National Security and Tax Reform: The Next Chapter for Applied Digital’s Deuel County Project

Northeast Radio SD News - Watertown, SD - The proposed Applied Digital AI factory in Deuel County aims to enhance local tax revenue and serve as a strategic effort to maintain American technological competitiveness globally.

In a recent interview, Nick Phillips, EVP of External Affairs for Applied Digital, noted that South Dakota’s cold climate and energy surplus position it as a key player in the international AI competition.

A Tool for Local Industry

Phillips addressed common anxieties regarding Artificial Intelligence, characterizing it not as a replacement for human workers, but as a transformative tool. He cited examples from the “Grand Farm” initiative near Fargo, where AI analyzes soil and imagery to help farmers increase yields while using fewer resources.

“If you’re still out there with a manual mower... you’re not paying your bills,” Phillips noted. “Technology has changed. This is just an extra tool for us to utilize.” He also shared a personal account of how AI helped his family navigate a medical diagnosis, emphasizing that the technology’s benefits are already being felt in healthcare and energy production.

The Legislative Landscape

Despite the region’s operational benefits, Phillips explained that current state law makes South Dakota an outlier. Along with Colorado, South Dakota is one of the few Midwest states that charges sales tax on data center equipment.

Representative Kent Roe has proposed legislation to eliminate this “bricks and sticks” tax disadvantage. Phillips argues this bill is essential to leveling the playing field with neighbors like Iowa and Nebraska.

“South Dakota energy is already powering these facilities in other locations,” Phillips said. “Why not bring home the benefits of having these facilities right in the state?”

Consumer Protections and Accountability

The proposed law includes explicit protections to ensure that the arrival of a large-scale power user does not shift costs onto residential ratepayers. Phillips emphasized that Applied Digital is not seeking a “free ride,” but rather a tax structure that allows it to compete with other states for multi-billion-dollar investments.

Community Invitation

As the project moves forward, Phillips remains committed to transparency. He confirmed that Applied Digital will host another town hall meeting in the third or fourth week of February.

“Spend the time to look at it,” Phillips urged residents. “I don’t see any better economic development opportunity for the state of South Dakota right now than bringing folks in that are very compatible from a workforce standpoint.”

The facility is expected to bring 200 to 250 jobs to the area, primarily in mechanical, electrical, and facility maintenance sectors.