In Ypsilanti, battle lines draw over data centers and sewage

A surge in data center interest prompted the Ypsilanti-area water utility to set a one-year moratorium on processing requests.
The utility says unknowns about capacity, particularly for wastewater, inspired the move.
US water associations endorse making assessments about data centers, but some also say the delays are unjustified.

YPSILANTI TOWNSHIP — Can sewage halt the avalanche of data centers coming into Michigan?

It might in Washtenaw County, where concerns about wastewater capacity prompted the Ypsilanti Community Utilities Authority this spring to set a one-year moratorium that could tap the brakes in two hyperscale facilities.

While communities throughout Michigan have fought the facilities over zoning rules, regulations and other blanket moratoriums, Ypsilanti is believed to be the first to demand more time to figure out how the massive facilities will impact wastewater and transmission lines.

“I believe we are ensuring the capacity, integrity, and long-term sustainability of the system are protected,” said Luther Blackburn, executive director of the authority that serves about 330,000 in 12 municipalities.

Most environmental fights with data centers focus on water and electricity use, but Blackburn and others worry that they could also strain outdated wastewater systems. The American Society of Civil Engineers gave the state’s sewer system a D grade in 2023.

Circular treatment basin at a wastewater treatment facility, surrounded by grassy grounds and industrial equipment under a clear blue sky. Low buildings, railings and processing structures stretch across the background. — The Ypsilanti Community Utilities Authority is the retail water provider for eastern Washtenaw County. It also runs a regional wastewater treatment facility for 12 communities in Wayne and Washtenaw counties. (Paula Gardner/Bridge Michigan)

Doug Winters, an attorney for Ypsilanti Township, said he fears that two large facilities alone could gobble up the system’s excess capacity and halt development in the area.

“There’d be no other building going on in the township — residential, commercial and industrial — until that wastewater treatment plant was expanded,” Winters said.

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Experts say the Ypsilanti system is exaggerating how much wastewater is returned by data centers, with estimates closer to 20-30%, not 50% suggested by the utility.

Data centers have emerged as one of the most divisive issues in Michigan in the past year, with the state courting them through new tax breaks and candidates calling for stricter regulations. More than 15% of readers cited data centers and AI as top election issues in Bridge Listens, our nonscientific election-year survey.

Centers are planned in at least 16 Michigan communities, including two hyperscale facilities served by the Ypsilanti utility: a $1.2 billion project by the University of Michigan with Los Alamos National Laboratory and a $1 billion data center near downtown Milan by Thor Equities.

The University of Michigan is threatening to sue over the Ypsilanti moratorium. The university is eying sites near Willow Run Airport and bordering the Huron River.

“We remain committed to engaging transparently and in good faith with elected officials,” U-M spokesperson Paul Corliss said. “However, recent actions suggest that approach is not being reciprocated.

“This latest effort to block the use of existing surplus water capacity only adds to our disappointment.”

Data center disconnect

Ypsilanti Township officials and other data center foes contend legislators and Whitmer should have assessed capacity of water systems before approving tax breaks in 2024 to large data centers for construction and equipment costs.

Among the requirements to receive the 6% tax credit on construction and equipment is hooking up to municipal water systems.

Aerial view of a large wastewater treatment facility with multiple circular treatment ponds, rectangular processing basins and several utility buildings connected by roads and service infrastructure. — The Ypsilanti Community Utilities Authority in April approved a one-year moratorium on approving water and wastewater service for data centers. (Courtesy image)

The tax break invited “every hyperscale data center in this country to come to Michigan,” not to create jobs but to collect “windfall profits,” Winters, the Ypsilanti Township attorney, said in April, as township trustees voted to seek the moratorium.

The water authority provides water through the Great Lakes Water Authority, which serves 4 million residents in southern Michigan. A spokesperson told Bridge that the group is not considering a similar moratorium.

Ypsilanti’s entire water treatment plant can accommodate 51 million gallons per day — and all but 5 million gallons is allocated to other communities or users, Winter said.

Thor Equities’ proposal near Milan could use 3 million gallons per day, while U-M’s would use 500,000.

If half of that is returned through the wastewater system, that’s close to one-third of the available capacity, Winters estimated.

Some industry experts say far less water would reach the sewers. That’s true with closed-loop systems and even with traditional cooling towers that rely in part on evaporation of large amounts of water, said Joe Sovas, vice president of Matrix Consulting Engineers in Lansing.

Even large-scale evaporation systems, he said, send an amount “just like the shower and bathroom water that any office would have” moving back to the treatment center.

In a letter threatening a lawsuit, U-M told the Ypsilanti authority it expects “prompt processing” of water requests.

“State law authorizes service limitations only where grounded in water quality protection or documented capacity constraints, neither of which exist here,” according to the letter, which was signed by Grand Rapids attorney Charles Denton.

Sarah Mills, director of the Center for EmPowering Communities at U-M. said it’s “rational” for local officials to evaluate whether they can serve new customers.

“There’s not a great link between our state statewide priorities and which communities are willing hosts,” she said.

A national issue

Many questions remain about wastewater from data centers, including contaminants and its temperature, said Blackburn of the Ypsilanti authority.

Utilities nationwide are asking similar questions, John Ikeda, chief mission officer with the Water Environment Federation, told Bridge.

“The primary question is whether they have sufficient capacity to serve a large industrial customer like a data center while continuing to meet the needs of existing users,” he said.

A report last fall from the American Water Works Association warned that data center design, technology, cooling strategies, projections for water use and other factors all make predicting usage difficult.

Delivery needs — such as peak demand times — could be vastly different from other commercial customers, the report said.

“This uncertainty makes it difficult to forecast potential impacts on a broad scale,” the report said. “Site-specific analysis can reveal the information needed to make appropriate planning decisions.”

Utilities will need to “approach long-term planning thoughtfully,” the waterworks association report said. That includes not overbuilding new infrastructure because technology could reduce water demand over time.