First AI Data Center Approved on Federal Public Land Hits a Major Roadblock
A federal judge has placed a hold on the permit for an AI data center proposed by Townsite Solar 2, LLC near Boulder City, Nevada. The judge ruled that the Bureau of Land Management acted arbitrarily in approving the data center based on a permit for a solar power plant without a new environmental assessment. Additionally, Boulder City's planning commission unanimously voted against constructing the data center on an adjacent city-owned parcel.
A proposed AI data center project on federal public land near Boulder City, Nevada, developed by Townsite Solar 2, LLC, has encountered a significant legal setback. On September 1, an administrative judge, David Gunter, issued a stay on the project's permit, asserting that the Bureau of Land Management (BLM) acted "arbitrarily or capriciously" by allowing the data center under an existing 2023 permit originally granted for a solar power plant with battery storage. The judge highlighted that the BLM's determination that the data center project was "substantially the same" as the solar plant project for National Environmental Policy Act (NEPA) analysis purposes was flawed, as opponents, including Nevada Rep. Dina Titus, argued the two projects are vastly different.
The developer, Townsite Solar 2, LLC, had initially received federal approval in 2023 for a solar plant. In 2025, they amended their request to use the acreage for an AI data center, which BLM approved in July, claiming similar use. The proposed data center is projected to require approximately 900,000 gallons of water during construction and consume more electricity annually than Boulder City itself. Concurrently, Townsite Solar 2 was negotiating with Boulder City for an 88.5-acre city-owned parcel adjacent to the federal land, but the Boulder City Planning Commission unanimously voted against the data center's construction on city property. The BLM now has until September 21 to respond to the order from the Interior Board of Land Appeals regarding the federal land project.