South Dakota Republican Leaders Clash Over Data Center Incentives

Senate Majority Leader and House Speaker debate economic development policies in front of reporters

Feb. 6, 2026 at 4:15am

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In a public clash, South Dakota Senate Majority Leader Jim Mehlhaff and House Speaker Jon Hansen, both Republicans, argued over proposals for a moratorium on the construction or expansion of large data centers. Mehlhaff criticized the idea as "fear-mongering" that would create a "chilling atmosphere" for development, while Hansen defended citizens' concerns about the impact of data centers on utility rates and water usage. The disagreement highlighted the divide within the state's Republican Party over the government's role in economic development.

Why it matters

The dispute between the two Republican leaders underscores the ongoing tensions within the party over the balance between promoting economic growth and addressing the potential downsides of large-scale development projects like data centers. This debate could have significant implications for the state's economic policies and the upcoming Republican primary election for governor.

The details

The argument erupted during a weekly press conference, with Mehlhaff criticizing a proposed moratorium on data center construction as an "artificial barrier to development." Hansen then attempted to respond, but Mehlhaff cut him off, saying he didn't want a "debate on every issue." Hansen went on to raise concerns about the impact of data centers on utility rates and water usage, citing the controversy over the Summit Carbon Solutions pipeline project. The two leaders traded barbs, with Mehlhaff questioning whether there had been any arrests related to the pipeline dispute.

  • The argument took place during the Republican legislative leadership team's weekly press conference on Thursday, February 6, 2026.
  • Earlier in the week, Hansen had cast a committee vote to reject a proposed sales tax exemption for data center equipment and software purchases.

The players

Jim Mehlhaff

The Republican Senate Majority Leader from Pierre, South Dakota, who criticized the idea of a moratorium on data center construction as "fear-mongering" that would create a "chilling atmosphere" for development.

Jon Hansen

The Republican House Speaker from Dell Rapids, South Dakota, who is seeking the party's nomination for governor. He defended citizens' concerns about the impact of data centers on utility rates and water usage, citing the controversy over the Summit Carbon Solutions pipeline project.

Larry Rhoden

The Republican Governor of South Dakota, who said that data centers represent a "big opportunity" for the state and that incentives for them are "pretty justifiable." Rhoden is one of three people challenging Hansen for the Republican nomination for governor in the June primary election.

Dusty Johnson

A U.S. Representative and Republican candidate for governor, who has said he favors incentives for data centers with guardrails to protect other electrical ratepayers and water users.

Toby Doeden

A Republican businessman and candidate for governor, who has said data centers "have to come here on our terms" and has pledged to grow the economy to an extent that the state won't need to subsidize them.

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What they’re saying

“You don't want to fear-monger on stuff, and I think we've seen an awful lot of that about just about every economic development idea that's come along in the last few years, and I think that's creating a very chilling atmosphere in South Dakota for developers.”

— Jim Mehlhaff, Senate Majority Leader

“So we're hearing real concerns from people, and that's the concerns that we're bringing to this legislative process.”

— Jon Hansen, House Speaker

“I think there's a lot of misinterpretation, as far as some of these incentives, when they call them 'corporate welfare.'”

— Larry Rhoden, Governor

What’s next

The debate over data center incentives and economic development policies is expected to continue in the South Dakota legislature, which is currently in session until next month.

The takeaway

The clash between the Republican leaders highlights the ongoing tensions within the party over the role of government in promoting economic growth, with some favoring more aggressive incentives and others concerned about the potential downsides of large-scale development projects. This debate could have significant implications for the state's economic policies and the upcoming Republican primary election for governor.