DATA CENTER SERIES: The Impact on Minnesota Waters

Water experts explain their worries about hyperscale data centers

Minnesota is poised on the brink of a precedent-setting situation as it comes to the future of the state’s water. A hyperscale data center is currently in construction in Rosemount, and projects are in various stages of approval in cities such as Apple Valley, Cannon Falls, Farmington, Hermantown, Lakeville, and Pine Island. There have been few protections in place so far about how the state chooses to set boundaries with corporate interests building the centers — often with nondisclosure agreements that prevent the details from being shared with the residents affected. 

A recent report published by the Alliance for the Great Lakes, titled “A Finite Resource,” assesses threats to water in the Great Lakes region: “if states, local governments, and economic development agencies do not begin incorporating water availability and demand into their decision-making processes, it may lead the region down a dangerous, unsustainable, and inefficient water use path that impacts drinking water supplies, businesses, and food production.”

The report highlights a lack of understanding about natural resource extraction and consumption, indicating that “the use of nondisclosure agreements, lack of water-use reporting requirements, and gaps in existing state water management laws all pose challenges for states and local governments,” due largely to efforts made by developers. 

Understanding the Water Footprint

Carrie Jennings, Freshwater

Dr. Carrie Jennings, Research and Policy Director for Freshwater, a nonprofit organization dedicated to conserving clean and sustainable water in Minnesota, warns that significant gaps in state water governance have become convenient loopholes for developers looking for the cheap and easy way to get projects approved at the city level. “We don’t understand [their] total water footprint at all,” Dr. Jennings says of the proposed hyperscale data centers. “There is opacity and nondisclosure [from developers] all along the way.” 

In cities such as Farmington, citizens involved in the Coalition for Responsible Data Center Development are currently fundraising for a grassroots legal battle against Tract, an out-of-state development company. The coalition is concerned, for starters, about water demands of the data center proposed in their neighborhood. Cathy Johnson, chair of the coalition, believes that Tract has worked to limit public knowledge. 

The coalition learned that water demands for the proposed data center campus would require 2.93 million gallons per day, according to the agreement the city signed with Tract in December 2024; normally, the entire city’s total daily consumption is 2.3 million gallons a day.

Residents worry that the data center will overshadow their own water needs, especially in the summer months. Tract developers convinced city officials to let data centers use municipal water supplies — despite the Minnesota Department of Natural Resources’ statutes governing water use — meaning that household water needs will not necessarily be prioritized over data center water consumption. Minnesota’s water allocation priorities name domestic water supply as the state’s first priority for the consumptive use of water, and specifically excludes industrial and commercial uses of municipal water supply.

Commercial Over Residential Water Needs

Carly Griffith, MCEA

Dr. Carly Griffth, Water Program Director for the Minnesota Center for Environmental Advocacy, explains that “when large-volume industrial and commercial water users get their water supplied through municipal water permits, water allocation priorities become harder to enforce. This puts other high priority water uses, such as agricultural irrigation, at risk, [especially] in times of drought or water shortage, which are increasingly frequent as the climate continues to change.” 

In other words, exorbitant data center water use will be difficult to distinguish from daily domestic use under a single municipal appropriation permit, and it will potentially be valued above agriculture and other commercial industries in times of water shortage.

Cities worried about local issues of revenue and debt might fail to consider the long-term consequences of resource extraction, Jennings says. Developers force city officials — who might not be experienced or educated in negotiations of this environmental scale — to make decisions quickly and sign nondisclosure agreements. After that, “they cannot ask questions anymore,” says Jennings. “These big companies have done their homework, and they know that they can approach these cities directly,” she says, avoiding scrutiny from the public and the DNR.

Griffith explains: “Wastewater permits, feedlot permits, stormwater permits, and many other standard processes include public comment periods where the public can give feedback and raise concerns before a final decision is made, but “that is not the case for water appropriation permits.”

The MCEA is advocating for public comment periods on water appropriation permit decisions, so that community members can weigh in on what serves the public interest, ensuring “that the factors that inform a given permit decision are transparent.”

Although the public has thus far been largely barred from data center discussions, it will be communities  that take the fall for data center’s irresponsible and unsustainable water practices. Griffith says that when data centers get their water through municipal water appropriation permits, “that also means that the liability and cost for any private well interference caused by their high capacity use falls on the city rather than on the company.” 

Jennings warns that city residents will also foot the bill for the upgrades needed in order for local wastewater treatment facilities to accommodate the sanitary discharge from data centers. Griffith views this as a larger “problem that could disincentivize responsible water use.”

Jennings points to Farmington as a clear example of a gap in governance. “I think what [Cathy and the coalition] have made clear is that we have laws that help with groundwater governance, we have science, and we have these groundwater managing agencies, like the DNR and the health department — but what we currently lack is a very clear path for stakeholders to figure out who to talk to” when it comes to standing up for their communities. “Instead what we see is people like Cathy spending their retirement years trying to figure out how to engage and do a lot of learning on their own,” she says. “If you call a state agency, you’re going to get an operator, and often it just doesn’t go anywhere.” 

“Governance – it’s for the citizens, right?” asks Jennings. “So it should [involve] a very clear pathway for citizens to provide their input.” If citizens had been invited into the decision-making process — and if the impact of data centers on water was better understood — communities would not be pitted against billion-dollar corporations, she indicated.

Vast, but Finite

As a water-rich state, “Minnesota is celebrated for our 10,000 lakes,” Griffith says, but “the availability of sustainable groundwater supplies is not uniform or guaranteed across the state. In Minnesota, 75 percent of water that we get at our tap — whether we’re on a private well or a municipal water supply — comes from groundwater,” she explains. While people cannot necessarily “sense it or see it, groundwater is absolutely critical to our everyday lives.”

The consumptive nature of data center water usage will result in water being “lost or otherwise not returned to the watershed because of evaporation or incorporation into a product or some other process,” Jennings says. 

Griffith and Jennings both wonder if individuals are conscious of how much water we use in a day. And, possibly more consequentially, are corporations aware of how much water they contaminate, discard, and remove from the region?

At first, groundwater over-extraction will be a local concern. Minnesota has multiple aquifers, which act as natural water supplies deep below the ground, and initially, the concern for residents will be dry wells as the availability of upper-level groundwater diminishes. [This has happened in Elko, site of a Niagara water bottling plant; story to come.]

Data centers are not currently required to employ water cooling processes that would involve reuse, such as closed-loop systems. Their consumption and discharge of water would eventually place stress on aquifers and depress groundwater levels in Farmington, which Jennings says could result in a lowering of the water table in Dakota County.

Jennings and Griffith also are both worried about the possibility for water contamination from naturally occurring minerals in the earth that can be “mobilized” as groundwater is depleted. Griffith says that manganese and arsenic could show up in the water supply, especially in private wells. 

“It was a lot more visceral for people when a company called Water Train was proposing [in 2019] to put a deep well in Randolph, put the water in railcars, and send water to the desert,” recalls Jennings. “Everyone was opposed to that. It was easy to imagine the water leaving the region.” A data center might sound different, she says, but it has the same potential to remove water from Minnesota.

The Alliance of the Great Lakes report indicates that overextraction of groundwater, due to rising energy demands and competition for limited natural resources, is already causing gradual caving of major cities in the Great Lakes region. “Overpumping groundwater at unsustainable rates means that aquifers can’t adequately replenish themselves.” When this happens, the porous space once occupied by groundwater can collapse, permanently reducing the aquifer’s storage capacity. This depression will eventually decrease recharge to the main source of Minnesota’s freshwater: the Great Lakes. 

As referenced by the Alliance for the Great Lakes, the legally binding Great Lakes Compact exists to prevent large-scale, long-range diversion of water from this protected basin of freshwater. But the compact must be improved as many of these data centers come to the Great Lakes region because technically data centers do not represent “a large-scale, long range diversion if they are located within the Great Lakes states,” explains Griffith. 

The Alliance for the Great Lakes concludes that improvements must be made to the existing compact to stipulate collaboration between states in developing new legislation regulating data center development, which could include “conducting regional water demand studies,” and “requiring large water-users to report and track water consumption.” At the time of their report’s publication in July 2025, Great Lakes states are leading the nation in terms of volume of data centers. 

From the Alliance for the Great Lakes report:

A Precautionary Principle

Jennings says that developers seem to be disregarding environmental concerns in favor of going “the cheap, fast way. It’s a race to the bottom,” she says. Development projects are moving fast, taking “advantage of the slow policy process. Now we’re trying to put policy in place too late.”

She believes “the biggest threat is people [including elected officials] not understanding where our water comes from.” 

Jennings says that without the resources to understand their water, communities outside the metro area are without a playbook of their own to match the monied, experienced development companies. Freshwater hopes to engage cities in “scenario planning [so that local leaders] understand where the depressions in the water will be,” and “help them think about what questions to ask, [as well as] what kind of negotiations [and] strategies they might [use]…while thinking about how to plan regionally.” 

At the MCEA, Griffith is also engaged with considering what she refers to as the water-energy nexus. In practical terms, much more water is consumed indirectly, through electricity generation, than directly to cool the servers in the equipment. In 2023, Griffith says, “indirect water use for electricity generation was 12 times greater than direct water use in the data centers.” Griffith says that there are “not currently enough incentives to require developers to understand that water footprint,” which leaves total water consumption through direct and indirect use unclear. 

The impetus of this new age of water demand is due to increasing human dependence on A.I., and the resulting intangible, unseen intricacies of energy consumption are adding up out of plain sight. “There is virtual water in every product that we use, from our clothing to our automobiles,” and throughout the chain of production, Jennings says. She urges people to be more conscious of their personal water consumption. She says that with the increased demands on our limited water resources, people must ask themselves what the non-essential uses of water in the household are — this is where people can start to conserve first. 

The MCEA is pushing for legislation that would obligate developers to understand and disclose the realities of data center water consumption — ”things like mandatory environmental review that would require project proposers to consider alternatives, as well as separate permit requirements for  large-volume commercial and industrial water users.” Griffith says public comment periods on water appropriation permit decisions would also be a state policy that could help developers, local governments, state agencies, and citizens better understand the true water footprint impacting Minnesota’s water. 

Griffith says Minnesotans should have the power to be thoughtful and rightfully critical about the state’s relationship with the earth and its resources. “As Minnesotans, we have the right to demand transparent public conversations about how we manage our limited resources. We get to be a part of a discussion.” 

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