The Environmental Quality Board on Oct. 15 opened a multi‑agency briefing on proposed large and hyperscale data centers in Minnesota, focusing on how state environmental review, permitting, tax incentives and energy planning apply to those projects.

The meeting featured presentations from DEED (department of employment and economic development), EQB environmental review staff, the Public Utilities Commission, the Department of Commerce, and the Minnesota Pollution Control Agency. DEED staff described the state’s data‑center tax exemption program and the Minnesota Business First Stop coordination team. EQB staff summarized how Minnesota’s environmental review tools — the Environmental Assessment Worksheet (EAW), Environmental Impact Statement (EIS) and Alternative Urban Area‑Wide Review (AUAR) — may apply to data‑center development. Public commenters urged the board to pursue stronger, statewide environmental review for projects they say can have large, cumulative impacts.

Why it matters: some proposed hyperscale data centers can match the electricity use of thousands of homes and may demand large quantities of water, generate noise and require on‑site generation or other grid changes. Those attributes can trigger review by multiple state agencies and raise questions about who conducts environmental review and at what threshold.

What agencies told the board
- DEED (Chet Boden) said Minnesota already has 40 certified data centers and outlined the sales‑tax exemption rules that have applied to smaller projects (the transcript lists a 25,000 square‑foot floor‑area threshold and a historical investment threshold; DEED also described a recently created large‑scale threshold requiring substantially larger investment and longer build windows). Boden described Minnesota Business First Stop as an interagency facilitation group that does not issue permits but helps project proponents and local governments navigate permitting and state incentives.

- EQB environmental review staff (Sarah Larell) gave a rule‑level primer on review options. Larell noted: “Data centers as a project type are not defined in Minnesota rules 4410 and they do not have a mandatory category threshold.” She explained that an AUAR can substitute for project‑level EAWs or EISs for specified development types (residential, commercial, warehousing, light industrial) provided an AUAR’s scenarios, assumptions and mitigation plan meet rule requirements, but that AUARs cannot substitute for environmental review when a project triggers one of the rule’s excluded mandatory categories (for example, certain electric‑generating facilities, transmission lines, air pollution thresholds and large water appropriations). She also described how AUAR scenarios must be consistent with local comprehensive plans and be updated at least every five years.

- The Public Utilities Commission (Mike Waller) described the PUC’s authority over rates and over large electric generation. He said state law now instructs the PUC to define a “very large customer” class (for investor‑owned utilities) and to ensure that tariffs for those customers assign incremental costs to the customer class. Waller said certificate‑of‑need and site‑permit processes apply to generation facilities of certain sizes (the transcript refers to 50 megawatts as a commonly used threshold) and that, where required, those proceedings include alternatives analyses and environmental review.

- The Department of Commerce (Dr. Sydney Lieb) and MPCA air permitting staff (**** Cortes in the transcript) said the state is balancing the economic opportunity data centers bring with the need to limit cost and environmental risk to ratepayers and nearby communities. MPCA staff noted that air permits are required before construction if a facility’s potential emissions exceed thresholds; several existing Minnesota data centers hold registration‑level permits, while larger or more complex sources would require more detailed permits and dispersion modeling.

- Several presenters described 2025 legislation affecting data centers: it expands some recordkeeping and interagency coordination, requires pre‑application consultation through DEED’s Minnesota Business First Stop, includes provisions on interconnection and utility tariffs for large loads, and carries requirements related to energy, workforce and payments into a weatherization fund. Presenters said a number of water‑related provisions will be covered in greater depth at future meetings because those specialists were at a water conference the day of the EQB meeting.

Public comment and board reaction
Public commenters from towns where AUARs and data‑center scenarios are under way urged the EQB to provide clearer statewide guidance and to consider requiring project‑level EISs in some cases. One commenter who identified herself as a local resident said a draft AUAR called the development “light industrial” even though local residents believed it was intended for a hyperscale data center; she said local officials had signed nondisclosure agreements and that neighbors were given little notice before rezoning and permitting steps moved forward. Another commenter, an environmental‑law attorney, recommended that EQB create a mandatory EIS category for data centers and designate a statewide agency as the responsible governmental unit (RGU) to ensure cumulative impacts are assessed.

What the board can and cannot do
EQB staff reminded the board that environmental review is delegated: responsible governmental units (typically local governments for AUARs or project‑level EAWs) carry out and decide on most reviews, and the EQB’s role is programmatic — producing guidance, technical assistance and, where applicable, rulemaking. Board members discussed whether AUARs are being used appropriately and how mandatory categories, if adopted, would change the process; staff said adding a mandatory category would require a formal rulemaking and would likely take on the order of years.

Next steps and follow up
EQB staff said the board will continue information‑gathering: the October meeting focused on energy and environmental review; water issues will be addressed at a future meeting when water agency staff are available. Staff asked interested members of the public to submit written comments so they can be included in the record for the next meeting packet.

Ending note: the board did not take any formal regulatory action on data centers at the Oct. 15 meeting; the session was an informational briefing and a multi‑agency conversation about where guidance or program changes might be needed.