California’s AI boom has run into a resource that even billions of dollars cannot automatically secure: water.
Imperial Valley Computer Manufacturing, or IVCM, wants to build what is expected to become California’s largest data center in Imperial County. The proposed hyperscale AI complex would span roughly 950,000 square feet, consume as much as 330 megawatts of electricity, and represent an investment estimated at around $10 billion.
There is one major problem.
The servers need cooling.
IVCM says the facility would require approximately 750,000 gallons of water every day, but the Imperial Irrigation District rejected its request for a water supply. The developer has now taken the publicly owned agency to court, seeking access to Colorado River water historically associated with agricultural land.
That turns a local permitting disagreement into something considerably bigger.
If enormous AI facilities require water, electricity and land on a scale comparable with major industries, who should get priority when those resources are already under pressure?
This Would Be an Enormous AI Facility
The proposed Imperial Data Center is not a conventional server room sitting behind an office building.
It is designed as hyperscale infrastructure specifically for advanced artificial intelligence and machine-learning workloads. The development would cover nearly one million square feet and could operate at approximately 330 megawatts.
That electricity requirement alone gives some idea of its scale.
Modern AI computing requires enormous clusters of specialized processors. Those processors perform huge numbers of calculations and generate substantial heat while doing so.
Heat must be removed continuously.
If it is not, servers cannot operate reliably.
Cooling therefore becomes fundamental infrastructure rather than an optional feature of a data center.
The problem is that some of the most efficient cooling approaches can consume substantial quantities of water.
And IVCM wants to build its facility in a place where water is anything but politically simple.
The Data Center Needs About 750,000 Gallons Every Day
IVCM says it requires roughly 750,000 gallons of water per day for cooling.
Depending on the operating assumptions used to annualize that figure, reports have placed the requirement at roughly 260 million to 287 million gallons annually. The latter estimate is around 880 acre-feet of water.
That sounds enormous.
In the context of the Imperial Irrigation District’s overall Colorado River entitlement, however, the developer argues that it is relatively small.
IID receives approximately 3.1 million acre-feet annually, meaning the data center’s requested amount would represent only around 0.03% of that allocation.
That statistic forms an important part of the developer’s argument.
If the irrigation district distributes millions of acre-feet each year, why should approximately 880 acre-feet prevent a multibillion-dollar technology project from moving forward?
Critics answer that the percentage alone misses the point.
Almost All the Region’s Fresh Water Comes From One Extremely Stressed River
Imperial Valley is one of America’s most productive agricultural regions, but it exists in an extremely dry environment.
Its freshwater supply depends on the Colorado River.
The same river supports communities, farms and industries across the American Southwest and Mexico. Its long-term future has become one of the most difficult water-policy questions in the United States as drought, climate change and competing demand place pressure on the system.
That makes even a comparatively small new industrial user politically sensitive.
The Imperial Data Center’s requested amount is especially controversial because the project was previously presented as something that would not depend on Colorado River water.
According to reporting from KPBS, developer Sebastian Rucci had said for months that the facility would avoid taking water from the drought-stressed river.
The original solution was supposed to be recycled wastewater.
Then that plan fell apart.
The Original Plan Was to Cool the Servers With Wastewater
Using recycled municipal wastewater could have dramatically changed the controversy surrounding the project.
Instead of consuming freshwater that might otherwise support agriculture or communities, the data center could use treated wastewater that would otherwise need disposal or another destination.
IVCM pursued arrangements involving the nearby cities of Imperial and El Centro.
Those negotiations ultimately failed.
Without the recycled-water supply it had expected, the developer began looking toward the Imperial Irrigation District.
That created an uncomfortable reversal.
A project promoted partly on the argument that it would not consume Colorado River water was now requesting access to precisely that resource.
IVCM’s proposed solution is unusual but straightforward.
It wants to buy farmland.
The Developer Says It Can Buy a Farm and Use Less Water
IVCM argues that its water consumption can effectively be offset by acquiring agricultural land and taking that land out of production.
The reasoning is mathematical.
Irrigated agriculture in Imperial Valley can consume substantial amounts of water. If IVCM purchases enough farmland, stops irrigating it and then uses less water for its data center than the farm previously consumed, the project could theoretically reduce rather than increase overall water demand.
Reports have compared the proposed data center’s water requirement with the consumption of roughly 160 acres of farmland.
From the developer’s perspective, the arrangement is almost a conservation project.
A farm uses one quantity of water.
The farm stops operating.
The data center uses a smaller quantity.
Total consumption falls.
But water policy rarely becomes that simple.
Critics Call It a “Buy and Dry” Strategy
Opponents worry about what happens if the model becomes widespread.
A technology company with access to billions of dollars can afford to purchase agricultural land largely for the water associated with it.
The company can then stop farming that land and redirect the water toward industrial development.
That approach is sometimes described as “buy and dry.”
One data center purchasing enough land to offset 750,000 gallons per day might have little measurable impact on California agriculture.
But what if 20 data centers follow?
What if lithium-processing facilities do the same?
What if other industrial projects discover that purchasing farms is the easiest route to securing Colorado River water?
The Imperial Valley economy remains closely tied to agriculture. Removing productive farmland can therefore affect more than crops. It can influence agricultural employment, suppliers, transportation companies and surrounding businesses.
That is why the lawsuit could establish a precedent extending well beyond one facility.
The Irrigation District Said No
IVCM applied to the Imperial Irrigation District for water service.
IID rejected the request.
One issue involves the district’s Regulation 21, which governs water service for non-agricultural purposes. Reporting on the dispute indicates that IID directed the project toward the City of Imperial because a potable municipal supply exists nearby.
IVCM disputes that interpretation and has sued.
The company argues that it should be allowed to receive the water associated with agricultural land it intends to fallow.
That means a court may ultimately need to consider an unusually modern question through California’s famously complicated water rules:
Can agricultural water effectively follow land into an entirely different industrial use when the new development claims it will consume less water than farming did?
The answer could matter enormously as AI infrastructure expands.
Imperial County Is Also Pushing Back Against Data Centers
Water is not the project’s only problem.
Local resistance has intensified around the entire development.
Imperial County supervisors initially approved an important land action allowing parcels for the project to be combined. They later reversed course amid public opposition and imposed a temporary moratorium while officials considered new rules governing data centers.
IVCM challenged that move too.
The developer has argued that the project would bring substantial economic benefits to an area that has historically struggled with unemployment.
According to project estimates reported by CalMatters, the development could create around 2,500 construction jobs and 100 permanent jobs, generate approximately $72.5 million in one-time sales-tax revenue and eventually produce roughly $28.7 million annually in taxes.
Those numbers make the debate more complicated than “technology company versus environment.”
Imperial County could genuinely benefit economically.
Residents are asking what it must give up in exchange.
AI Data Centers Are Turning Into Infrastructure Projects
The controversy demonstrates how dramatically the meaning of a “technology company” has changed.
Traditional software could expand to millions of customers without every new user requiring substantial additional physical infrastructure in the same community.
AI is different.
Frontier AI requires massive computing facilities.
Those facilities need electricity.
Electricity requires generation and transmission infrastructure.
Servers create heat.
Removing that heat can require substantial water or additional electricity.
Backup power can require generators.
Construction requires land.
Suddenly, artificial intelligence begins looking less like a purely digital industry and more like heavy infrastructure.
California lawmakers are already paying attention. A 2026 California legislative analysis specifically cited the Imperial County project and its request for hundreds of millions of gallons of water as an extreme example of the environmental and infrastructure questions surrounding rapid data-center development.
Why Not Simply Cool the Data Center Without Water?
Data centers do not necessarily have to consume huge amounts of water.
Air cooling, closed-loop liquid systems and other approaches can substantially reduce direct freshwater consumption.
But there is usually a tradeoff.
Water-based evaporative cooling can be highly energy-efficient, particularly under certain climatic conditions. Switching toward dry cooling may reduce water consumption while increasing electricity demand.
That creates a difficult water-energy relationship.
A 2026 research paper examining U.S. data-center infrastructure warned that water availability could itself become a major bottleneck for data-center expansion. The researchers estimated that, without substantial improvements in water-use intensity, new U.S. data centers through 2030 could require hundreds of millions of gallons of additional daily water-system capacity.
Reducing direct water use therefore does not automatically eliminate environmental costs.
It can move some of those costs onto the electrical grid instead.
The Colorado River Makes This Case Different
If the same facility were being built somewhere with abundant water, 750,000 gallons per day might generate a very different political response.
Location changes the equation.
Water does not have the same environmental value everywhere.
Using a million gallons in a water-rich region is fundamentally different from demanding the same quantity from an ecosystem already under significant stress.
Researchers studying data-center sustainability increasingly argue that companies should therefore consider where and when water is consumed rather than reporting only total annual consumption.
That principle is particularly relevant in Imperial Valley.
The dispute is not simply about whether 0.03% sounds small.
It is about what happens when an entirely new industry begins competing for a resource already supporting farms, communities and ecosystems.
This Lawsuit Could Become a Preview of America’s AI Buildout
The Imperial Data Center is unlikely to be the last project facing this conflict.
Artificial intelligence companies are racing to construct larger computing campuses across the United States.
Communities initially attracted by investment and tax revenue are beginning to ask harder questions about electricity rates, water consumption, diesel backup generators, noise and infrastructure costs.
Some are responding with moratoriums.
Developers are responding with lawsuits.
The trend is already spreading beyond California, with data-center developers challenging local restrictions in several U.S. jurisdictions.
That makes Imperial Valley an early test of a conflict likely to become increasingly common.
Everyone wants the economic opportunities associated with AI.
Far fewer communities want unlimited responsibility for the infrastructure AI requires.
The Real Question Is Who Pays for AI’s Physical Footprint
The proposed California facility demonstrates something easily forgotten when people interact with artificial intelligence through a browser or smartphone.
AI is physical.
Every prompt ultimately reaches processors sitting somewhere.
Those processors consume electricity and produce heat.
The buildings housing them occupy land.
Their cooling systems may consume water.
The infrastructure supporting them affects real communities.
IVCM argues that its proposed water consumption is tiny compared with Imperial Valley agriculture and that fallowing farmland could offset the data center’s needs. Its opponents worry that allowing wealthy industrial users to purchase farmland for water could gradually transform both the local economy and the way scarce Colorado River resources are allocated.
Both arguments point toward the same uncomfortable reality.
California wants AI investment.
Imperial County wants economic development.
Farmers need water.
Communities need reliable resources.
And the Colorado River cannot expand simply because another billion-dollar industry wants access to it.
The lawsuit will determine a specific dispute between one developer and one public agency.
Its larger significance is much harder to contain.
As America’s AI infrastructure grows, the most important question may eventually stop being how many data centers the country can build.
It may become how many the surrounding communities can physically support.
