As a data center developer moves its project forward on federal land in Boulder City using an unusual regulatory mechanism, a heated land use debate has sparked appeals and a resolution in Congress that would ban data centers on federal land.
On Monday, the Center for Biological Diversity and the Sierra Club jointly filed a petition for a stay to the Interior Board of Land Appeals, asking a judge to halt construction while an appeal is processed. The Boulder City Attorney’s office filed its own version on Friday after the City Council voted to direct its staff to do so earlier this month.
“If this isn’t challenged, it won’t stop in Boulder City — it will become the blueprint for data centers across public lands in the West,” said Olivia Tanager, executive director of the Sierra Club Toiyabe chapter, in a Monday statement. “We’re fighting to make sure that never happens.”
What happened in Boulder City has partly spurred the introduction of the No AI Data Centers on Federal Lands Act, a resolution seeking to ban data centers on land owned by the federal government. U.S. Rep. Rashida Tlaib, D-Mich., introduced the measure late last week as H.R. 9939. The resolution’s five cosponsors as of Monday did not include any members of Nevada’s congressional delegation.
Houston-based Townsite Solar 2, a subsidiary of the hedge fund firm Skylar Capital Management, had publicly sought a lease on city-owned land for months for a data center that could have generated $2.3 million in annual revenue for Boulder City, according to city officials. The developer declined to comment further on the appeals through a spokesperson.
After a city panel voted 6-1 recommending against the project’s approval, the Trump administration granted the developer expedited approval to build it on an adjacent parcel of federal land that had already been approved, after environmental review and public engagement processes, for a utility-scale solar project.
Federal land managers determined in approving the switch that the environmental impacts of a solar farm and data center were not different enough to warrant another environmental review.
Opponents argue the two uses are materially different in energy and water demands — as well as understudied impacts including heat emission, noise and air pollution.
Tech companies and pro-industry advocates say local concern is overblown and argued that refusing to approve data centers ignores the benefits they can bring, including jobs, local tax revenue and, in some cases, an expansion of the energy grid.
“Banning data centers on federal lands forecloses economic growth and sets a dangerous precedent of politicians picking and choosing amongst their favored industries while they are in power,” said Josh Smith, a senior fellow at the libertarian legal firm Pacific Legal Foundation. “The federal estate is a massive asset. It has room enough for all kinds of projects.”
Appeals allege approval was illegal
The Bureau of Land Management has said the project review complied with President Donald Trump’s 2025 executive order speeding up the permitting of data centers on federal land. It added that the approval reflected the role of public lands in advancing technology while upholding its principles of responsible stewardship.
However, both of the appeals from the city and environmental groups allege that the Trump administration broke federal laws in approving the Townsite Solar 2 data center without allowing residents to weigh in on the new plan or assess its impact on water supplies.
Attorneys specifically said the Bureau of Land Management failed to meet its public involvement obligation under the Federal Land Policy and Management Act and the National Environmental Policy Act, or NEPA. They also said the agency ignored fundamental differences between the land uses, according to the appeals.
“The (determination of NEPA adequacy) makes a strained attempt to draw similarities between the two projects and their impacts, essentially trying to drive a square peg through a round hole,” attorneys for the environmental groups wrote.
The environmental groups’ appeal raises questions about a sharp increase in the water needed for construction.
While building the solar project would have required the use of 25 acre-feet of water, building the data center would need 560 acre-feet, according to the BLM’s review. One acre-foot of water is enough to sustain at least two single-family households for a year, and Nevada’s full allocation from Lake Mead is 300,000 acre-feet each year.
That water might come from Boulder City’s wastewater treatment plant — the only one in the Southern Nevada Water Authority’s purview that doesn’t send treated water back into Lake Mead. But if no deal is reached with the city, questions remain about where that water may come from.
Costs passed on to Boulder City residents?
In Boulder City’s view, the approval equates to a federal mandate to allow an out-of-state developer to benefit from city infrastructure and services without proper consultation.
In addition to the laws cited in the other appeal, Boulder City staff argues that data centers are not considered an acceptable use under federal law or the BLM’s Las Vegas Resource Management Plan. The data center, which the developer has said will purchase power from elsewhere but use an existing substation, will require the use of three times the city’s electrical load, according to the appeal.
City Attorney Brittany Walker writes “there is no question” the conflict “will directly impact the City’s ability to provide electricity to its residents” via its city-owned utility. It may increase prices for residents at peak times, she added.
Boulder City may find itself in competition with the data center as it searches for power to purchase, she wrote, especially as it fills the gap it will face as Hoover Dam’s hydropower capacity drops by 70 percent soon due to declining Lake Mead levels.
“BLM’s right-of-way grant change from a power-producing project to one that will likely represent the single largest energy consumer in the area will exacerbate an already precarious situation,” Walker wrote.
Walker argues that granting the city a stay — something that would halt the development temporarily and allow for a more thoughtful review — is not a heavy lift for the BLM.
“While the BLM may argue that prioritizing data center development is a matter of national priority, that priority does not excuse BLM from its obligations to examine the impacts of the project under NEPA or consult with local governments,” Walker wrote.
Contact Alan Halaly at ahalaly@reviewjournal.com. Follow @AlanHalaly on X.
