Key Takeaways:
Utah Governor Spencer Cox imposed an eight-principle regulatory framework for data center development Friday, tightening oversight of Kevin O'Leary's proposed 9-gigawatt Stratos Project after months of community opposition over water and power use.
"Utahns deserve confidence that water resources, air quality, utility rates, wildlife, and quality of life will be protected," Cox wrote in an X post announcing the executive order, which directs state agencies to adopt the framework immediately.
The framework's eight principles include protections for the Great Salt Lake, mitigation of wildlife impacts, safeguards for utility ratepayers, and requirements for "transparent, meaningful and thorough opportunities for public comment." The Stratos Project, approved by Box Elder County commissioners, spans 40,000 acres and could draw up to 9 gigawatts of power at full buildout — enough to supply roughly 7 million U.S. homes. Residents submitted more than 2,000 questions and concerns, according to a project webpage. The executive order also requires developers to secure new permits for each phase of expansion, a condition Cox said the Stratos team already accepted.
The order marks one of the most aggressive state-level interventions in data center siting this year, as communities across the U.S. push back against the infrastructure demands of artificial intelligence. In February, New Jersey residents successfully blocked a separate data center development in New Brunswick. With midterm elections in November, local opposition is pressuring politicians to act, potentially slowing the pace of AI infrastructure buildout and raising costs for developers already competing for limited power supply.
O'Leary, who calls himself "Mr. Wonderful" and has dubbed the project "Wonder Valley," has defended the development against what he characterized as organized opposition. Earlier this month, he suggested without evidence that "professional protesters" orchestrated much of the controversy and that Chinese funding was fanning the outrage. The developer's website described the feedback as "a mix of supportive and critical feedback."
Data centers become a political flashpoint
The Utah order reflects a broader shift in how states approach data center regulation. At least a dozen states have introduced or passed legislation this year addressing data center water use, power procurement, or tax incentives, according to industry tracking groups. The tension pits economic development — data centers create construction jobs and tax revenue — against environmental and quality-of-life concerns that have mobilized residents in New Jersey, Virginia, and now Utah.
The regulatory tightening comes as U.S. data center power demand is projected to grow from roughly 20 gigawatts in 2024 to more than 50 gigawatts by 2030, according to estimates from the Electric Power Research Institute. That growth has triggered competition for grid capacity, with interconnection wait times stretching past four years in some regions, according to Lawrence Berkeley National Laboratory data. States that impose additional permitting requirements risk losing projects to less restrictive jurisdictions, creating a patchwork of regulatory environments that complicates national infrastructure planning.
For the AI infrastructure sector, the phased-permit approach introduces direct financial implications. Developers of hyperscale projects typically spend $8 billion to $12 billion per gigawatt of capacity, including land, construction, power infrastructure, and cooling systems. A multi-year permitting delay on a 9-gigawatt project could represent billions of dollars in deferred revenue and carrying costs. Data center REITs with exposure to Utah and neighboring states may face increased scrutiny from investors assessing regulatory risk in their project pipelines.
This article is for informational purposes only and does not constitute investment advice.
