How data centers affect water resources and what MN regulations do about it

As artificial intelligence becomes more ubiquitous, the demand for data centers is growing, and developers are increasingly looking away from urban places to build them.

In cold Minnesota, data center developers may be attracted to tax breaks offered by the state Legislature in 2025, in addition to the climate. These projects bring promises of construction jobs, technician jobs and a boost to local property tax revenue, but some environmental and grassroots groups are concerned about how data centers can negatively impact rural communities — and water resources.

In the state of Virginia, the world's largest hub of data centers used 1.85 billion gallons of water in 2023 — up more than 60% than its reported usage closer to 1 billion gallons in 2021.

Rural America offers plenty of space to develop renewable energy sources and sprawling campuses, and rural communities often have more relaxed regulatory processes for construction compared to dense urban centers.

While most of the state’s 70 data centers are concentrated around the Twin Cities, more are being built in suburban and rural areas. Meta, the parent company of Facebook and Instagram, is slated to open a data center in Rosemount in 2026.

Twelve more hyper-scale data centers are in various phases of exploration in the state, including a Hermantown project that has been on hold since Nov. 17.

The Minnesota Center for Environmental Advocacy, partnering with the grassroots “Stop the Hermantown Data Center” group, challenged Hermantown’s thoroughness in its review of the project area in court on Nov. 5. An earlier petition circulated by residents for the council to reconsider its review also prompted pauses, but in Hermantown’s Dec. 3 response to the Environmental Quality Board, it is denying the petition to do further review.

During a Nov. 19 meeting, the state board hosted its second informational session on data centers, with a focus on water resources. Information from these data center sessions in October and November is slated to help guide further work for the Environmental Quality Board focused on its two priorities: supporting program development on emerging environmental issues and to improve the state’s environmental review program.

“There's a lot of technical capacity and expertise that comes with being in the metro area that rural Minnesota and rural municipalities and communities just don't have,” said Peg Furshong, the director of constituent relations and special projects at rural environmental advocacy group CURE, during the recent meeting.

"There's not a consistency of access to engineers and hydrologists, and all of that is entailed to manage these complex projects.”

Local governments, such as cities, are responsible for completing environmental assessment worksheets and alternative urban areawide reviews, or AUARs. An alternative urban areawide review differs in many ways from the environmental assessment worksheet and the even more rigorous environmental impact statement processes that are typically part of massive infrastructure projects.

Data centers are essentially warehouses that host servers that power the internet, from mobile phone applications to sensitive government data systems. The servers are seldom powered off due to the 24/7/365 demands of internet users, requiring more systems to cool them down.

That’s where data centers call for large volumes of water. In the data center regulations cleared by the Legislature at the end of last session, the state Department of Natural Resources can inquire about water resources as developers plan out data centers.

Jason Meckel, assistant director of the DNR’s Ecological and Water Resources Division, explained to the Environmental Quality Board what the agency evaluates.

"What's the geology? What do we know about the availability of water? What are the existing users in the area? What kind of natural resources are associated with those aquifers?” Moeckel said.

"What's proposed for how the water will be used, when it will be used, how it will be pumped? What might the constraints be at that given site?”

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U.S.G.S.

The DNR issues water appropriations permits when projects are expected to use at least 100 million gallons per year. A million gallons of water could fill a very large swimming pool, according to a handy visualization aid from the U.S. Geological Survey. One hundred million gallons of water could cover a little over 6 square miles with an inch of water.

While Minnesota is a very wet state, there are frequent periods of drought, and aquifers can draw down in the summer with agriculture’s irrigation demands.

Steve Robertson from the Minnesota Department of Health said cities with municipal water systems have to consider the public’s trust when approving data center developments.

"With a public water system, that's a key consideration. And it's largely because these new large developments of all kinds — including those involving new large volume water users — really bear on maintaining or stewarding the public trust relative to delivering a product like drinking water,” Robertson said. “Many people prioritize [drinking water] for their own public health protection.”

If the data center plans include establishing a new water supply, that can affect private well owners as well, Robertson explained.

“It would not be unusual for a new large-volume water user to satisfy its needs by developing a new source of supply. In Minnesota, that's most commonly going to be with a new well,” he said.

“And the principal issue that this presents to the local community is that a new well has the potential to alter the groundwater flow regime in a significant way.”

If a new, larger well is established, nearby smaller wells with shorter “straws” may have difficulty accessing the water from the same aquifer.

Much of the water that would go into data centers would need to be discharged, either through private septic systems or municipal wastewater. This, according to Jen Kastrewski from the Met Council, can bring additional unknowns.

She said the Council typically waits to design a billing structure until an industrial complex is built, to gather real-time data on how it will impact wastewater systems.

"We're being asked to make a lot of decisions before we have the full amount of information,” Kastrewski said. “And so, we know that all of these things are starting to have long-term effects on our regional growth management.”

Based on the public comments it received, the Environmental Quality Board may take action to adjust the state’s environmental review rules that the board oversees.