The nation’s data center debate has reached Southern Nevada

The fast-spreading national debate over the effects of AI data centers on the environment has reached Southern Nevada, this time taking over Henderson City Hall.

At a meeting Tuesday, officials said they would explore a 180-day pause on data center permit approvals while city staff studies ways city codes could be changed to address concerns about air quality, heat generation, siting and decommissioning plans.

In an interview, Henderson Mayor Michelle Romero said she proposed the moratorium personally after tech companies reached out to city officials. To Romero, a data center pause is a chance to be thoughtful about development.

Last year, officials approved a conditional use permit for the Trammell Crow Co. to build a 300-acre data center campus in the eastern outskirts of the city, but no other companies have active applications, a city spokeswoman said.

“I’m not an IT expert, I’m not a data center expert and, to my knowledge, neither is anybody on the council,” Romero said. “I think we make better-informed decisions when we think about things ahead of time.”

Henderson’s decision to consider a moratorium comes at a time when communities across the state and country are reckoning with skepticism toward AI data centers, which promise a flush of local tax revenue but raise questions about water and energy use, among other impacts.

No other local government in the Las Vegas Valley has floated updated regulations specifically for data centers yet. But with Henderson’s step in that direction, some are hopeful that could change.

Olivia Tanager, executive director of the Sierra Club’s Toiyabe chapter, has been the leading environmentalist pushing for increased oversight in closed city chambers across the state.

Tanager said in an interview that her organization has been in conversation with Henderson officials for months, recommending they put in moratoriums and button up city code until the Nevada Legislature meets again in 2027.

“My vision of Nevada, in an ideal world, is not one where data centers have overtaken the whole state,” Tanager said. “Short of my imaginary millionaire friends funding a ballot measure to ban data centers statewide, this is the reality that we’re working with.”

Statewide anxiety pops Clark County bubble

By far, the biggest limiting factor to data center rollout is energy capacity, and a wave of interest is almost certain to ensure that Nevada falls short of its legally mandated 2030 clean energy goals.

NV Energy says it has received requests to serve 39 proposed data center projects, drawing a projected total of 16,530 megawatts between both the southern and northern regions. The state’s combined peak load capacity is currently 8,241 megawatts, according to the utility website.

“These are requests, not firm commitments to service,” utility spokeswoman Katie Jo Collier wrote in a statement. “We are not planning to serve all proposed projects. We recognize that the scale and pace of potential data center development is unprecedented in Nevada. That is why we are planning carefully and transparently.”

And in the driest state in the nation, where fear is mounting over extreme heat and rising utility bills, Henderson is far from the only city to respond to negative sentiment over data centers.

Boulder City residents have been lobbying against a proposed data center that has the support of the mayor but received a negative recommendation from the city’s planning commission. In November, voters will decide if data centers are an acceptable use of land for a portion of city-owned land in the Eldorado Valley.

Nye County Commissioners approved a temporary moratorium on data centers last month at the urging of its water district, and a second vote that would extend it is pending. Similar votes have taken place or are scheduled to take place at Reno City Council, Churchill County Commission, Humboldt County Commission and others.

But the state’s most populous county hasn’t done much on the issue yet. What it did do quietly in the early 2020s was button up the water use question by banning so-called evaporative cooling that loses water to the atmosphere.

That extends to data centers, meaning all data centers proposed in Southern Nevada after about 2023 cannot contribute to the decline of the Colorado River or Lake Mead by evaporating water to cool computer servers.

“We’re seeing a lot of plans for data centers, and that’s fine,” Southern Nevada Water Authority chief John Entsminger told lawmakers in March. “They can be built without consuming any more water.”

‘Boogeyman of the day’

Growing backlash in the Silver State has spurred the creation of the Nevada Data Center Alliance, the primary advocacy group that speaks up on behalf of tech companies at public meetings.

The group’s spokesman, Tray Abney, said in an interview that he believes politicians are capitalizing on social media hype rather than seeing data center development as an opportunity to rake in stable tax revenue. He sees big tech as the key to diversifying economies that are currently dependent on gaming, tourism and mining.

“For some reason, data centers are the boogeyman of the day,” Abney said. “Yes, there should be guardrails on every type of development, whether you’re building a single family home, a data center or anything in between. But we don’t feel like the amount of press, worry and fear is commensurate with actual impact.”

Nevada has a competitive tax abatement structure that provides tax cuts to data centers, where the state will slash tech companies’ personal property taxes by 75 percent for one or two decades.

Data centers have the seal of approval from Gov. Joe Lombardo, who will face Attorney General Aaron Ford in November’s general election. In a Reno Gazette-Journal op-ed published Thursday, Lombardo said he supports projects that “have responsible plans in place for water usage, energy generation and infrastructure demands.”

Facing some pushback at a meeting Wednesday, Switch, which operates a mega-campus of several data centers in the southwest valley, gained the approval of the Clark County Planning Commission to build another one.

Clark County Commissioner Tick Segerblom said in a phone interview after voting in favor that he’s open to supporting countywide guardrails for data centers. Segerblom said it could be a topic for discussion at a future board meeting or a designated town hall for residents.

“We’re such a small valley,” Segerblom said. “What does it do to our resources: water, electricity and heat?”

All eyes on the 2027 Legislature

Tanager, whose chapter of the Sierra Club has created a list of policy recommendations, said she expects data centers to be a hot topic when the Legislature meets in 2027.

It has already been the focus of an interim committee meeting, where many spoke of their concerns. Many potential impacts of data centers, from noise and air pollution to potential heat generation, have not been the subject of much academic study.

While the state can create larger rules, Tanager said local governments have some power. Ensuring that backup diesel fuel generators meet the Environmental Protection Agency’s strictest standards for air pollution is one example, she said.

To combat the loss of tax revenue due to abatements, Tanager said officials should consider a “sliding scale business impact fee,” which would ensure that communities get proper compensation depending on the extent of impact.

“We’re continuing to have those conversations and trying to figure out what the pathways are,” Tanager said.

Her organization has suggested that Southern Nevada’s evaporative cooling ban could be extended statewide — something that Abney said his members oppose.

Abney said a “one-size-fits-all” approach to any data center regulation is not preferred, though he said many fears about water impacts are unfounded and based on old information as technology has evolved.

Now, the stage is set for a larger battle between business interests and environmentalists in Carson City.

“I would just caution all of our local governments before they start putting moratoriums and putting a stop sign up to this massive investment,” Abney said. “These things are not going away.”