House committee probes water and permitting risks of proposed data centers in H.727

The Vermont House Energy and Digital Infrastructure committee on Feb. 18 continued testimony on H.727, an act relating to sustainable data center deployment, with state environmental officials and agency staff describing how existing statutes and permits would apply to large data-center projects.

Why it matters: Witnesses told lawmakers that the water demands and cooling-water discharges of modern data centers can be substantial, and that state and local permitting — including Act 250 review, groundwater and surface-water permitting and NPDES discharge permits — are the primary tools for managing those impacts. Committee members pressed for clearer thresholds and monitoring requirements as drought and river-temperature concerns grow.

Kevin Burke, director of the DEC Watershed Management Division, told the committee that "data centers, like any other commercial project, would trigger the typical environmental permits, including stormwater permits for impervious surface, construction permits, potentially wetlands permits," and that if a facility uses significant cooling water "that discharge would need to be permitted" under the NPDES program to ensure temperature and other water-quality standards are met. Burke added that temperature is treated as a pollutant and that any discharge would be evaluated to protect cold-water fisheries.

Michael Gray, legislative counsel, described how both groundwater and surface water are treated as public-trust resources in Vermont. He said the state adopted a groundwater protection rule and that "whenever there's a potential effect on groundwater, there must be an analysis to determine whether or not the activity ... is going to be managed in order to protect public health and welfare." Gray explained specific thresholds used in Vermont oversight: a large-volume groundwater withdrawal permit is required for withdrawals greater than 57,600 gallons per day, and development may be triggered by withdrawals of 340,000 gallons per day from a well or spring, prompting Act 250 review. He also summarized current surface-water reporting requirements: withdrawals of 10,000 gallons or more in 24 hours, or 150,000 gallons in 30 days, must be registered and reported online under present law.

A committee participant cited commonly cited industry figures for perspective: "average data center uses 300,000 gallons a day," with larger artificial-intelligence facilities potentially using between 1,000,000 and 5,000,000 gallons per day, and noted that the industry is developing closed-loop cooling and water-reuse systems. Committee members and agency staff repeatedly emphasized that actual water use depends on the facility's scale, design and local supply capacity.

Agency planning staff also flagged a potential jurisdictional gap. Billy Koster, director of planning policy at the Agency of Natural Resources, said that because Act 250 jurisdiction can be tied to parcel size, "an easy fix ... is just to add to Act 250 a very simple jurisdictional trigger that says ... data centers or some generic facility of a certain magnitude ... [require Act 250 review] full stop no matter where it is in the state." He recommended consulting the land use board on the best statutory language and thresholds.

Panelists urged lawmakers to consider combined effects — withdrawals plus discharges plus municipal water-system capacity — when assessing proposals. Gray said projects that connect to public water systems would require permit reviews to confirm that the system and wastewater-treatment capacity can support the load, and noted that applicants often provide redundancies (private wells, storage ponds or alternative sources) and may fund upgrades to municipal systems when necessary.

On next steps, the committee did not vote on H.727 during this session; members asked agency staff to return with additional technical witnesses and information on groundwater and surface-water withdrawals, reporting and monitoring practices before further action.

The hearing recessed and will continue the committee's consideration of H.727 on a later date.