neighboring communities, workforce, community benefits and transparency. GOED's executive director is directed to publish the standard terms by Nov. 6, 2026, after consulting with the State Engineer, PUCN, local governments, school districts and other agencies.

A material failure to comply with the agreement could suspend an abatement and result in some tax benefits being recaptured, to the extent allowed under state law. A material violation of a grid-reliability obligation during a declared grid emergency would be considered a default without a cure period.

Nevada to develop long-term power plan

The executive order also directs the Nevada Office of Energy to develop a “Responsible Speed to Power Plan” by Dec. 31.

That plan is expected to identify the power infrastructure needed to serve anticipated large electricity loads through 2036, examine where Nevada's current approval and development process could delay new power capacity, and identify potential legislation needed to address those delays. The order says the goal is to provide that power without causing existing ratepayers to pay more because a data center was built.

The order also prohibits GOED from bringing a tax abatement application to the board if the data center applicant or facility operator is owned or controlled by, or subject to the direction of, a foreign adversary of the United States as defined under federal regulations.

The new requirements apply immediately to applications that have not yet been acted on by the Board of Economic Development. They do not apply retroactively to applications already approved. The order also states that it does not limit the land-use authority of Nevada cities or counties.

Data center industry raises concerns

The Data Center Coalition said it shares several of Lombardo's goals but expressed concern about parts of the executive order.

“We thank Governor Lombardo for his leadership on this issue and for his willingness to engage directly with all stakeholders as Nevada works through the complex issues associated with data center development,” Khara Boender, the coalition's director of government affairs for the West, said in a statement.

The organization said “some of the policies in his Executive Order create additional hurdles to data center development in Nevada,” while saying it shares the governor's goals of job creation, protecting natural resources and supporting public education. The coalition said it plans to continue working with Lombardo and state policymakers.

Lombardo said the intent is to allow Nevada to continue attracting data center investment while setting conditions for projects receiving state assistance.

“Data centers can be an unprecedented opportunity for Nevada, but if companies want to build here, they need to play by our rules,” Lombardo said.

Response from Aaron Ford

Nevada Attorney General and democratic gubernatorial candidate Aaron Ford's campaign released a statement on the executive order:

“Just last month, Joe Lombardo approved new tax breaks for data centers despite communities across Nevada voicing their concerns. Lombardo has given data center companies more than $240 million in taxpayer dollars that should have been used to help Nevadans struggling to live in his failed economy – and in return, his campaign has been bankrolled with $2 million from MAGA data center and AI billionaires. In his desperation to cling to power, Data Center Joe is trying to run away from his record with this last-ditch excuse for an executive order that maintains the status quo so many Nevadans are rightfully outraged by: massive giveaways for data center companies and no say for communities. Lombardo’s executive order is not a reflection of what Nevada communities are asking for — instead, it's nearly copied and pasted from a MAGA Republican strategy memo.

When I’m Governor, Nevadans will have the final say on whether or not a data center is built in their community — if local governments don’t want them, they shouldn’t be forced to have them. I will pump the brakes on Lombardo’s data center gravy train, put communities in the driver’s seat, block data centers from raising Nevadans’ costs and depleting our resources, and hold the big data center companies accountable.”