As hyperscale data centers race to feed the artificial-intelligence boom, the public records that would show how much water and electricity they consume have become some of the most closely guarded documents in municipal government. Two lawsuits filed in the past seven months — one against the City of Racine, Wisconsin, the other against Montgomery County, Missouri — illustrate a widening pattern: local officials signing nondisclosure agreements with Microsoft and Amazon Web Services, then using those agreements to refuse public-records requests that state sunshine laws were written to honor.
The disputes are producing the first hard numbers on the water footprint of the AI buildout. After a 210-day standoff and a court filing, Racine officials were forced to release records showing that the first phase of Microsoft’s Mount Pleasant campus would draw roughly 234,000 gallons per day of Lake Michigan water while returning only 81,000 gallons — a net consumptive loss of about 8 million gallons in 2026 alone, with later phases projected to push total withdrawals several times higher. The Missouri petition, filed April 11 in Cole County Circuit Court, seeks to void up to $35 billion in industrial revenue bonds authorized for a 1,000-acre Amazon campus after the county allegedly concealed water-impact studies from local taxing districts.
Taken together with federal legislation introduced last month and a parallel transparency fight unfolding in Texas, the cases mark the opening phase of what is shaping up to be the most consequential public-records battle of the AI era.
Racine: A 210-Day Stonewall on Lake Michigan
The Wisconsin case began with a routine request. In February 2025, the nonprofit Milwaukee Riverkeeper asked the City of Racine for documents projecting how much Lake Michigan water Microsoft’s new data center campus would withdraw through the Racine Water Utility. City officials did not acknowledge the request for more than seven months. In September, the advocacy group Midwest Environmental Advocates filed suit in Racine County Circuit Court on Riverkeeper’s behalf, alleging violations of the Wisconsin Public Records Law.
Within days of the filing, the city released the documents. According to the records, the first of Microsoft’s planned data center buildings would consume roughly 8 million gallons of Lake Michigan water per year on a net basis, with peak draws of up to 234,000 gallons per day. The site sits on the former Foxconn campus in Mount Pleasant, where Microsoft is investing more than $4 billion to build an AI-focused hyperscale facility.
The legal filing and subsequent disclosures raise several issues that echo in similar disputes nationwide:
- The water-use projections had existed in city files for months before the request was filed, according to the complaint filed by Midwest Environmental Advocates.
- Nondisclosure agreements between the municipality and Microsoft were cited internally as a reason for delay, though Wisconsin courts have repeatedly held that such agreements cannot override the state’s public-records statute.
- The released numbers cover only the first of multiple planned buildings on the campus. Total water demand once the facility is fully built out has not been publicly disclosed.
Wisconsin Public Radio reported that tech firms routinely use NDAs with local governments to shield data-center specifications from competitors, but those agreements can directly conflict with state open-records laws. Midwest Environmental Advocates has said it intends to pursue attorney’s fees under Wisconsin’s records-law fee-shifting provision, which is designed to deter stonewalling.
Missouri: A $35 Billion Bond Authorization Under Challenge
The Montgomery County dispute involves a much larger financial footprint. On April 11, a citizens’ group organized as Preserve Montgomery County LLC filed a 35-page petition in Cole County Circuit Court naming both the Montgomery County Commission and the Missouri Department of Economic Development as defendants. According to KSDK, the suit seeks to void an ordinance authorizing up to $35 billion in industrial revenue bonds and a development agreement for an Amazon Web Services campus on roughly 1,000 acres approximately 80 miles west of St. Louis.
The petition alleges the county violated Missouri’s Sunshine Law by negotiating with Amazon in closed session without the notices the statute requires, and that the commission approved the bond and tax-abatement package — worth an estimated $1 billion in local tax breaks — without completing the water-impact and fiscal-impact studies that state law mandates for projects of that scale. The St. Louis Post-Dispatch reported that the opposition group alleges no competing taxing jurisdictions — including the local school and fire-protection districts — received the statutorily required notices before the commission voted.
Sabrina Cope, the Montgomery County resident who organized the plaintiff entity, told local station KRCG that residents have felt “shut out” of the approval process and that the level of transparency has been “abysmal.” The group is seeking emergency injunctive relief to halt preliminary site work while the court reviews the procedural record.
The Missouri case matters beyond its own borders because it tests whether state Sunshine Laws, which in most jurisdictions predate the data-center boom by decades, can be enforced against the type of multi-party NDA-governed negotiations that hyperscalers now demand as a precondition to site selection.
The National Numbers: What Is Actually Being Hidden
The reason water disclosure has become a flashpoint is straightforward: the aggregate figures are large and growing fast. The Environmental and Energy Study Institute has reported that U.S. data centers directly consumed roughly 17 billion gallons of water in 2023, with industry analysts and Lawrence Berkeley National Laboratory projecting that figure could reach 38 to 73 billion gallons annually by 2028 as AI training workloads expand.
A March 2026 analysis from the University of California, Riverside found that without new cooling efficiencies, peak day-ahead water demand from U.S. data centers could rise by 697 million to 1.45 billion gallons per day by the end of the decade — a load that would strain municipal utilities in drought-exposed regions including the Southwest, the Central Valley, and the Colorado River basin.
Those figures exclude the much larger indirect water footprint tied to electricity generation. A 2024 peer-reviewed study estimated that for every kilowatt-hour of power consumed by U.S. data centers, an additional 1.8 to 2.7 liters of water is withdrawn at the generating station for thermoelectric cooling. Industry-standard disclosures under the Uptime Institute’s water usage effectiveness (WUE) metric remain voluntary, and fewer than one-third of operators publish site-level figures.
Federal and State Transparency Push
The Racine and Montgomery County disputes are converging with legislative action. On March 26, 2026, Senator Dick Durbin (D-Ill.) introduced the Data Center Water and Energy Transparency Act, which would require data-center operators to report actual and projected energy and water consumption to the states where they operate, direct states to aggregate those figures for the EPA, the Department of Energy, and the USDA, and authorize civil penalties for noncompliance. A companion measure in the House, H.R. 6984, is pending before the Energy and Commerce Committee.
States have not waited for Washington. According to MultiState, legislatures in California, Iowa, Michigan, Virginia, and Georgia have introduced bills in the 2025–2026 sessions requiring data-center operators to file periodic water-use reports with state utility commissions. In Texas, Public Utility Commission Chairman Thomas Gleeson testified before state lawmakers last week that the absence of comprehensive consumption data is itself a regulatory gap, warning that Texas cannot manage its long-running water scarcity while simultaneously approving data-center interconnections without usage baselines.
Several industry groups have responded by publicizing voluntary commitments to closed-loop and air-cooled designs that reduce evaporative water loss. Whether those commitments translate into verifiable reductions at the site level is among the questions the Durbin bill would force into the open record.
A Pattern of NDA-Driven Secrecy
The Racine and Montgomery County cases are not isolated. E&E News reported that similar public-records disputes are pending or recently resolved in at least eight states, typically pitting small local news outlets, environmental nonprofits, or neighborhood coalitions against municipalities that cite NDAs to withhold engineering specifications, water-withdrawal permits, or economic-development memoranda of understanding.
A common thread links the cases: hyperscalers negotiate with host communities under code names — “Project Sail,” “Project Bluebird,” and “Project Fortress” have surfaced in released documents — and require confidentiality agreements that extend through public hearings and bond votes. When neighbors file records requests, cities invoke the agreements even in jurisdictions where courts have held that private contracts cannot override public-records law.
The secrecy has downstream consequences that are starting to appear in municipal budgets. In several counties that approved large incentive packages before water and grid studies were completed, utilities have since proposed rate increases to fund the transmission upgrades and treatment capacity the campuses require. When residents contest the rate cases, the underlying load forecasts are frequently marked confidential.
What Remains Unknown — and What to Watch
Neither the Racine nor the Montgomery County case has reached a ruling on the merits, and both Microsoft and Amazon have declined to comment publicly on the pending litigation. The companies’ host-community agreements remain under seal in most jurisdictions, and full-build-out water and power projections for the two campuses have not been released.
Three questions will shape the next phase. First, whether Wisconsin and Missouri courts treat data-center NDAs as unenforceable to the extent they conflict with state sunshine laws — a holding that would ripple through pending site-selection deals nationwide. Second, whether the Durbin transparency bill advances in a divided Congress, where a bipartisan coalition of rural-state senators has expressed interest in grid-reliability provisions that could be paired with disclosure mandates. Third, whether state utility commissions begin conditioning interconnection approvals on public water and energy disclosures, as Texas regulators have signaled.
Until those questions are answered, the most reliable data on the AI industry’s resource footprint will continue to emerge the way the Racine numbers did: one court filing at a time.