Minnesota water policy outcomes from the 2025 session

Minnesota’s 2025 legislative session yielded progress for state water policy and funding, following a lengthy and unconventional process. The regular session ended on May 19 with work left to accomplish, necessitating a special session to finalize bills and agreements for the two-year state budget. On the morning of June 10, the Legislature concluded a one-day marathon special session, passing 14 bills that have since been signed into law by Governor Walz.

Freshwater and our lobbying firm, Park Street Public, worked closely with legislators, state agencies and partner organizations to advocate for a number of water policy and funding initiatives. Here is a look at how our priority issues fared this session, along with several other water issues of interest.

Passage of a bonding bill to fund urgent water infrastructure needs

Going into the session, a bonding bill had not been passed since 2023, leading to a backlog of deferred drinking water, stormwater and wastewater projects across the state. Water infrastructure is critical to support public health and the economy, and project costs increase each year they are not funded.

Freshwater voiced support for water infrastructure funding in partnership with city and water industry representatives, meeting with legislators who serve on the bonding committee and represent key districts around the state. We also advocated for continued investment in the state’s match for the federal Conservation Reserve Enhancement Program (CREP), which compensates landowners through perpetual conservation easements for soil protection, water improvement and habitat. Freshwater supported Governor Walz’s bonding proposal of $9.3 million for this purpose.

Outcomes (water infrastructure funding)

Capital Investment bonding bill (HF18/SF21) – A $700 million bonding bill was released and passed during the 2025 Special Session – of which $176 million total was allocated for Public Facilities Authority (PFA) programs. HF18 passed the House 116-15 and the Senate 57-10 with the required supermajority votes. The bill included:

• • $87 million for the PFA's Water Infrastructure Funding Program.
  • $32 million for the PFA’s Point Source Implementation Grants Program.
  • $18 million for a new Emerging Contaminants program meant to fund water system upgrades for contaminants like PFAS.
  • No funding for CREP was included in HF18.

Siting and development of water-intensive industry

With an influx of proposed data centers (at least 10 hyperscale facilities) and other water-intensive development in Minnesota, the siting and design of these facilities is critical to the future of drinking water supplies and aquatic ecosystems. Freshwater decided early in the session to focus on this issue and became a lead organization advocating for more scrutiny around where and how large water use projects are developed.

This work included introduction of a water availability atlas bill (HF2918/SF3015). Authored by Rep. Kristi Pursell (DFL-Northfield) and Sen. Jennifer McEwen (DFL-Duluth) with bipartisan coauthors, the bill proposed spending $300,000 for the DNR to work with the Minnesota Geospatial Information Office to develop a siting methodology for large water users around the state. While it received a hearing in both the House and the Senate Environment committees, this idea was not included in an omnibus bill during the regular session. However, the Omnibus Environment Bill that passed during the special session does include funding for a GIS platform to identify sites with the least amount of conflict for complex development projects (see the outcome below regarding Minnesota Business First Stop).

Rep. Patty Acomb (DFL-Minnetonka) was a lead legislator focusing on data center issues as co-chair of the House Energy Finance and Policy committee. Rep. Acomb, Sen. Ann Johnson Stewart (DFL-Plymouth) and others co-authored  HF3007/SF3320, which proposed a suite of provisions for increased oversight of water-intensive projects – and laid the groundwork for a data center bill that passed during the special session.

Outcomes (data centers and large development projects)

Data Center bill (HF16/SF19) – The special session agreement between leaders included a standalone data center bill, HF16. This bill included energy and water provisions, as well as definitional and policy provisions around hyperscale data centers, and it passed the House 85-43 and the Senate 40-6. Water-use policy in the final bill includes:

• • Preapplication Evaluation of Certain Water Appropriation Projects: HF16 creates a formal DNR preapplication review process for data centers planning to use over 100 million gallons of water annually. The evaluation is required before a permit application is filed. This language may be found in Section 3, starting on line 2.3.
  • Permit Conditions: HF16 establishes permit conditions for water use permits for data centers consuming more than 100 million gallons of water per year. These conditions include requiring protections for public welfare, water conservation practices, and conflict resolution for water use; an aquifer test can also be required as needed. This language is found in Section 4, starting on line 3.2.

Omnibus Environment bill (HF8/SF3)

• • Business First Stop – SF3 included an increase to Minnesota Business First Stop (an office housed at the Minnesota Department of Employment and Economic Development) base budget of $444,000 per year. Of this increase, $100,000 in FY26 and FY27 is for developing a GIS platform that can be used to identify “least-conflict” sites in the state for economic development projects.

Safe drinking water for all: Support for private well owners and continued nitrate contamination mitigation

Unsafe levels of nitrate and other contaminants in drinking water are a serious health concern across Minnesota, especially in the southeastern part of the state where the karst geology makes groundwater particularly vulnerable to land-use practices.

Similar to the 2024 legislative session, there was discussion and legislation related to nitrate mitigation in private wells. Freshwater engaged in discussions with legislators, stakeholders, and agency officials around the need for funding for this work and policy changes that could incentivize reducing nitrogen use and groundwater contamination.

A nitrate mitigation bill (HF821/SF1183) introduced by bipartisan authors and coauthors had a $3.866 million appropriation in FY26 and FY27 for reverse osmosis, well repair and well reconstruction of private drinking water wells with nitrate levels above 10 milligrams per liter. Targeted to southeastern Minnesota counties, this work would be shared between the Department of Agriculture and the Department of Health. Unfortunately, with a lack of available funding, this appropriation was not included in the Omnibus Agriculture bill.

Outcomes (soil health and nitrate reduction)

Omnibus Agriculture bill (HF2446/SF2458)

• • Study of Olmsted County soil health program – The Omnibus Agriculture includes a $75,000 appropriation to conduct a study of the practices and performance of the Olmsted County groundwater protection and soil health initiative (lines 6.10-6.25 of the bill). This is a program conducted by the Olmsted County SWCD that has been very successful at incentivizing and educating farmers to implement practices that can reduce nitrate such as cover crops, small grains and haying or grazing. Since 2023, the program has reduced ~ 295,000 pounds of nitrogen and could serve as a model for other parts of the state.
  • Biofertilizer innovation program – Additionally, the Omnibus Agriculture bill establishes a pilot program for Biofertilizer Innovation and Efficiency (lines 71.21-72.26) and appropriates $250,000 in FY26 and FY27 to establish and administer the program. Coordinated by the Minnesota Department of Agriculture and the University of Minnesota, this aims to improve water quality by incentivizing farmers to reduce nitrogen fertilizer use through biofertilizers and innovative technologies. It would provide per-acre payments to farmers who reduce nitrogen by 15 percent or 30 pounds per acre. To be eligible, a farmer must reside in one of the specified counties (mostly in southeastern, central and southwestern Minnesota), document their nitrogen reductions and methods, and enroll at least 40 acres.

Soil and water conservation district funding

Freshwater supports an increase in long-term funding for soil and water conservation districts (SWCD’s). SWCD’s are frontline partners for implementing soil health and water conservation programs designed to ensure clean water and resilient landscapes.

SWCD’s have historically been funded at insufficient levels, with the Clean Water Fund providing supplemental support in recent years. In 2023, the Legislature created an SWCD aid fund with $30 million for FY 24-25 ($15 million per year) and $12 million per year in FY 26-27. It was appropriate to shift base funding for SWCD’s to the General Fund, but this resulted in a significant reduction in services that are key to achieving state water goals.

Outcomes (SWCD funding)

Tax bill (HF9/SF20) – The tax bill did not contain any increases for SWCD aid. The aid will remain at $12 million per year for now.

Maintaining integrity of state environmental funds

One of the major issues of contention going into the 2025 Legislative Session was protecting the integrity of the state’s constitutionally dedicated funds, including recommendations made by the Legislative-Citizen Commission on Minnesota Resources (LCCMR) and the Clean Water Council.

Following a thorough vetting process, the Clean Water Council proposed its FY26-27 funding recommendations. These included a number of key items that Freshwater supports such as the private well initiative (MDH), aquifer monitoring for water supply planning (DNR), conservation equipment assistance (MDA), chloride reduction efforts (MPCA), and accelerated implementation of watershed plans (BWSR).

The reauthorization of the Environmental and Natural Resources Trust Fund (passed by 77 percent of voters in November) included an additional 1.5 percent of the fund to be annually directed to a new Community Grants Program through the Minnesota DNR; 5.5 percent of the fund continues to go toward LCCMR projects as before. Intended to provide grant access to new and smaller organizations, the program became a point of contention with a House proposal that would have redirected 95 percent of Community Grants funding to other projects.

Outcomes (Clean Water Fund, Environment and Natural Resources Trust Fund)

Omnibus Legacy Finance bill (HF2563/SF2865) – Clean Water Council recommendations passed with no changes.

Omnibus Environment Finance bill (HF8/SF3) – Passed during the special session, the bill includes LCCMR funding recommendations and the Community Grants program funded fully at $28.18 million. There remains an advisory council to oversee the Community Grant Program funds; state agencies and the University of Minnesota can’t receive these funds, and the DNR is required to report back to the Legislature by December 15, 2025, on its plans to implement the program.

Additional policy items

• Chloride/smart salting legislation: A bill was introduced this year (HF793/SF492) with bipartisan authors to grant limited liability protection for certified applicators who complete MPCA smart salt training. The bill was similar to proposed legislation in recent years, but it did not receive a hearing this session.
• Anthony Falls Cutoff Wall Study extension – An extension of this study to 2026 was included in the Omnibus State Government bill, HF2783/SF3045. As a partner on the project, Freshwater worked with legislators and stakeholders on getting this legislation drafted and heard.
• Infrastructure Advisory Council repealed – SF3045 also repealed the new Infrastructure Advisory Council, which Freshwater and other partners were engaged with.
• Minnesota Geological Survey funding intact – Earlier in session, the Senate Omnibus Higher Education bill zeroed out the Minnesota Geological Survey’s base funding. Freshwater engaged with members of the Higher Education committees in the House and Senate on the importance of this funding, and ultimately this reduction was not included in a final Higher Education agreement.
• Sustainable aviation fuel: During the regular session, an agreement was reached between industry, agriculture groups, environmental stakeholders, and state agencies on policy regarding eligibility for the Sustainable Aviation Fuel (SAF) tax credit. These eligibility requirements were based on feedstocks and lifecycle emissions. However, this SAF policy was not included in the final Tax bill (HF9) that passed during the special session. The only SAF item in the tax bill is an extension of availability for the existing credit.
• Permitting reform: An agreement was reached between legislators, the Walz administration, and business/industry/labor stakeholders. The entire permitting reform package is in Article 6, starting on line 156.1 of the Omnibus Environment Bill (SF3). One specific item to note is language beginning on lines 163.13-163.25: It narrows the eligibility of Minnesotans who can petition for an Environmental Assessment Worksheet on a proposed project; whereas previously you needed to reside or own property anywhere in the state, you now must reside or own property in a Minnesota county where a proposed project will be undertaken or in an adjoining county.
• Water use and permitting fees: SF3 includes increases to DNR water use fees based on annual volume, along with an increase in the water appropriation permit application fee from $150 to $600.
• PFAS: There were a number of proposals this session to loosen PFAS restrictions under Amara’s Law such as exemptions for cookware and other nonessential uses. The Omnibus Environment bill includes a few minor changes to PFAS policy, including extensions for airport hangars as they work to switch over from Class B firefighting foam, exempting internal components in existing banned products until 2032, and exempting juvenile ATVs and OHVs from the “juvenile products” category.