Arizona AG Threatens Lawsuit Over Water Use by Phoenix Data Centers
Arizona AG calls for pause on Phoenix data centers amid soaring water demand forecasts.
Why it matters: Arizona faces severe Colorado River water reductions, raising legal and compliance risks for data centers reliant on scarce resources. Corporate and legal teams must navigate infrastructure sustainability amidst increasing regulatory scrutiny.
- Attorney General Kris Mayes urges a statewide halt on new data center approvals due to rising energy costs and nearly 30% Colorado River water cuts.
- New analysis forecasts over 450% increase in water demand if all planned Phoenix-area data centers are built.
- Arizona’s existing nearly 200 data centers and chip factories consume less than 1% of Phoenix's total water supply.
- Mayes also challenges utility agreements potentially shifting $600 million in energy costs from large users to other customers.
Arizona Attorney General Kris Mayes is pressing for a statewide pause on approving new data centers, especially hyperscale AI projects, highlighting growing concerns over water and energy resources in the drought-impacted region. "The only sane thing to do is to pause the approval of new data centers. Data centers are power- and water-intensive, and Arizona is challenged on both fronts right now," Mayes said in a state press release.
A recent analysis estimates that if all planned data center projects in the Phoenix area proceed, water demand could increase by more than 450%, a significant strain amid a nearly 30% cut in Arizona's Colorado River water allocations. Currently, Arizona’s nearly 200 data centers and chip manufacturing facilities use less than 1% of the region's total water supply, but the rising expansion raises sustainability questions. Arizona State University water law professor Rhett Larson commented, "While I don’t think that data centers are the cause of the current Colorado River crisis, they are growing and they’re growing fast. They do use a lot of water."
The water cuts finalized by the U.S. Department of the Interior for 2027-2028 reduce Colorado River supplies by 1.25 million acre-feet for Lower Basin states, with Arizona facing the largest deduction of 760,000 acre-feet, further intensifying water scarcity challenges (Axios report).
Beyond water, Mayes has raised concerns about energy costs associated with data centers. She asked the Arizona Corporation Commission to investigate whether Arizona Public Service Company's Power Supply Adjuster mechanism has shifted nearly $600 million in costs from large users such as data centers to other customers (AG press release).
Additionally, Mayes filed an appeal against the Arizona Corporation Commission’s approval of a special energy agreement between Tucson Electric Power and Beale Infrastructure for the Project Blue data center. She argues it violates the Arizona Constitution by letting the utility and data center set electricity rates privately (AG press release).
As Arizona's legal, regulatory, and environmental pressures mount, corporate legal and operational teams should closely monitor developments impacting infrastructure sustainability and compliance in the state’s data center sector.
By the numbers:
- 450% — projected surge in water demand if all planned Phoenix data centers are built
- 30% — reduction in Arizona's Colorado River water supplies
- 760,000 acre-feet — Arizona's water cut from the Colorado River for 2027-2028
- $600 million — potential cost shift from large energy users to other Arizona Public Service customers
What's next: Attorney General Mayes' call for a pause may prompt regulatory reviews and possibility of lawsuits over new data center approvals and utility agreements.