Data centers’ new tool: Corporate cartography

Por Arianna Skibell and Ariel Wittenberg — POLITICO – TOP Stories

When a rural Iowa county tried to exert control over how much water a proposed Google data center would use, the tech giant found a loophole — redrawing its map.

Officials in unincorporated Linn County did their homework when Google approached them last year about building a $1 billion data center campus and set about drafting guidelines to address some of the most hot-button topics driving community backlash against the computing facilities across the country.

In February, two weeks after the county approved the rules governing water use and economic incentives, Google pulled out of the negotiations. The company told county officials that it would ask a neighboring city with fewer regulations, Palo, to absorb the land instead, in a process called annexation. Google began moving forward with that plan last week with letters to Palo residents making the case for the data center.

“We are committed to listening to you and learning the unique needs of the community so we can bring the best of Google to deliver what is most important to the people of Palo,” wrote Steve Walter, Google’s vice president of global infrastructure and energy.

If Palo officials approve the company’s annexation request, Google could build the same project — using the same 545-acre plot of land, the same power supply and the same water source — but without being subject to the county’s strict rules. In most states, including Iowa, cities do not need counties to sign off on annexation.

“Let’s be clear about what is happening here,” Sami Scheetz, a member of the Linn County Board of Supervisors, said in a statement after Google ended negotiations with county officials. “We negotiated in good faith. And Google’s response was to go find a local government that will ask for less.”

Google declined to provide an explanation on the record for the company’s decision to seek annexation with Palo but told county officials in an email viewed by POLITICO that the move was in the best interest of the company and the region’s economic development. Trent Fellers, a public affairs manager, told POLITICO the tech giant will ensure both Palo and Linn County officials have “full transparency” into the water permitting process.

“We are appreciative of the close collaboration with the Palo leaders to maintain our shared commitment to responsible water use while progressing economic growth for the community,” Fellers said in an email.

Corporate giants have long turned to land annexation as a way to gain access to city infrastructure, secure tax incentives or obtain more favorable regulations. Now, the data center industry is using the tool — and that’s inflaming political tensions and complicating communities’ efforts to set the rules at a moment when Americans are increasingly wary of the energy- and water-guzzling facilities.

In Waco, Texas, government officials are using annexation to advance a $10 billion project that’s drawing fierce opposition from residents. A proposed $3.6 billion data center campus in Arizona sparked a local revolt when residents learned of a plan to annex Pima County land into Tucson so that “Project Blue” could access city water. And in Wyoming, the Cheyenne City Council voted to annex a 3,460-acre swath of land that Microsoft purchased from the family of Sen. Cynthia Lummis (R-Wyo.) for a data center despite residents’ multiple attempts to delay or stop the effort.

“You’re seeing tech companies find safer spaces to build that will come with less community resistance,” said Nicol Turner Lee, director of the Center for Technology Innovation at the Brookings Institution, who has been monitoring opposition to AI projects. “AI developers are using any and all tactics to be able to access land.”

Which side of the border a data center lands can make or break local economies, with hundreds of millions of dollars in taxes and community investment from companies on the line. That has pitted neighboring communities against each other.

In Iowa, the experience left Linn County officials so soured, they passed an 18-month data center moratorium in July.

“We should be working together and not let these billion-dollar corporations race to the bottom competing for economic incentives,” Kirsten Running-Marquardt, chair of the Linn County Board of Supervisors, said before the vote to approve it.

‘We could never get to an understanding on water’

When Google approached Linn County last year about constructing a six-building data center campus on 545 acres of land, county officials were initially interested — but they were also concerned about altering the region’s bucolic landscape and straining resources.

A small farming community of about 1,600 residents located 20 minutes northwest of Cedar Rapids, Palo is increasingly drawing new families and young professionals in search of affordable homes and a small-town feel.

The area already has a solar field and nuclear plant, and the county is considering a proposal for a large gas plant.

Water demands are a top concern for residents and county officials alike.

Farmers in the area are still reeling from a severe, four-year-long drought that ended in 2024. At the same time, concerns over the state’s high cancer rate — the second fastest-growing in the nation — have left residents and politicians particularly attuned to the safety of drinking water supplies.

Ultimately county officials developed and adopted an ordinance requiring large-scale facilities to conduct and publish a study demonstrating there is a sustainable water supply in the area’s underground aquifer and rivers before construction begins.

The ordinance also requires large data centers to sign agreements with the county addressing public monitoring and reporting of water use and could allow the county to curtail data centers during times of drought or other emergencies.

That provision was a big sticking point with Google, county officials said.

“We could never get to an understanding on the water. They basically view water usage as a trade secret,” said Charlie Nichols, who leads Linn County’s planning and development agency. “They did not want to share water usage, any sort of data, really, monthly, weekly or daily. They didn’t want that to be public information.”

Google spokesperson Devon Smiley said the company will report its water and discharge usage monthly and annually to the Iowa Department of Natural Resources, the city of Palo and Linn County.

At the same time, the county was also negotiating with Google to secure significant investments in the community.

The company’s last offer before it ended negotiations included an annual deposit to the county of $1 million for each building of the data center campus with a 2% annual escalator. The county countered and asked for either $70 million up-front per building or $3.25 million annually with a 4% escalator, Scheetz said.

“I feel very comfortable with what the county was asking for,” Scheetz said. “Trillion-dollar companies should pay their fair share, and there should be a basic level of protections in place for our residents.”

But two weeks after the ordinance passed, Google told county officials it would instead seek annexation into the city of Palo, putting the facility under the city’s jurisdiction — and outside of the reach of the county’s new water ordinance, under Iowa law.

“We believe this path best prioritizes our long-term investment and the region’s economic benefits,” Sydney Henry, a Google employee who works on siting data centers, wrote in a Feb. 26 email to county officials viewed by POLITICO.

In July, Palo adopted its own zoning ordinance that is almost identical to the county’s — except when it comes to water. Instead of granting local officials visibility into — and some control over — the data center’s water use, the city ordinance only requires the facilities to send the city copies of the paperwork required by the Iowa Department of Natural Resources.

Palo Mayor Bryan Busch did not respond to multiple emails and phone calls but has said publicly he did not make Google any promises before championing the city’s ordinance. But documents obtained by local news outlets show Palo officials had been working with Google on an annexation plan months before Google formally ended negotiations with Linn County.

The company said in its letter to residents last week that it plans to pay full property taxes.

‘You can’t turn these data centers off’

Whichever side of Palo’s border the proposed data center sits on, it’s anticipated to draw from the same water source: the Cedar River.

A 338-mile-long tributary of the Mississippi River, the waterway plays a crucial role in replenishing Linn County’s drinking water supply, which is drawn from a system of connected aquifers.

That supply is already tapped by two other data centers in the region: one owned by Google that sits within the city of Cedar Rapid’s jurisdiction and another facility run by Qualified Technology Services.

County officials said Google plans to seek permits from the state allowing it to use a maximum of 15 million gallons of water per day — an amount that Nichols, the Linn County planner, called concerning. While the company has not submitted permit requests yet, it told residents last week that it plans to use evaporative cooling, one of the most water-intensive cooling technologies, at the planned facility.

“It is unclear at this point how much the drawdown from the Cedar River will affect the amount of water in those alluvial aquifers,” Nichols said. “We aren’t cumulatively looking at the impact of large water users on our shared systems.”

And the Google data center isn’t the only new strain on the river. That same water source is also set to supply new or expanded power plants that are being built to feed the data centers.

Google has signed a power deal with NextEra Energy to help restart the mothballed Duane Arnold Energy Center nuclear power plant, which historically relied on the Cedar River for cooling. And Linn County officials are also reviewing a proposed 720-megawatt natural gas power plant from Alliant Energy, which has sparked significant local backlash.

The county’s plan had been to use the community investment funds it was seeking from Google to conserve wetlands around the river, according to Laura Krouse, a commissioner on the Linn County Soil and Water Conservation District. Those projects could help collect stormwater runoff and feed the underground aquifer, she said.

Krouse, whose district manages water quality control projects around the county, said the water study Google had proposed before ending negotiations with the county would have been incredibly valuable as the region plans for the possibility of future droughts at the same time that new industries are drawing from the river.

“The aquifer can serve them now, but what is the plan if we get into another drought situation?” she said. “We haven’t had an answer to that, but, as far as I know, you can’t turn these data centers off.”

That concern, coupled with Google’s request for annexation, prompted Linn County officials to enact the 18-month moratorium on new data center projects. The moratorium, which doesn’t apply to Google’s project, took effect July 1.

“We feel that our ordinance is good for data centers, but it doesn’t really matter if data centers can just annex into cities and kind of sidestep the ordinance,” Nichols said.

Fonte: POLITICO – TOP Stories