Developers of data centers and other industries often seek to tap into city water supplies to get the water they need for cooling equipment and other processes.
But some lawmakers say the practice of companies piggybacking on a city’s water permit allows them to avoid public scrutiny, and puts the state’s groundwater at risk.
They have proposed requiring hyperscale data centers and other large water users to apply for their own permit to use water.
“What some of these large users are attempting to do is just use that city's water permit instead of getting their own,” said state Sen. Ann Johnson Stewart, the sponsor of a Senate bill, during a March 26 committee hearing. “That's what this bill hopes to prevent.”
Johnson Stewart, DFL-Minnetonka, said requiring a separate permit for large water users who use more than 100 million gallons a year, or more than 50 percent of a city’s authorized water use, would increase transparency and give the public a chance to weigh in before it’s approved.
Minnesota is often thought of as a water-rich state. But some environmental groups warn that water-guzzling industries, including hyperscale data centers, bottled water manufacturers and ethanol plants, are increasingly straining the state’s groundwater resources.
“Pumping too much water can cause residential wells to run dry, draw contaminants like manganese and arsenic into well water … and long term, can threaten sustainable water supplies across the state,” said Andrew Hillman, water resources specialist with the nonprofit Minnesota Center for Environmental Advocacy, during the Senate committee hearing.
Groundwater is the source of drinking water for about three-fourths of Minnesotans and almost all of the water used to irrigate crops.
Proponents of the bills say they also would allow the Minnesota Department of Natural Resources to enforce state rules that give the highest priority to household drinking water and a lower priority to industrial and commercial use.
They say when industries and businesses get their water through a city permit, residents’ water supply can be at risk during a drought or water shortage.
“The intent is simple – people's drinking water should come before industrial use,” said Janelle Kuznia, a New Market Township resident, during the Senate committee hearing.
Kuznia fought against a Niagara Bottling bottled water plant in Elko New Market, south of the Twin Cities metro, which began operating last year.
The DNR permitted the city of Elko New Market to pump more groundwater to provide to the plant in June 2024. The approval came despite complaints from some area residents with private wells that their water became discolored and cloudy while the city conducted an aquifer test in late 2023.
Kuznia said some well owners have spent thousands of dollars on repairs and filtration systems, and some are buying bottled water.
“We can no longer allow large industrial users to hide behind municipal permits,” she said.
Lawmakers, environmental groups and residents cited data centers as a growing concern due to the large volume of water they can consume for cooling.
Some proponents of the bill have cited a hyperscale data center in Farmington proposed by Tract, a Colorado-based developer. In an environmental review, Tract said the facility could use more than 2.35 million gallons of water per day from the city’s water supply.
A spokesperson for Tract said the company has refined its water use projections since the environmental review was completed, and the actual amount is not expected to exceed 137,000 gallons per day or 50 million per year. He said Tract plans to incorporate more modern cooling technologies, and the peak water use would only be expected on the hottest day of the year.
Mixed reaction
The bill’s proponents say requiring a separate permit would put the liability and cost for any cases of wells running dry onto the company, rather than the city. They say it also would increase transparency by requiring industries to report their water use on a monthly basis, rather than annually.
Rep. Kristi Pursell, DFL-Northfield, is sponsoring a similar bill in the Minnesota House. The bills’ future is uncertain, but they could be included in larger omnibus bills.
The proposals have generated some pushback, including from the state agency tasked with overseeing water-use permits.
Jason Moeckel, assistant director of ecological and water resources for the DNR, said the agency isn’t currently set up to issue a separate permit for large water users, and would have to make changes to its permit program.
Minnesota Chamber of Commerce’s Andrew Morley noted that Minnesota lawmakers passed some additional regulations on data centers last year, including giving the DNR the authority to request more information about their water use early in the development process.
Clarification (April 6, 2026): The story has been updated to reflect that Tract says its proposed data center in Farmington would use less water than originally estimated in an environmental review of the project.