This bill establishes new requirements for water efficiency in data centers in Iowa, focusing on the adoption of water-efficient cooling technologies and the use of nonpotable and recycled water sources. It defines key terms such as "cooling technology," "data center," and "water usage effectiveness rating," which measures the efficiency of water used for cooling. Starting January 1, 2026, all new data centers and those undergoing expansion or renovation must comply with a water usage effectiveness rating of 0.2 liters per kilowatt hour or lower. The bill encourages the use of air-based or hybrid cooling systems and mandates that data centers submit a cooling and water sourcing plan to the Department of Natural Resources (DNR) prior to construction or renovation, along with annual compliance reports for five years.

To ensure compliance, the DNR is tasked with establishing monitoring and enforcement procedures, including the ability to conduct inspections and impose civil penalties of up to $10,000 per day for violations. Temporary exemptions may be granted for up to 12 months for data centers facing challenges in meeting the requirements due to lack of feasible technology or public safety concerns. The bill takes effect immediately upon enactment and applies retroactively to all relevant data center projects permitted on or after January 1, 2026.