An AI data center suing for Colorado River water highlights a bigger question: Who should get the West's water?

The developer behind what would be California’s largest AI data center is suing for access to Colorado River water, the threatened source of freshwater for 40 million people and the subject of countless disputes over water use in the West.

The lawsuit, filed this month by Imperial Valley Computer Manufacturing, says the company needs access to 287 million gallons of water for the 330-megawatt data center.

If the proposed project in Southern California’s Imperial Valley is built, it would be the largest AI data center in the state.

The lawsuit was filed after the Imperial Irrigation District, a local agency that delivers Colorado River water in the Imperial Valley, denied the company’s request for water for the project.

It also comes as communities across the US push back against data centers.

The Colorado River is the only source of freshwater in the Imperial Valley, which has long faced drought and water supply issues.

The developer, Sebastian Rucci, said the project would not add to demand on the river overall because the company would fallow, or stop irrigating, nearby farmland and use that water to cool the data center instead.

Rucci told Business Insider the proposal would have “zero impact” because the data center would not require any additional allocation from the Colorado River, adding that its water demand would be similar to that of a 160-acre farm.

Water experts and local advocates say the case raises a bigger question than how much water a single data center should use: As water becomes scarcer and new industries increase demand, should water historically used for farming be redirected to power the AI boom?

Imperial Valley’s identity has been tied to farming, with cattle, alfalfa, lettuce, and spinach among its top commodities.

John Fleck, a writer and water policy expert at the University of New Mexico, told Business Insider that “taking land out of agricultural production to use for other things is a values question, even if it’s a small amount.” Michael Cohen, a senior fellow at the Pacific Institute focusing on Colorado River Basin water use, said the issue is not necessarily the amount of water, but rather the developer’s plan to access farmland, dry it up, and reallocate it for industrial use. “There’s a lot of resistance in any agricultural community to ‘buy and dry’ because that’s jobs,” he said.

Rucci said his company has a contract to purchase the land and water assignments from farmers.

He also said he pursued this strategy after his proposals to use reclaimed water were rejected.

While individual landowners may profit from the practice, taking farmland out of production can have cascading effects in agricultural communities, including fewer farm-related jobs.

Imperial Valley’s economy has long relied on Colorado River agriculture.

If it weren’t for that part of the country around Imperial and Yuma, Arizona, “no one in America could afford a salad in February,” Rhett Larson, a water-law expert at Arizona State University, said.

Larson said that while farmers may make money selling land or water rights, the people who are often hurt are the fertilizer salesmen, tractor repairmen, teachers, dry cleaners, or anyone in these rural communities who doesn’t have land or water rights to sell.

Rucci said the data center would bring major economic benefits to Imperial County, including 1,688 construction jobs, over a hundred permanent jobs, and an estimated $2.95 billion in economic improvement over 30 years, citing an independent economic study prepared for the county. “Economic diversification is exactly what the area needs,” Rucci said in an emailed statement, pointing to Imperial County’s high unemployment.

The county’s unemployment rate was about 17% as of May, according to state data.

Eric Reyes, an Imperial Valley resident and the executive director at the advocacy organization Los Amigos de la Comunidad, said he’s concerned the lawsuit is an attempt to circumvent the Imperial Irrigation District (IDD), a publicly owned utility governed by an elected board.

Water rights in the area have long been held in trust by the IID, rather than individual landowners.

Reyes said the developer’s plan “raised a huge red flag” because it could involve a “private deal with a landowner and then use it for his own purpose.” He sees it as an attempt to circumvent the IID and give landowners more power over water, some of whom, he says, want to “farm water instead of farmland” — or sell water intended for farming — because it can be more lucrative.

Rucci rejected the idea that the company is trying to circumvent IID’s control and said farmers have the right under state law to assign water, and that the proposals would not require “a single additional drop” from the Colorado River.

Larson said the case shows why water fights in the West are rarely only about conservation. “Everybody will say, ‘Well, we need to conserve water,’ but they’ll often stop at that point,” he said. “We need to ask another question, which is, ‘conserve it for what?'” Moving water from farms to data centers could be a choice some communities make, Larson said, but there will be tradeoffs. “The Colorado River basin has to decide what we want to be when we grow up and what it will take to get there,” he said. “We have enough water to do a lot of great things.

But we don’t have enough water to do every good thing.”