A large data center consumes up to 5 million gallons of water per day. That is the drinking water supply for 10,000 to 50,000 people. On April 16, EPA Administrator Lee Zeldin stood in front of a coalition that included Deputy Administrator David Fotouhi, Assistant Administrator for Water Jessica Kramer, Senator Mike Rounds, CEQ Chairman Katherine Scarlett, and Suzanne Clark of the U.S. Chamber of Commerce and announced that the federal government wants data center operators off potable water. The vehicle is WRAP 2.0, the second edition of the Water Reuse Action Plan, and for the first time it names data center cooling as an explicit federal priority.
The original WRAP launched in 2020 with 37 actions and 86 partners. WRAP 2.0 has 200 partners and 76 actions organized across three priority tracks: supporting domestic manufacturing and agriculture, water for U.S. technology (semiconductor fabrication and data center cooling), and American energy dominance. A Republican senator from South Dakota and the head of the Chamber of Commerce stood next to the EPA administrator to make this announcement. That coalition tells you where the politics are heading.
We have covered the scale of AI's water consumption extensively. Evaporative cooling towers, the dominant heat rejection method for large campuses, consume water as a thermodynamic inevitability: roughly 1.8 liters per kWh in makeup water for every kilowatt of heat rejected through evaporation, which means a 100 MW campus running evaporative cooling in a warm climate burns through millions of gallons a week.
The friction is already visible. Permitting fights. Water allocation disputes. Disclosure battles at the state level. Senator Dick Durbin's proposed Data Center Water and Energy Transparency Act tried to force federal reporting requirements and stalled. How much water data centers actually consume, and from which sources, remains voluntarily disclosed at best.
WRAP 2.0 skips the transparency fight entirely and goes straight to substitution: get operators onto recycled wastewater, treated effluent, reclaimed municipal water. The source changes. The consumption does not.
Microsoft funded a $31 million water reuse facility in Quincy, Washington, operational since June 2021, with a reuse capacity of 138 million gallons per year delivered through a 30-mile piping network under a 30-year agreement with the local utility. Quincy hosts a dense cluster of operators. Yahoo, Sabey, Intuit, Vantage. They all draw from the same regional water basin, and Microsoft's investment in reclaimed water infrastructure created shared capacity across that entire cluster.
In Loudoun County, Virginia, the densest data center market on the planet, the Broad Run Water Reclamation Facility provides non-potable reclaimed water specifically for data center cooling. Google runs cooling at its Douglas County, Georgia facility on recycled municipal wastewater. These systems are operational, and the water quality requirements for evaporative cooling are far less stringent than potable standards, which makes treated effluent a natural fit for cooling tower makeup.
The engineering works. The hard question has always been who writes the check for the piping, the treatment upgrades, and the institutional arrangements that connect a municipal wastewater plant to a data center campus. Quincy's 30-mile network and 30-year contract show one version of what that deal structure looks like, and WRAP 2.0 is the federal government saying it wants to see that deal replicated across every major data center market in the country.
WRAP 2.0 carries no regulatory mandate. States lead implementation. The Clean Water Act and Safe Drinking Water Act provide the statutory framework, but the plan itself is a coordination vehicle. Critics will call it performative. That reading misses the mechanism.
Standardized guidance from a federal water reuse plan reduces permitting uncertainty at the state level, and every state that adopts WRAP 2.0 frameworks makes it easier for developers to include recycled water in their cooling designs without navigating a bespoke regulatory process from scratch. That is the procedural layer. The political layer matters more: municipalities that want to sell reclaimed water to data centers but face local opposition now have the EPA's endorsement as a shield, which changes the calculus for city councils and county boards that would otherwise stall these agreements indefinitely. And the financial layer sits underneath both, because lenders and insurers now see recycled water infrastructure as a federally recognized asset class, and that changes the financing terms for the kind of $31 million facility Microsoft built in Quincy.
Two hundred partners signed on. The Chamber of Commerce, the EPA, and a Republican senator from South Dakota showed up for the same water reuse plan. The political risk of adopting recycled water just dropped.
Recycled water fixes the source problem. Volume is untouched. A data center running evaporative cooling on reclaimed wastewater still consumes millions of gallons, still competes with agricultural and industrial users for treatment capacity, and in water-stressed regions the recycled supply itself is finite. MENA operators facing extreme water stress cannot solve their problem with reclaimed municipal water because there is not enough municipal water to reclaim.
The water-power tradeoff remains intact. Operators who shift from evaporative cooling to air-cooled or zero-water cooling systems reduce water consumption but increase power consumption and often sacrifice density. WRAP 2.0 does not weigh in on that tradeoff. It assumes evaporative cooling continues and tries to clean up the supply side.
Then there is offsite water consumption. Power plants that supply electricity to data centers consume enormous volumes of water for their own cooling. A data center that reports zero onsite water use but draws power from a thermoelectric plant with once-through cooling has simply moved the water footprint upstream. WRAP 2.0 does not touch this.
WRAP 2.0 is the first federal policy document that names data center cooling as a water reuse priority. The industry has been experimenting with alternative water sources for years, from seawater to treated effluent, but without a federal coordination layer. Now there is one.
This administration will not mandate water reuse for data centers. What WRAP 2.0 does is reduce permitting friction, provide institutional templates, and build a political coalition broad enough that recycled water becomes a consensus position. Two hundred partners already signed up.
Our position: within five years, recycled water will be the default cooling supply for new evaporative data center builds in any jurisdiction with a functioning reclamation system. The Quincy model will replicate. Operators still designing campuses around potable water in 2026 are building in a liability, because the economics favor reuse and the politics now favor it too. WRAP 2.0 is the coordination layer that makes the transition frictionless enough to happen without a mandate.