Nebraska Governor Jim Pillen signed an executive order on July 21, 2026, cutting off data centers from tax incentives available under Nebraska's ImagiNE Nebraska Act, while directing state agencies to establish new oversight frameworks for evaluating future projects based on their impact on the state's land, water, and electrical resources.

What the Order Does

Executive Order 26-17 prohibits data center applications from being approved under the ImagiNE Act, the state's existing economic development incentive program.

Beyond ending access to those incentives, the order requires the Department of Economic Development, the Department of Revenue and the Department of Water, Energy and Environment to work together when reviewing any proposed data center projects to determine whether they serve Nebraska's interests.

The order also mandates the creation of a data center task force through the Department of Water, Energy and Environment to ensure protection of the state's natural resources.

Governor Pillen was joined at the signing announcement by Senator Mike Jacobson, DED Director Maureen Larsen and Jesse Bradley, Director of the Department of Water, Energy and Environment.

Pillen was careful to draw a distinction between what the order does and does not accomplish. "This is not a moratorium on data centers," he said. "However, if a local entity chooses to engage in the development of a data center, it must now be developed in accordance with guidelines included in the executive order."

The governor described the action as consistent with a call he made earlier in his administration for a pause in building new data centers.

Water and Energy Concerns at the Center of the Decision

Director Bradley said the task force created under the order will work with Natural Resources Districts to ensure that policies and best practices are effective, and that county officials have the tools they need for zoning and related activities.

He framed the effort as a continuation of work already done on energy policy during the most recent legislative session.

"I think this is just a great opportunity to educate and learn about all the great practices Nebraska has as a state but also examine those and make sure those practices are going to ensure that we have sustainable resources for the future," Bradley said.

"Building off of the work that was done on energy last session, I think this is a natural fit to now really examine the water side of things."

The governor acknowledged that data centers represent a significant economic opportunity, noting that major technology companies are investing hundreds of billions of dollars into them.

But he said that level of activity also creates resource challenges that the state must address.

"Data centers are a booming industry," Pillen said. "And while that presents significant economic opportunity, it also presents resource challenges."

Legislation Already Passed Addresses Power Demand

One piece of the resource equation has already been addressed through the legislature. The passage of LB1261 this year included what was described as "behind the meter" legislation allowing large industrial users to engage private entities in constructing their own power facilities.

According to the governor's office, the intent is to protect ratepayers from price increases driven by higher electrical demand from large industrial consumers such as data centers.

Tax Incentives Deemed Unnecessary by Lawmakers

Senator Jacobson, who announced he will introduce legislation on the subject in the next session, argued that providing tax incentives to data center operators is not warranted given the financial scale of the companies involved and what he described as an absence of competitive pressure to attract them.

"If a mega data center chooses to locate in Nebraska, our taxpayers and communities should receive the full benefit of that investment," Jacobson said.

"Tax incentive programs should not return or waive the very revenue that could support our counties, cities, schools, and other political subdivisions."

He added that the state's position is neither to promote nor prohibit data centers, but to ensure that when they do locate in Nebraska, the people of the state benefit from their presence.

AI Development Acknowledged as National Priority

DED Director Larsen acknowledged the role data centers play in artificial intelligence development and framed the evaluation process as necessary rather than obstructive.

"As a matter of national security, it is absolutely critical for America to be a global leader in AI," Larsen said.

"And being at the forefront of AI will require building data centers in the U.S. At the same time, we must assess the impact of increased water and power demands on existing Nebraska businesses and communities.

The Governor's executive order enables us to evaluate whether potential data center projects are truly in Nebraskans' best interests."