RESOLVING THE LEDGER
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0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. A federal decision to allow a large data center project on public land in southern Nevada is facing a growing legal challenge, setting up what opponents say could become a national test case for the Trump administration's push to accelerate data center development.
Residents near Boulder City, environmental groups, federal land managers, technology developers and communities across the West could all be affected if the approval process becomes a model for future projects.
Newsweek contacted the BLM and Skylar Capital Management, the developer of the site, for comment via email on Wednesday morning.
The data center fight extends beyond a single Nevada project. Demand for data centers has surged as technology companies race to expand artificial intelligence infrastructure, prompting pressure on governments to accelerate approvals for facilities that require vast amounts of land, power and water.
Critics argue that speeding up federal permitting risks weakening environmental review and local oversight, while supporters contend additional data center capacity is critical for economic growth and U.S. competitiveness in AI.
The controversy centers on the proposed Townsite Data Center in Eldorado Valley, near Boulder City, often known as the gateway to the Hoover Dam.
According to local officials, Houston-based Townsite Solar 2 LLC originally secured federal approval in 2023 for a solar and battery-storage project.
In 2025, however, the company amended its application to include plans for a data center.
On June 26, the BLM, which operates within the Interior Department, approved the amended right-of-way, allowing the project to proceed on federal land.
Boulder City officials contend the agency should have required a fresh review rather than relying on approvals associated with the earlier solar project.
Their objections intensified after city leaders said federal officials did not coordinate with local government during the approval process despite the project's potential effects on municipal services and infrastructure.
The legal challenge focuses largely on whether federal officials complied with environmental review requirements.
The Center for Biological Diversity and Sierra Club Toiyabe Chapter filed an administrative appeal this week, arguing the approval relied on what they described as an unusual permitting pathway that avoided public participation and environmental scrutiny.
"It's an outrage that the Trump administration is giving away our public lands to hedge funds for data centers," said Patrick Donnelly, the Great Basin director at the Center for Biological Diversity. "Public lands are for wildlife and clean water, for recreation and spiritual renewal. They're not meant for big tech companies to spew air pollution and suck down water for AI and the surveillance state."
Environmental groups argue residents never received a formal opportunity to review data center plans or provide public comment before the government granted approval.
Opponents also say the project could affect the desert tortoise habitat in Eldorado Valley and place additional demands on water resources in the Colorado River Basin, where communities continue to face long-term drought concerns .
According to the appeal, the groups believe the BLM unlawfully bypassed environmental laws by treating the transition from a solar project to a data center as a sufficiently similar land use that did not require a new review process.
City officials have portrayed the fight as a broader question about federal authority and local control.
Boulder City Attorney Brittany Walker has argued that federal land managers traditionally work with local jurisdictions on projects of this scale, allowing communities to address zoning standards, infrastructure demands and land-use concerns.
She said the city is questioning both the process and precedent behind the approval, arguing that the dispute could become a broader test of how far federal agencies can go in overriding local concerns.
According to Walker, officials were not allowed to weigh in on land-use issues before the project received approval.
"They would have had to work with us and we could have discussed our local land use codes and work with the [Bureau of Land Management] on that, but we were not consulted," she said.
The proposed site sits on federal land but lies within Boulder City's geographical area, meaning local police, fire, water infrastructure and transportation networks could ultimately support the development if construction proceeds.
Several city council members have publicly criticized the approval process, while residents packed council meetings in recent weeks to express concerns about environmental impacts and resource consumption.
Beyond officials and environmental groups in Nevada, polling indicates that many Americans are wary of having data centers built near where they live.
A Verasight survey conducted May 13-18 among 3,000 U.S. adults examined public attitudes toward AI infrastructure.
Respondents were randomly assigned to separate survey modules containing about 1,000 participants each. The margin of error was plus or minus 3.2 percentage points for the Technology, Identity and Global Issues module that included the data center questions.
When asked what they would do if a new data center were proposed in their community, 40 percent said they would sign a petition opposing the project.
Another 28 percent said they would contact a local official to oppose it, while 25 percent said they would publicly oppose the proposal at a local meeting. Twenty percent said they would attend a protest.
Only 9 percent said they would publicly support a data center at a local meeting and 9 percent said they would contact a local official in support of the proposal.
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