Nevada's local governments are increasingly grappling with how to regulate data centers, and an emerging dispute in Southern Nevada asks a new question: What happens when projects move to federal land? 

Boulder City officials took steps Tuesday to challenge the use of nearby federal land for a data center project that might use three times more energy than the entire city uses, according to one estimate.

The developer initially intended to pursue the project on city-owned land, but after the U.S. Bureau of Land Management (BLM) OK'd the use of federal land in late June, it withdrew its city application.

The saga raises questions about the limits of local officials' power to regulate data centers in a state where more than 80 percent of land is owned by the federal government.

President Donald Trump last year signed an executive order to streamline data center development. It instructed government agencies to coordinate on approving projects on federal lands. 

Rep. Dina Titus (D-NV), who represents Boulder City, wrote a letter to BLM expressing her frustration and requesting information on what public consultation happened before approving the land use.

The proposal has also angered residents in the area. Janelle Sorenson, a retiree who's been heavily involved in organizing opposition to data center construction, said Boulder City residents like the "quaint, charming small-town" feel and want no part of major construction in the area. 

"Pinkbox Doughnuts was trying to come here, and they pretty much got booed out of town," Sorenson said of the popular donut chain. "This is a million times worse. We didn't want Pinkbox Doughnuts. We certainly don't want a data center." 

How we got here

The developer — Houston-based Skylar Energy Resources — initiated the process to use federal land for the project six years ago.

At the time, it intended to create a 19 megawatt (MW) solar power-generating facility, in addition to a 35 MW battery storage facility. Power generated at the facility would be delivered to a local substation from the same developer through newly created power lines. A megawatt of power can supply electricity to as many as 1,000 homes. 

The BLM approved this land use in 2023 for the construction of solar fields. 

However, the developer changed its proposal in November from building solar fields to building a data center spanning millions of square feet, in addition to a 70 MW battery storage facility that will help power the data center.

The facility — at its peak demand of 167 MW — would rely on electricity from a nearby substation. About 30 percent to 50 percent of this substation's power is from non-carbon renewable energy sources, according to project documents, and the developer would tap into these sources "when it is economically feasible."

However, the facility would also have 167 MW of biodiesel or natural gas generators on tap in cases of long outages and system emergencies, according to project documents.

The project would not tap into Boulder City's electrical system, according to project documents. 

The BLM approved this updated project in late June. In its justification, it said the environmental effects would be similar to the previously approved project and that the existing public input on the proposed solar field project was "adequate" for the new proposal.

Boulder City officials countered that this was a "departure from previous precedent and procedure as the BLM sweepingly approved an entirely new land use" with no additional consultations with the city or public. 

At Tuesday's meeting, Boulder City elected officials said they were not contacted by the federal government ahead of the approval — the city attorney, Brittany Walker, said she only received notice of the approval itself. Though the land is within city limits, BLM owns the land itself, which means that Boulder City would not be able to lease the land to Skylar Capital Management, the company building the project titled Townsite Solar 2 

"We didn't have a chance to say yes," Boulder City Mayor Joe Hardy said during the meeting. 

Though Boulder City has little say in the approval of the project on federal land, Walker said the city is able to regulate the land that the data center sits on through passing zoning regulations. In that sense, it could pass ordinances related to noise, design and setbacks. 

"The city did reach out to the BLM several times, asking about the status of the application, but each time we were just provided answers to our questions. We were not involved in a collaborative way," Walker said. 

'A bunch of BS'

By shifting the project to federal land, the developer will not generate revenue for city coffers. If it were built on city-owned land, Boulder City would have received roughly $2.3 million annually for leasing the land, as well as taxes. 

The $2.3 million pales in comparison to a similar project in Richland Parish, Louisiana, where the rural town received $42.9 million in sales and taxes from a Meta project. Some of the proceeds for that project went to the local school district where some teachers received more than $50,000 in bonuses. 

The loss of revenue is one of the reasons the city is appealing BLM's approval. However, some residents say no money is enough. 

Several dozen residents spoke at Tuesday's city council meeting. Many discussed fears over water usage, harm to local wildlife, noise, air pollution, increased heat and more. Data center construction in the area will likely delay Nevada's clean energy goals due to increased demand. 

At times, the mood turned ugly, with one person who called into the meeting calling Hardy an expletive, inducing gasps in the crowd. Many residents also expressed disappointment in how the process had been handled, with some saying it made them consider selling their homes. 

Some speakers raised conspiracy fears, citing unfounded evidence that the data center would use surveillance technology on the community, that there were hundreds of data centers being built elsewhere in the Las Vegas Valley or that the center would use the water intensive evaporative cooling methods in the facility. 

Tray Abney, a lobbyist for the Nevada Data Center Alliance, said he has been confused by the backlash against data centers compared to other forms of manufacturing. He said that people should be protected from the effects of industrial centers, whether that be data centers or any other form of industrial production. 

"Let's remember that these are just buildings with computers in them," Abney said.

He said he thinks that much of the controversy can be traced back to fears of artificial intelligence (AI). He pointed out that data centers have existed for decades, powering services such as Instagram, YouTube and storing electronic files for hospitals, schools and offices. 

"A lot of it is just getting caught up in the whole cultural AI discussion," he said .

Residents disagree. Sorenson said that the whole process was insulting to residents. At one town hall, she said the company was doing little to address their concerns, instead telling residents blankly "how great it was going to be." 

"They stopped short of saying it is going to smell like pumpkin spice lattes," Sorenson said. "It's just a bunch of bullshit." 

What comes next

This week's decision means the matter will head to the Interior Board of Land Appeals, a panel within the U.S. Department of Interior. 

Most cases are resolved in two years, according to the department, but some have stretched on for as long as six.

However, there are other avenues available that could yield a faster timeline. The BLM's decision can also be appealed in federal court, said Olivia Tanager, the director of the Sierra Club Toiyabe Chapter. It's unclear whether anyone will pursue this kind of action in this case.