County sets regs for potential data centers

Lea County, New Mexico, is proactively establishing new regulations for the development of artificial intelligence data centers, recognizing the potential for significant economic growth alongside concerns for local resources. At a February 26 meeting, the Lea County Commission unanimously approved the first of several planned revisions, driven by insights from County Manager Corey Needham, who noted widespread discussions on data centers at the Association of Counties conference and identified water use and power grid impacts as key issues from other counties' experiences. The new regulations require incoming AI data centers to implement closed-loop or similar cooling systems to conserve potable water, as Lea County faces scarce usable water resources. Furthermore, to mitigate strain on the power grid and prevent rate increases for existing customers, data centers will either need to build their own behind-the-meter power generation, such as solar or gas-fired plants, or negotiate with local energy providers. James Lackey, Director of Customer Relations at Xcel Energy, previously highlighted a regional power demand shortfall of 7,500 megawatts, potentially growing to 20,000 megawatts in a decade, with Xcel's efforts to build out 3,000 additional megawatts progressing slowly due to arduous processes. These regulatory efforts precede potential major developments, with Needham indicating ongoing discussions with various developers over the past two years. Notably, New Era Energy and Digital announced in November its intention to acquire 3,500 acres near Caprock in Lea County for a large data center, projected to be operational by 2028, featuring its own natural gas-fired power plant and a modular nuclear reactor. E. Will Gray II, CEO of New Era Energy, emphasized leveraging New Mexico's energy heritage and natural resources to power AI innovation and drive economic growth. The county also plans to require data centers seeking incentives like industrial revenue bonds to ensure payouts benefit all school and hospital districts. The context of these regulations is New Mexico's broader data center landscape, which includes Meta Platform Inc.'s campus in Los Lunas, Project Jupiter in Santa Teresa, and a Zenith Volts Corp. development near Roswell. The state has nearly two dozen data centers operating or in development, making Lea County's preemptive regulatory framework a significant move in managing future growth.