The Starwood Digital Ventures lost its appeal to the DNREC’s Coastal Zone Industrial Control Board on whether its proposed data center in News Castle County is prohibited under the state’s Coastal Zone Act.
After three days of expert testimony, argument, and public comment the board’s five voting members in the appeal case deliberated for about forty minutes, upholding Secretary Greg Patterson’s decision that the data center should be considered heavy industry use and not allowed in the state’s coastal zone.
Argument and the Coastal Zone Act
Mary Douglas opened deliberation and said, "we have to keep in mind that Delaware has plenty of business interests."
But she added CZA's primary purpose is to protect Delaware's coastal zone, which consists of approximately 274,000 acres running north and south along the state's shoreline.
Under the law, new development of "heavy industry" is not allowed in that area. And heavy industry makes up an area of more than 20 acres that uses equipment like smokestacks, tanks, distillation columns, or chemical processing equipment.
Passed in 1971, it includes possible examples: oil refineries, basic steel manufacturing plants, basic cellulosic pulp-paper mills, and chemical plants. It describes industry as "having potential to pollute when equipment malfunctions or human error occurs."
Starwood's appeal said data storage and processing plan aren't included characteristics of heavy industry outlined by the CZA.
Its legal representation argued that 516 diesel fuel tanks planned for back-up power should not be considered a "tank farm." And emissions pipes attached to those are not "smokestacks."
Deliberation
During deliberation, board member Jeff Draper questioned whether the board wanted to set precedent by following Secretary Patterson's decisions and definitions in Starwood's case.
But multiple board members, including Willie Scott, mentioned Coastal Barge Corp. v. Coastal Zone Indus.'s direction that the CZA should be applied liberally, to upload its intent of preventing pollution and harm to the environment.
"No matter what you call a collection of tanks in a defined space and area that hold two-and-a-half-million gallons of oil," he said. "Is that the right thing to have in the coastal zone? I think it's a fundamental question."
The multi-billion dollar company's application is the largest proposed data center ever for Delaware. Douglas said data centers and AI are rapidly evolving, and legal language isn't modified or updated to consider the advances.
Member CJ Bell agreed, and said it made Patterson's application of the CZA to Starwood appropriate: "There's a project that's never been done before. So you would have to do some of these things that are a little unorthodox, creating or merging definitions that make sense as a whole."
Board member Robert Snowden didn’t find Starwood’s argument that its data center is like a warehouse persuasive, because of its energy use and complexity of the technology that supports it.
"In my mind it doesn't fit," he said. "Because you have the facility here that's projected to consume 1.2 gigawatts of power."
He said that is about a tenth of power generated by the power plant in Salem New Jersey.
"And so it's consuming that power to do something," he said. "...there's a tremendous amount of activity going on there electronically. That's an indicia of something heavy going on. Because if 1.2 gigawatts of power being consumed isn't heavy, I don't know what is."
Despite a swift decision from DNREC’s Coastal Zone Industrial Control Board against Starwood's data center plan, the company is "absolutely confident" that its project "will be successfully completed and remain on track."
Starwood reaction
Starwood is likely to appeal the board's decision, in which case it would be heard by Delaware’s Superior Court.
In a statement, its press representative Jim Lamb said Starwood Digital Ventures is "absolutely confident" that its plan for a data center in New Castle County "will be successfully completed and remain on track despite today’s decision."
He said the company is committed to working with DNREC and regulators "to make certain that Project Washington will be developed as a state-of-the-art, environmentally-conscious data center campus that will bring thousands of jobs to Delaware."
He said the project has approval from the state's business community, unions and trade groups, along with hundreds of New Castle County residents.
