Utah governor issues new data center rules as Kevin O'Leary's Stratos Project faces lawsuits

A 9-gigawatt data centre outraged a Utah community. The governor just issued new rules.

Utah's governor issued an executive order setting new standards for data centres after a 9 GW project backed by Kevin O'Leary sparked protests. Utah Governor Spencer Cox signed an executive order on Friday establishing a "higher bar for data center development" in the state. The order is effective immediately. It follows months of community outrage over the Stratos Project, a 40,000-acre hyperscale data centre campus backed by "Shark Tank" investor Kevin O'Leary that could reach 9 gigawatts of power at full buildout. The framework contains eight principles addressing water resources, air quality, wildlife protection, utility rate impacts, and public comment requirements. "Utahns deserve confidence that water resources, air quality, utility rates, wildlife, and quality of life will be protected," Cox wrote on X. The executive order directs state agencies to adopt the framework. It also requires the Stratos developers to use a phased approach, applying for new permits at every planned expansion. The project cannot proceed as a single blanket approval. Box Elder County commissioners approved the Stratos Project despite significant community opposition. Residents crowded council meetings, circulated petitions, and recently protested outside the Utah State Capitol. More than 2,000 questions and concerns were submitted, containing "a mix of supportive and critical feedback," according to the project's webpage. O'Leary has defended the development repeatedly. Earlier this month, he suggested without evidence that "professional protesters" orchestrated the controversy. He also claimed Chinese funding was fanning the outrage. Local residents rejected both assertions. Supporters say the data centre will create jobs and drive economic growth. Opponents are concerned about water consumption, noise, air quality, traffic, and the impact on the Great Salt Lake, which is already facing an ecological crisis from decades of water diversion. The global race to build AI data centre capacity is intensifying. SoftBank announced €75 billion for 5 gigawatts in France this weekend. The Stratos Project alone would deliver nearly double that capacity in a single location. The scale of AI infrastructure demand is creating land-use conflicts that local governments were not designed to adjudicate. Data centres are becoming strategic infrastructure. In the Gulf, they are being targeted by drones. In Utah, they are being targeted by petitions. The political dynamics are different but the underlying tension is the same: AI infrastructure requires enormous power, water, and land, and the communities that host it are demanding a say in the terms. Data centres are becoming a major political issue ahead of November's US midterms. Communities across the country are rallying against them. In February, residents in New Brunswick, New Jersey successfully blocked a data centre development entirely. The NIMBYism that once focused on housing and wind farms has found a new target. The energy dimension compounds the tension. xAI is powering data centres with unregulated gas turbines in Memphis. SoftBank's Ohio project plans $33 billion in natural gas-fired electricity. The Stratos Project has not disclosed its energy source in detail. For communities that care about air quality and carbon emissions, the power source matters as much as the facility itself. Cox's executive order is a political response to a problem that will only grow. AI compute demand is projected to increase by terawatts over the coming years. The infrastructure to deliver that compute must be built somewhere. Utah is not saying no to data centres. It is saying: not without rules, not without public input, and not without protecting the Great Salt Lake. Whether an executive order is sufficient to balance a 9-gigawatt project against a community of a few thousand people is the question that Box Elder County will answer over the next several years. O'Leary calls the project "Wonder Valley." The residents who live next to it have a different name for it. The governor is trying to find language that works for both.

Utah residents sue officials over Kevin O'Leary data center plan

Kevin O'Leary in Miami Beach, Flo., last month.Romain Maurice / Getty Images file A progressive nonprofit and five Utah residents have filed a lawsuit against government officials and a special entity overseeing Kevin O'Leary's planned Stratos Project data center, alleging that Box Elder County residents' rights were violated. The lawsuit was filed on Wednesday in Utah's Third District Court by the nonprofit Alliance for a Better Utah and the group of anonymous residents. The plaintiffs hope to challenge the constitutionality of the Military Installation Development Authority -- a special entity that oversees the data center's proposal -- and its approval of the project, an Alliance for a Better Utah spokesperson said. Attorney David Irvine, who is representing the plaintiffs, alleges that MIDA is exercising powers as an unelected body that "the Utah Constitution never authorized." "Under the Stratos plan, it would hold permanent, irrevocable control over public health, safety, taxation, and land use across tens of thousands of acres of Box Elder County, with no voter recourse," he said in a statement. The lawsuit alleges that allowing MIDA to oversee the data center's development "irrevocably" cuts off Box Elder County citizens' rights by not allowing sufficient public input in the project. "The Stratos Project Area Plan, and actions taken by MIDA and the Commission to enact the same, puts lawmaking power respecting questions of public health, safety, welfare, morals, taxation, zoning, land use, and the like, in relation to a significant swath of county territory in a non-elected MIDA Board," the complaint reads. In addition to MIDA and the Box Elder County Commission, the lawsuit names Utah Senate President J. Stuart Adams and state Sen. Jerry Stevenson, who also serve as MIDA board members. Irvine said Adams and Stevenson's presence on the MIDA board as active legislators "appears to violate the prohibition on holding more than one office of public trust simultaneously," and claimed this should render the data center's approval "null and void." Adams and Stevenson did not immediately respond to a request for comment. In a statement, a MIDA spokesperson said they are reviewing the lawsuit. A spokesperson for Box Elder County said that officials have not been formally served with court filings. "Once the County receives and reviews the relevant documents, we will evaluate the matter and respond as appropriate," Public Information Officer Lynnette Crockett said in a statement. The original data center proposal included building a 40,000-acre AI data center campus in Utah's Hansel Valley. Celebrity investor Kevin O'Leary told NBC News Wednesday evening that he is "going to have to" slim down the project while political pushback continues to mount. Utah Senate President J. Stuart Adams sent him a letter, requesting a 75% reduction in the size of the data center. Adams announced Thursday that O'Leary conceded to his demands, including the 75% size reduction, a commitment of water to the Great Salt Lake and "thousands of acres to be set aside for open space, wildlife protections, and continued agricultural use." "The response to the demand letter I sent demonstrates that public engagement matters and that Utahns' concerns are being heard," Adams said in a news release. He added that the project is still in its "earliest stages" and a full permitting and environmental review process will be carried out. O'Leary responded Thursday in a post on X, saying his team is "working around the clock to address every issue raised." The Box Elder County Commission gave its first approval related to the project in May, followed by an executive order signed later that month by Utah Gov. Spencer Cox to prioritize several environmental and consumer safeguards. The Box Elder County residents' lawsuit requests that the court deem actions taken by MIDA and the county commission as unconstitutional and judges Adams and Stevenson as unconstitutional appointees of MIDA's board. It also asks for an injunction to "permanently prevent" any further attempts to "implement or otherwise administer the Stratos Project Area Plan." "Backroom deals and pay-to-play have no place in Utah government, and Box Elder County residents deserve a voice in what happens to their community," Irvine said in a statement. "We're going to court to make sure they get one."

It's Going to Be Bigger Than Manhattan and Drain a State of Its Resources. Residents Are Fighting to Kill It.

A remote Utah county has become the latest front in a high-stakes fight to build the infrastructure powering the A.I. boom. Sign up for the Slatest to get the most insightful analysis, criticism, and advice out there, delivered to your inbox daily. Shark Tank's Kevin O'Leary wants to bring the world's largest A.I. campus to Utah. Over the past month, the Canadian American businessman has been planning out this megaproject alongside financiers, private landowners, military strategists, and state officials, on 40,000 acres of unincorporated land in Box Elder County, right next to the ever-dwindling Great Salt Lake. The idea is to collaborate with the military to install a 30-building "hyperscale" cluster as a matter of national security -- i.e., to use a swath of undeveloped Western land to produce high-level American A.I. because, according to O'Leary, "the country with the best AI is gonna win the wars," and he does not want China to get there first. When constructed, the facility will be more than twice the size of Manhattan and bigger even than Bryce Canyon's 35,000 acres. For Utah, that means a space with dozens of data centers, a handful of research facilities, and, potentially, some worker housing. The builders are also adding sleek glass panels and internal office space to craft the "sexiest, coolest construction posting in America," according to Paul Palandjian, the CEO of O'Leary Digital. There's a problem with these futuristic plans, however: A lot of people in Box Elder County don't want this. Community data center resistance is not a new trend in the U.S. But it's been potent enough for Box Elder County that, even in deep-red Utah, the people are likely to demand significant political overhaul. "Most people feel betrayed, and that's bipartisan," Stephen Otterstrom, a longtime Salt Lake City resident running to represent District 21 in the Statehouse, told me. "I have not encountered a single person who's said, 'Wow, this is going to be a great thing for us,' outside of public officials." To take it from Otterstrom's fellow Utahns, the betrayal is not just that the already data-center-dense state is getting another one, but that they feel there was no opportunity for democratic deliberation. O'Leary first began discussing his "Stratos Hyperscale Data Center" with Gov. Spencer Cox back in January and announced the proposal a month later. (Neither O'Leary Digital nor Cox responded with comment when reached for this story.) However, Box Elder residents didn't learn about Stratos until late April, when the county commission held its first public hearing. It was a hasty process for everyone involved; the state's Military Installation Development Authority, a partner on Stratos, sought to get permits going right away, even though the commissioners complained they hadn't adequate time to assess Stratos. Locals insisted upon the need for more public awareness and discussion, leading the board to temporarily set aside the data-center resolution -- before pressure from Cox, who claimed that Utah had an "obligation" to allow the data centers as part of the tech race against China, got the commissioners to take it up again. Thousands of Utahns submitted negative comments, and hundreds of Box Elder residents flooded the commission meeting on May 4, shouting down the politicians as they left the room to continue the meeting virtually and unanimously rubber-stamp the A.I. partnership with MIDA. "I keep an ear out on things, but like many Utahns, this data center came as a shock -- not that it was proposed, but that it was all but approved from every level," Larry D. Curtis, a lifelong Salt Lake City resident and former local journalist, told me. "To me, and to other people I've talked to, it felt like it was done in the dark: backroom deals and assurances made with no transparency or government accountability." Their rage is so pitched that it has also attracted national attention, with Paramore singer Hayley Williams taking a moment to call O'Leary out at a recent concert in Salt Lake City. The resistance efforts haven't let up: A new grassroots organization called Box Elder Accountability Referendum filed for a process to allow voters to overturn the commission's approval. (The county attorney rejected the referendum, but its organizers plan to appeal the ruling.) Utahns have also deluged Cox with thousands of letters in opposition, while regularly convening on the state Capitol with unflattering signs featuring O'Leary and Cox. In fairness to the county commissioners, there wasn't much they could have done. The acres parceled out for Stratos all lie on private, unzoned property, and the landowners there had already granted their blessing. One of them told the Salt Lake Tribune that "it's going to bring a lot of good-paying jobs" and that "if we really need it to stay ahead of China, I am all for it." "They can buy this property, build this data center, and I can do nothing to stop it," Box Elder County Commissioner Lee Perry told area public radio station KUER. So after "looking at all the options that I had available," Perry attempted to add in some deal sweeteners (higher tax revenue, thorough state-corporate coverage of the construction costs) so as to lessen the financial burden on Box Elder residents reasonably worried over the nightmares they've heard from neighbors: higher utility costs, further water shortages, noise and air pollution. (There's a reason Iron County, in the southern portion of the state, just approved a six-month moratorium on new data centers.) That may not save Perry and his colleagues, said Curtis, who predicted that "they probably won't run again -- I think people fully expect those county commissioners will never be elected again." Despite such potential drawbacks, Stratos' pitch to the populace seems intuitive: The campus, also referred to as "Wonder Valley," will be built out in separate phases, each part estimated by the state to bring in tens of millions of dollars in tax revenue, along with thousands of (mostly temporary) jobs in construction, maintenance, and IT. Power needs would be met by an already-extant gas pipeline and a new on-site solar farm, while Stratos backers promise that some of the water taken to cool the hot-running, desert-sited servers would become part of a "closed-loop" system that flushes out used water back into the Great Salt Lake. That line has also been pushed by Cox, the governor, who claimed -- at the very same press conference when he declared a state of emergency over Utah's drought conditions -- that the newest "data center is going to use less water" than the Great Salt Lake's other stressors, such as agriculture and lawn care. But Utahns have their doubts. "Just 2,000 permanent jobs isn't much when you're considering the size of that facility," said Otterstrom. "Also, we're in a situation where the Great Salt Lake is drying out, and we haven't even begun to stop the decline." Curtis agreed, pointing to the climate emergency indicated by the most recent dry season. "There's never been a winter like this, where we had virtually no precipitation, very little snow, very little rain. We count on that snowpack from the mountains," he said. "Every Utahn is aware of our shrinking and dying Great Salt Lake and the role that plays in our economy, our climate, the lake effect, even for sending snow to ski resorts." And on top of that: fishing, boating, mineral extraction, and protection from underground toxins that could blanket Utah's most heavily populated area and drive everyone away -- not just from Box Elder, but from the state altogether. "Our economic growth is in the Salt Lake Basin. If you look for high-paying jobs elsewhere within the state, there are not a lot of opportunities," said Otterstrom. "In the past, one thing I could've agreed with Gov. Cox on was that we need to save the lake. Now this puts into question whether there is any sincerity in that." So, in spite of O'Leary's concerted efforts to smear the protesters as "proxies" for the Chinese government, and to dismiss opposing arguments as "poo-poo," Utah politicians sound quite different right now. State Sen. Scott Sandall, who represents Box Elder County, went from unconditionally supporting Stratos to endorsing a new legislative study on data centers' potential wildlife harms. Utah House Speaker Mike Schultz, shouted out by O'Leary as an early supporter of Stratos, appeared to backpedal after local media reported that he owns land near the planned data-center plot; he denied being briefed early on by O'Leary, called for a wholesale environmental review, and endorsed the now-scrapped Box Elder Accountability Referendum. Those doubling down, however, are subjecting themselves to public wrath. J&J Nursery, a facility owned by a state senator who helped approve the Stratos megaproject, is facing widespread calls for a boycott. Jason Chaffetz, the Republican ex-representative now hoping to succeed Cox in the governor's mansion, is facing blowback for admitting to being part of the consulting firm that brought Wonder Valley into Box Elder County. Senate President Stuart Adams, who chairs MIDA, is facing a slew of primary opponents. "He's politically untouchable, but I actually think this makes him vulnerable. It's that much of a backlash," said Curtis, pointing out that Adams was also weakened by a political scandal last year, after he pushed for a law change that ended up benefiting a granddaughter of his who pleaded guilty to sexual battery. Notably, Spencer Cox has himself retracted some of his disparaging comments, admitting that "people are right to push back," committing to a thorough environmental-impact review, even issuing an executive order Friday requiring a "higher bar for data center development in Utah" that includes consideration of utility rates and environmental impacts -- though it might be too little too late. "Gov. Cox, who once seemed like a reasonable moderate, has done everything state lawmakers have told him to. People can't stand politicians who stand for nothing," said Curtis, who added that he had been a lifelong Republican prior to the MAGA age. " 'Vote them all out' has been in the mouths of Democrats and Republicans over the data center. In my lifetime, I've rarely seen such a universal level of community response to any one thing." That response is ongoing. Developers' recent applications for water rights tied to Stratos were immediately countered with formally filed objections from everyday Utahns; two of these applications have already been withdrawn. People are still gathering at the Utah Capitol itself, and some groups are even planning a lawsuit against MIDA. There is sustained popular resistance here, with the resultant political blowback we've already seen in states like Virginia, Missouri, and Michigan. For Utahns, it's especially existential: An A.I. competition with China should not trump their natural wonders, quality of life, and ability to even stay in the Salt Lake Basin for the long term. "We have public programs, such as our education system, that go woefully underfunded year after year, and it's not because there's a lack of resources. It's because there's a lack of allocation," said Otterstrom. "More often than not, those who have inexhaustible means, like the billionaires, they get what they want." Perhaps this data center battle, then, was just the tipping point for widely frustrated and fearful Utahns. Without realizing it, Kevin O'Leary may have awakened a new political uprising in Utah -- one that could come back to bite the very lawmakers he partnered with for his latest moneymaking venture.

O'Leary shrinking Utah data center after backlash

Business mogul Kevin O'Leary said late Wednesday he is willing to scale back his controversial 40,000-acre artificial intelligence data center campus in Utah after mounting backlash over the development's size and environmental impact. The "Shark Tank" business mogul told NBC News that he is "going to have to" slim down the development amid political pushback from state leadership. "I have no choice," he said at the Washington AI Network's AI Honors gala. Utah Senate President J. Stuart Adams (R) sent a letter to O'Leary on Monday calling for a 75 percent reduction in size of the proposed Stratos data center in Box Elder County, from an already approved 40,000 acres to approximately 10,000 acres. Adams also requested "greater transparency, stronger conservation commitments and enhanced protections for Utah's natural resources" including protections for the Great Salt Lake, despite none of the water currently used in the area flowing into the lake. O'Leary suggested the request was driven by political reasons amid growing opposition to the project, which has sparked protests and criticism from local residents who argue the development advanced without sufficient public input. "I know he did it for political reasons," O'Leary told NBC News. "He has to address those issues, and so do I." The state senator is running for reelection against two challengers in an upcoming June 23 GOP primary. O'Leary said he plans to send a formal response to Adams with details of a revised proposal by Friday. The Stratos project in the Beehive State has become a closely watched data center development due to growing debate over the massive energy and water demands of large-scale data centers. It has been billed as one of the world's largest AI data center developments and was approved to span multiple sites across the state. O'Leary has previously dismissed concerns as "misinformation" and lies, notably accusing China of funding smear campaigns against the project. "All these people have a right to get information," he said. "Why are they getting it from a false initiative? Who is spending all this money to put out all these falsehoods and straight-out misinformation and lies and agitate these people?" O'Leary also told NBC News he suspected one of the major organizations pushing back on the development, Alliance for a Better Utah, is funded by dark-money interests from China. The organization denied the claim, writing: "The only foreign interest in this data center is Kevin from Canada," in a statement on its website.

Utah Tightens AI Data Center Rules As Kevin O'Leary Battles Opposition To Massive Stratos Project

Kevin O'Leary-backed AI data center plans in Utah are now facing tighter state oversight after Gov. Spencer Cox moved to impose stricter development rules amid rising community opposition over environmental and resource concerns. Utah Imposes Stricter Rules In an executive order issued Friday, Cox established a "higher bar for data center development in Utah," directing state agencies to apply stricter review standards focused on water use, electricity demand, environmental impact and public input. "Utahns deserve confidence that water resources, air quality, utility rates, wildlife, and quality of life will be protected," Cox wrote in a post on X. He added, "This framework helps ensure that data center development aligns with Utah's long-term interests and reflects Utah values." The order includes eight principles requiring developers to better protect water systems such as the Great Salt Lake, limit strain on utility ratepayers, and expand opportunities for public comment. It takes effect immediately and applies to future permitting decisions. The move comes as the Stratos Project, a massive AI data center campus in Box Elder County, continues to face strong opposition. O'Leary Claims Coordinated Opposition To Utah AI Data Center Earlier, O'Leary said opposition to his Utah AI data center was driven by coordinated misinformation and foreign-linked interests tied to China, while defending the project against environmental criticism. He claimed false narratives spread after approval of the Stratos Project, including exaggerated claims about water use, power demand and size, and said the development would generate its own energy, follow regulations and create jobs. O'Leary also said his team identified advocacy groups and funding networks behind the backlash, alleging outside influence on efforts to slow U.S. data center growth. Separately, he defended the 40,000-acre project, saying sustainability measures such as improved cooling systems, battery technology and renewable energy were central to its design. He dismissed parts of the opposition as manufactured and questioned the authenticity of some online criticism. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Kathy Hutchins / Shutterstock.com Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.