Transparency for Thirsty Compute

States facing drought and dwindling groundwater supplies are seeking to pull back the curtain on water use at data centers, in a push for transparency that has scrambled traditional partisan alliances.

Lawmakers from at least eight states this year introduced legislation to require data centers to report their water use, which supporters say is crucial to protecting consumers and managing a finite resource. Driven by concerns about artificial intelligence’s environmental footprint, the effort is generating support — and skepticism — from both sides of the aisle.

In New Jersey and California, bills requiring data center water use reporting passed both legislative chambers but were vetoed by Democratic governors. In Virginia, a bill authorizing local governments to evaluate data center noise, water and land-use impacts was vetoed by Republican Gov. Glenn Youngkin.

The issue is certain to return to statehouses next year, as officials scramble to keep up with the rapid deployment of AI data centers championed by Silicon Valley and the Trump administration.

“We’re watching a digital gold rush unfold, but we don’t have the transparency,” said California state Assemblymember Diane Papan, a Democrat who chairs the committee on water, parks and wildlife. “We’ve got a water rush we can’t really see or plan for right now.”

Data centers powering generative AI consume eye-popping amounts of electricity — in some cases, as much as entire cities — to run computing hardware and cooling systems around the clock. That has spurred concerns about the build-out’s potential to raise energy prices and spike carbon emissions.

Data centers’ water usage is generally less clear and depends on the design of the facility. Estimates of average consumption vary, and developers often won’t disclose their water use, classifying it as proprietary information. Federal laws like the Clean Water Act do not regulate water quantity, resulting in a patchwork of state policies for large water users.

“I don’t think we have enough good data to know how much [water] is being used,” said Virginia state Sen. Richard Stuart, a Republican whose eastern Virginia district has become a hub for data center development.

Small data centers may only consume as much water as a typical office park. But new, hyperscale facilities built for AI are more likely to strain water supplies, due to direct water consumption for cooling and indirect use by power plants, said Margaret Cook, vice president for water and community resilience at the Texas-based nonprofit Houston Advanced Research Center (HARC).

“The facilities are getting larger and larger,” Cook said. “Even if your per-energy-unit of water consumption is going down, your total water consumption goes vastly up if your facility is huge.”

The Lone Star State is now second after Virginia in the number of data centers proposed and built. HARC has estimated that data center growth could increase water use statewide by 3 percent by 2030, potentially exacerbating water shortages.

That trend is not accounted for in the state’s water plan, which forecasts future supplies and water needs, Cook said. State regulators don’t have the tools to determinate how much water new data centers are expected to use, she said.

“The planners and the scientists are concerned,” she said. “The municipalities are concerned that they don’t have enough information to be able to do planning, because sometimes they’re told about the water use, and sometimes they’re not.”

Those worries aren’t limited to arid states.

In Virginia — ground zero for the nation’s data center industry — declining water levels in the Potomac Aquifer have forced some eastern localities to switch from groundwater to surface water for drinking and other needs.

Depletion of the aquifer began prior to the boom in data center development. But Stuart, the state lawmaker, is worried by the prospect of the water-guzzling industry competing with local water providers for an increasingly precious resource, without a clear picture of data center water demands.

“I think we moved so fast [in Virginia] that now we’ve gotta step back to make sure we’ve got resources for drinking water and everything else for folks,” Stuart said.

Planning and security concerns

States have taken varied approaches to try to shed light on data centers’ water use, with some bills introduced this year also seeking information about energy consumption.

The proposal in California, from Papan, would have required data centers to report estimated water use to their local supplier before applying for a business license. Companies would have also needed to report annual use when applying to renew their license.

The bill passed both of California’s Democratic-controlled chambers, but Gov. Gavin Newsom did not sign it. In his veto message, the Democrat said that he appreciated the bill’s intent but was concerned it would impose “rigid reporting requirements” that could have unintended consequences on an industry of global and regional importance.

A proposal from Democrats in New Jersey took a similar approach. It would have required data center operators to submit a water and energy usage report, including with information about where the water came from, to the state’s Board of Public Utilities.

Gov. Phil Murphy (D) vetoed the bill, recommending that lawmakers amend it so that the board could seek the same information through a separate process and under a slower timeline. He also suggested changes to “protect potentially proprietary information and address security concerns” by anonymizing individual data centers’ water and energy use.

Other bills to estimate or disclose water use at data centers were introduced in New York, Oregon, Georgia, Indiana and Illinois. Utah is the latest state in the mix, with Republican state House Rep. Jill Koford having introduced a bill last month to mandate water use reporting for large data centers spanning at least 50,000 square feet.

The data center industry has generally opposed the legislative proposals.

Dan Diorio, vice president of state policy at the Data Center Coalition, said burdensome reporting requirements could stall economic growth and paint a distorted picture of water and energy use. Data center developers have made significant strides in improving their water efficiency, he said.

“You’d end up with a disparate requirement that unfairly penalizes one industry, while other industries do not have that same accountability,” Diorio said.

In seeking to keep water use secret at data centers, tech giants argue the information could be used by competitors to infer details about their centers’ design. The facilities are the “backbone of the 21st-century economy,” critical to a variety of sectors like healthcare and finance, Diorio said.

“If this information can be found out and be determined, it could unnecessarily put a target on their backs,” he said.

Next steps

As state lawmakers wrestle with water use amid the AI boom, existing policies addressing the issue run the gamut.

In Louisiana, home to Meta’s largest-ever data center in Richland Parish, water users across the board are not required to apply for permits to pump groundwater, said Haley Gentry, assistant director of the Tulane Institute on Water Resources Law and Policy.

The only requirement applicable to data centers using groundwater is that they register with the state if they plan to tap more than 50,000 gallons of water per day, Gentry said.

“The registration process is better than nothing, but it’s not super meaningful,” she said.

Aside from groundwater, data centers may draw directly from surface waters, or rely on a local water utility. The utilities are sometimes barred from releasing data to the public about water consumption of data centers due to nondisclosure agreements, notes a recent report from the American Water Works Association.

Still, in some cases, even local governments may struggle to obtain information about total projected water use when evaluating a proposed new project, said Josh Thomas, a Democratic member of the Virginia House of Delegates.

Thomas was the sponsor of the only data center “reform” bill, as he described it, that made it to Youngkin’s desk this year. The bill, HB 1601, would have required developers of a “high energy use facility,” such as a data center, to conduct assessments evaluating noise impacts on nearby residences and schools.

In addition, it would have authorized local governments to require assessments of other environmental effects, including impacts on water resources. That would guarantee them the right to ask about water use when a data center comes to their area — without putting officials at risk of a lawsuit for rejecting a project, Thomas said.

“Localities can get sued if they’re viewed as doing something in not keeping with their own zoning ordinance or being arbitrary or capricious,” he said. “Having it in the code makes it clear that [data center developers] don’t even show up unless they know they can provide that information.”

In his veto message, Youngkin stated that the bill would have created unnecessary obstacles to new data center projects, which “represent an immense opportunity for localities around the Commonwealth.”

“While well-intentioned, the legislation imposes a one-size-fits-all approach on communities that are best positioned to make their own decisions,” the outgoing governor wrote.

For Thomas and Stuart, the Republican Virginia lawmaker, next year’s legislative session will be another opportunity to press forward on data center reforms.

The lawmakers could have an ally in Gov.-elect Abigail Spanberger, a Democrat who has vowed to ensure that communities can continue to approve new data enters “without straining statewide resources such as water supply.”

“There are a handful of us who are working really hard and fighting to try to strike a fair balance between the data centers and general public,” Stuart said. “I’m hopeful, because we’ve gotta have industry, we’ve gotta have jobs, and we’ve gotta have drinking water for citizens.”

https://www.eenews.net/articles/states-push-to-end-secrecy-over-data-center-water-use/