The decisions by the Environmental Appeals Board inSturgeon Lake Cree Nation v Designated Director under the Water Act, re: Municipal District of Greenview No. 16 and the Court of King’s Bench Sturgeon Lake Cree Nation v Alberta (Minister of Indigenous Relations)
Unlike oil and gas, mining or forestry activities, Alberta does not have a specific regulatory system in place for data centres. Rather, it depends on regulating aspects of data centre development and operations through generally applicable legislation such as the Municipal Government Act, the Environmental Protection and Enhancement Act (EPEA) and the Water Act. As a consequence, there is a real risk that the impacts of data centre development and operations will not be considered before making decisions. This risk can be alleviated by requiring data centres – particularly hyperscale data centres – to undergo environmental assessment in accordance with EPEA.
For more on data centre regulation, see our recent blog post and our newly published brief
This blog post looks at the proposed Wonder Valley AI Data Centre and the water licence which was issued to the Municipal District of Greenview in April 2025. The decision to issue a water licence was appealed to the Alberta Environmental Appeals Board (AEAB) by the Sturgeon Lake Cree Nation (SLCN). The AEAB dismissed the appeal on the grounds that the SLCN were not directly affected by the decision and therefore lacked standing to bring the appeal. As a result, there was no consideration of substantive matters by the AEAB.
The SLCN has also filed a judicial review, which the Court of King’s Bench (ABKB) has confirmed will proceed. In its August 13th decision, the ABKB considered and denied the application by O’Leary Digital Limited (ODL) to strike the SLCN’s judicial review on the grounds that ODL was not affected by the water licence decision as the licence was issued to the MD of Greenview not ODL. Because this was a preliminary motion to strike, there was no consideration of substantive matters at this time (but those will be heard and considered once the matter proceeds, likely later this year).
Before reviewing the AEAB’s and the ABKB’s decisions, this blog post will provide background information on water licences under the Water Act and on the proposed Wonder Valley AI Data Centre project. Beyond the AEAB decision, however, this situation illustrates the need for a cohesive approach to considering and regulating data centres. The current regulatory approach is piecemeal: looking at pieces of data centres such as water usage, co-located power plants and municipal zoning without necessarily looking at the whole project. Not only does this mean the totality of a data centre and its impacts may not be considered, it can make public participation difficult given the restrictive “directly and adversely affected” test used to assess standing in regulatory processes. It is proposed that environmental assessment of data centres – particularly hyperscale data centres – be required to enable consider the entirety of data centre enterprises including water licences and approvals, habitat and surface disturbances, and co-located power plants.
The Wonder Valley AI Data Centre proposal, the municipality and the Water Act
Under the Water Act, a water licence is required for a diversion of water. A diversion of water is defined in section 1(1)(m) as “the impoundment, storage, consumption, taking or removal of water for any purpose”.[1] Data centres typically rely on water for the purposes of cooling computer equipment either directly within the data centre as a heat transfer medium or indirectly by using additional electrical power for cooling purposes. Although there is little data on the water usage by data centres, certain existing data centres are known to consume a lot of water.[2] For example, in 2021, Google’s data centers in Dallas consumed 355 million gallons of water which accounted for 29% of the City’s total water consumption.[3] Factors to decrease water usage by a data centre include server efficiency, electrical grid water consumption factors, server utilization, cooling system type, infrastructure efficiency, climate zone, inactive server percentage, and server refresh cycle.[4]
ODL’s proposed Wonder Valley AI Data Centre will occupy approximately 64 km2 in the Greenview Industrial Gateway (GIG) and recent reporting indicated that the facility is projected to use up to 6 million m3 of water when fully operational.[5] Although there are some projections that up to 24 million m3 will be used (see Wonder Valley Fact Sheet). In February 2024, a Preliminary Certificate was issued to the Municipal District of Greenview for industrial and commercial purposes within the GIG allowing diversion of up to 24 million m3 annually. Note that a preliminary certificate essentially is a promised allocation of water and a water licence is required for the actual diversion to occur. As such, in April 2025, Water Licence DAUT0021649 was issued to the MD of Greenview for industrial and commercial purposes within the GIG allowing diversion of 6 million m3 annually. This preliminary certificate and water license are seemingly intended to support the operations of the Wonder Valley AI Data Centre (but note that neither the water licence application nor the Aboriginal Consultation Office Assessment mention Wonder Valley or data centres in general). Indeed, the ABKB’s decision indicates that an agreement has been made between the MD of Greenview and ODL “purporting to transfer both the Water Licence and certain GIG lands to ODL” and that “ODL claims a contractual interest in the Water License” issued to the MD of Greenview (para. 2).
As overall concerns about data centres increase, the fact that the municipality rather than the data centre itself applied for the water licence is complicating. While water licences issued to municipalities for industrial purposes are not out of the ordinary, the pursuit of a generalized water licence on behalf of a single entity appears unusual. This approach may complicate issues around transparency and disclosure of information. This approach also makes the municipality liable for any issues arising from compliance with the licence and licencing conditions and could lead to inspection and investigation challenges should they arise. The structure of this licence means the municipality must take care to condition any related developments arising from the licence to ensure it can meet its provincial regulatory requirements, particularly around monitoring and reporting. For these reasons of transparency, public discourse and assumption of regulatory obligations, municipalities should be hesitant to act as agents in this regard.
Water use questions remain
According to the Greenview Industrial Gateway Factsheet, the Wonder Valley AI Data Centre is projected to use up to 9GW of power.[6] It is not clear how much water is required to generate that much power or how that usage contributes, if at all, to the water usage estimates. While the initial licence decision relates to a diversion of 6 million cubic metres, it is unclear whether this is for all phases of the project or merely part of the project. Furthermore, there is little published available data on the water diversions and consumption by Alberta’s existing natural gas power plants (many of those plants received water licences when they were running coal-fired generators which require more water). This is despite the fact that this water use information should be publicly available as it should be reported under the licence conditions and is disclosable under the legislation. In preparing this blog, we did find that the Shepard Natural Gas Plant is cited for its use of wastewater, which avoids diverting 6 million m3 from the Bow River for its 860 MW combined cycle generating plant (see Enmax’s website: Shepard Energy Centre marks 10 years of powering Alberta). This being the case, there are additional questions around water use under different buildout scenarios in relation to the proposed Wonder Valley AI Data Centre. Note that the ELC will be seeking the relevant water-use information from the regulators in relation to other natural gas power plants, while recognizing that there can be significant variations in water use depending on the technology used for natural gas power generation.
The Alberta Environmental Appeals Board Decision
The SLCN appealed the issuance of Water Licence DAUT0021649 to the AEAB arguing that they were directly and adversely affected by the water licence and were not properly consulted on its issuance. The SLCN stated that it would be impacted by:
- a reduced ability to fish, hunt and trap;
- an inability to use water in sufficient quantity and quality;
- impacts on fish and fish habitat;
- impacts to their ability to gather culturally and spiritually significant medicines, food source plants and traditional use plants; and
- impacts to culturally sacred sites
among other things.
In its decision, the AEAB only considered the preliminary issue of whether the SLCN had standing to bring the appeals. Since it found that the SLCN lacked standing, there was no consideration of substantive matters. The AEAB did find that members of the SLCN have a direct or personal interest in the quality and quantity of water in the Smoky River and the watershed as they use the area near the point of diversion to hunt, fish, trap, gather and exercise their aboriginal and treaty rights, as well as to obtain drinking water from the Smoky River. However, the AEAB found that the SLCN was not directly affected by the decision to issue the licence as there was no evidence submitted as to how the alleged impacts directly or adversely affect the SLCN or how impacts were connected to the decision to issue the licence.
In making its decision, the AEAB referenced the Director’s evidence that the impact from the diversion would be negligible representing about 0.0556% of the yearly flow rate and less than 1% of the daily flow rate of the Smoky River. In addition, because the diversion is only allowed from mid-April to mid-November and necessary equipment is to be moved annually, there are no lasting impacts. The AEAB also noted that it is not a constitutional decision-maker and does not have jurisdiction to consider constitutional questions including those around the adequacy of First Nations consultation.
The Court of King’s Bench decision
As mentioned above, in October 2025, the SLCN also filed a judicial review application. In this application, the SLCN challenge the issuance of the water licence due to a failure to consult. They also raise concerns with an associated land transfer in 2021 (where Crown land was transferred to the Municipal District of Greenview), the lack of consultation and lack of consultation requirements in the Government of Alberta’s AI Data Centre Strategy, and the lack of information around the Wonder Valley Data Centre proposal.
This particular decision by the ABKB related to ODL’s application to strike the SCLN’s application for judicial review of the water licence issued to the MD of Greenview. The basis of ODL’s argument is that it has a contractual interest in the water licence due to an agreement with the MD of Greenview and is therefore directly affected by the application for judicial review. ODL goes on to argue that, as a directly affected party, it ought to have been served with notice of the judicial review but it was not and so the judicial review should be struck. In the alternative, ODL seeks to be granted intervenor status or to be added as a respondent to the judicial review.
The ABKB denied the application by ODL and the matter will proceed as a judicial review initiated by the SLCN with the MD of Greenview and government of Alberta as respondents. The ABKB found that there was not sufficient evidence that ODL is directly affected by the judicial review of the water licence. The ABKB states that (paras. 96 and 97):
Even if I was prepared to find that a potential contractual entitlement to receive the Water Licence from Greenview is enough to demonstrate that ODL is directly affected, ODL has not provided sufficient evidence to permit that conclusion.
ODL unilaterally redacted the [agreement] and then urged me to rely on approximately ten isolated provisions in order to decide in their favour. This directly contradicts the Supreme Court’s direction that contracts must be interpreted as a whole; see Sattva. In other words, the evidentiary gap created by ODL’s own redactions precludes a finding that it is directly affected.
On the alternatives of being granted intervenor status or being made a respondent, the ABKB also denied these requests. The ABKB found that ODL only has a contingent and speculative commercial interest in the outcome of the judicial review, it is not directly affected, and “will not provide any expertise or fresh perspective” (para 114). Any arguments to be made about the agreement can be advanced by the MD of Greenview which is the other party to the agreement. As such, the ABKB concludes that ODL should not be granted intervenor status. Similarly, the ABKB determined that ODL does not have a sufficient interest in the outcome of the judicial review, is not directly affected, and the MD of Greenview can raise any relevant matters about the agreement. As such, the ABKB denied the relief of adding ODL as a respondent to the judicial review.
The need for environmental assessment of data centres
The provincial environmental assessment (EA) process is governed by EPEA, which does not include data centres in its Schedule of Activities. However, activities requiring a water licence and power generation activities (i.e. power plants will be co-located with most data centres) are included in the Schedule of Activities and should therefore bring data centres into the scope of the provincial EA process.
On March 31, 2026, the Department of Environment and Protected Areas determined that the Wonder Valley AI Data Centre is not required to undergo a provincial EA. The Director indicated that a data centre is not a mandatory activity for the purposes of EA and, considering the factors listed in section 44(3) of EPEA, further assessment was not required. The factors listed in section 44(3) are:
- the location, size and nature of the proposed activity;
- the complexity of the proposed activity and the technology to be employed in it;
- any concerns in respect of the proposed activity that have been expressed by the public of which the Director is aware;
- the presence of other similar activities in the same general area;
- any other criteria established in the regulations; and
- any other factors the Director considers to be relevant.
The Director did reserve the ability to review the decision in the event of new information coming to light and noted that under section 47 of EPEA, the Minister could require an EA Report to be prepared despite the Director’s decision.
Robust EA enables decisions that consider potential environmental impacts and allow for appropriate mitigations to be put into place. Data centres are often met with local opposition driven by very real concerns around water impacts, land use (loss of agricultural lands), local heat island impacts, noise and visual impacts. These concerns need to be heard and addressed, and the EA process provides an opportunity to do so.
EA should be a requirement for data centre enterprises as a whole, this includes consideration of water licences and approvals, habitat and surface disturbances, and co-located power plants. This wholistic review should apply even if ownership of the data centre, co-located power plant and so on are owned or operated by different entities. It should still be reviewed as a singular enterprise. Furthermore, in the interest of transparency and effective public process, there must be clarity around the relationships among the various enterprise parties and potential licence-holders (for example, if a municipality obtains a water licence for the benefit of another party that ought to be transparently indicated in the application).
Learn more about data centres
Have a look at the ELC’s newest publication – Data Centres in Alberta: Environmental Impacts, Regulation & Next Steps. This brief will highlight the environmental impacts of data centres, outline the current regulatory landscape, and make recommendations for improved decision-making around data centres in Alberta.
Featured Photo by Taylor Vick on Unsplash
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[1] Note that the Water Act also requires approvals for activities that may alter the flow or level of water, may change the location or direction of flow of water, may cause the siltation of water or the erosion of any bed or shore of a water bogy, or may cause an effect on the aquatic environment (section 1(1)(b)).
[2] David Mytton, “Data centre water consumption” (2021) 4 npj Clean Water 11, https://doi.org/10.1038/s41545-021-00101-w [Mytton].
[3] Nuoa Lei, Jun Lu, Arman Shehabi and Eric Masanet, “The water use of data center workloads: A review and assessment of key determinants” (2025) 219 Resources, Conservation & Recycling 108310.
[4] Ibid.
[5] Public information about the Wonder Valley AI Data Centre proposal is sparse but see Eagle Andersen, (June 3, 2026), “Updated info about water use, timelines for proposed Wonder Valley AI project in Alberta”.
[6] Ibid. See also the Wonder Valley Fact Sheet.