Data centers have become the focus of intense public debate and controversy with the debate centering on resource consumption, economic fairness, and local environmental impacts. Although much has been written about the amount of energy and water consumed, the environmental impacts, and the stress on water and power infrastructure, few, if any, public resources connect the dots between those impacts and either existing legal structures or policy responses. Noting this gap, Water Systems Council decided to embark on a research project to fill the gaps between the impacts of data centers on water resources and regulatory requirements.
In our federalist governance system, each of the 50 states determines property rights in that state, including water rights. The federal government holds the power to regulate interstate commerce, which enables the Clean Water Act and other federal water quality regulations, but the states govern water allocation. The publications therefore focus on state law.
For the groundwater industry, understanding these legal requirements is increasingly important. Well contractors, groundwater consultants, engineers, and other industry professionals may help evaluate potential supplies, develop wells, assess effects on existing users, and advise customers considering data center projects. Those responsibilities require an understanding of both the applicable water allocation framework and emerging requirements directed specifically at data centers.
This three-publication series examines three components of that legal landscape. The first publication considers how state water allocation statutes treat data centers within the broader systems governing groundwater and surface water use. The second reviews new statutes and regulations specifically directed at data centers, focusing on provisions addressing water supply, withdrawal, use, and management. Finally, the third publication examines recent gubernatorial executive orders, emphasizing water-related directives and their implications for state policy and agency action.
All three publications have been posted on the WSC website.
The findings from the reports reveal existing regulatory gaps and emerging regulatory strategies to address the unique impacts of data centers. Existing state water allocation statutes contain regulatory gaps in fourteen states, although a new California law specifically directed at data centers will reduce that number to thirteen on January 1, 2027. A regulatory gap means that a data center could begin to pump groundwater, surface water, or both in either part of the state or across the entire state with no regulatory oversight.
Ten states have passed laws directed specifically at water consumption by data centers. The laws range from requirements to receive tax incentives to a complete moratorium. The regulations tend to focus on transparency, early review of requirements, and assessments to ensure adequate water supply.
The Governors of 15 states have issued executive orders placing substantive water use requirements on data centers. Like state laws, these executive orders have a wide range of requirements, but tend to focus on transparency, early review of requirements, and assessments to ensure adequate water supply.
Read together, the publications provide a framework for understanding how established water law and newer data center policies interact. The distinctions among these legal approaches matter: an existing water allocation statute, an executive directive, and a data center-specific regulatory requirement can serve different purposes and carry different consequences. By explaining those distinctions and highlighting water-related provisions, this series aims to help groundwater professionals identify relevant requirements, anticipate questions arising during project planning, and contribute informed technical expertise to decisions about data center development and water resources.
Given the fast-moving pace of new laws and executive actions, WSC will update these publications periodically. In addition, new publications will provide additional information and provide specific policy recommendations.