Starwood Ventures has officially appealed DNREC’s CZA Decision for their planned 6 million sq ft, 1.2GW, hyperscale data center project. For context, you might recall that the Coastal Zone Act (the CZA) protects the sensitive coastal areas of Delaware by prohibiting new heavy industrial development and regulating certain other uses through a permitting program.
DNREC’s decision was that Project Washington was PROHIBITED in the Coastal Zone, based on being considered a “heavy industrial use.” That determination weighed heavily on the project’s plans to include over 500 diesel generators and how subsequent pollution would be greater than any other heavy industry use within the coastal zone aside from the Delaware City Refinery. Lawyers for Starwood have now filed an appeal, disagreeing with DNREC’s decision. The appeal argues that the project does not resemble the “characteristics of a heavy industry use,” and claims that DNREC made incorrect assumptions about fuel storage and generator emissions. The appeal also calls out how the decision, “solely focuses on alleged environmental risk…and does not fairly weigh…other countervailing factors” such as jobs, tax benefits, and neighboring land uses.
Here’s the thing…hyperscale data centers didn’t exist in 1971 when the CZA was written, and that seems to be a part of what the appeal considers; that DNREC allegedly exceeded its authority because the law lays out some general examples of heavy industry and doesn’t mention data centers. However, the definition of heavy industry in the Act is not exclusive, meaning just because something isn't listed doesn't mean it gets an automatic pass. The CZA defines a heavy industry use as, “involving more than 20 acres, and characteristically employing some but not necessarily all of such equipment such as, but not limited to, smokestacks, tanks, distillation or reaction columns, chemical processing equipment, scrubbing towers, pickling equipment and waste-treatment lagoons; [and] has the potential to pollute when equipment malfunctions or human error occurs.” The definition was left intentionally broad for cases just like this and DNREC cited several times that one of the key points to the decision was the “potential to pollute.” The appeal letter from Starwood’s lawyers, however, stated that this was misused in the decision.
As for the “countervailing factors” that are mentioned? Starwood provides rough estimates for job creation and new revenue for the State to highlight economic benefits. The trouble is nobody seems to be able to clarify or provide evidence to support those numbers. Construction of projects at this scale have created jobs during construction, but long term job numbers are much harder to evaluate. For most data centers, it is fewer than 50 permanent jobs. In a recent newsletter, Councilman Dave Carter says these claims are still unsubstantiated despite direct requests to Starwood to help provide context. Due to unique state and local tax structures, there are no verified sources showing what, if any, tax benefits will result from the project. Councilman Carter points out that Delaware’s tax policies are very different from other places, like Virginia, where data center construction has resulted in big income for municipalities. Additionally, economic considerations are secondary to environmental considerations when examining impacts within the coastal zone.
As far as being similar to nearby uses…There are no other hyperscale data centers in the area, or in all of Delaware. The refinery nearby is heavy industry, and worth noting, is grandfathered in because it was there before the CZA was passed into law. However, even the refinery only uses about 7% of the energy that Starwood plans to use, and only has 8 generators on site compared to the 516 proposed by Starwood. It’s also important to note that DNREC may consider the cumulative impact of Starwood's proposed use, in combination with existing uses, on the local environment. There are some other warehouses in the immediate area, but warehouses don’t create the same potential for pollution, and they don’t rely on hundreds of backup generators, or 1.2GW of electricity, or millions of gallons of water for cooling systems.
Make no mistake - This kind of project is exactly what the CZA was put in place to protect against. Constructing a data center of this scale, in the coastal zone is absolutely detrimental to Delaware’s protected natural areas. Construction means impacts to wooded areas and wetlands that provide important habitat. It means the installation of a huge fleet of generators pumping small, harmful particulates and noxious gasses into the air at ground level, which impacts nearby communities and anyone with cardiovascular issues like asthma. It means constant low-level humming noises from fans that could disrupt residents or wildlife up to 2 miles away. It means reconsidering the floodplain, and where water will go during storms.
So what’s next? The appeal includes a request for an in person hearing with the 9-person Coastal Zone Industrial Control Board, which is an independent entity from DNREC. The Board has the authority to affirm, reverse, or modify CZA decisions. That will take time, and there’s a possibility that the decision could be appealed again for the courts to take up.
In the meantime, it is essential that we continue to advocate for putting in place reasonable guardrails that help mitigate the negative consequences of data center projects like this at the county and state level. We have to work towards a path forward where we can, Do it right, or not at all.