Amid backlash, O'Leary Digital CEO defends Box Elder County data center project

SALT LAKE CITY — Paul Palandjian, head of the company spearheading the controversial Box Elder County data center project, has no problem with calls for more rigorous review of the project's potential environmental impacts.

"Requests for more study are entirely reasonable, and we welcome the rigor," he said, noting the oversight role several regulatory and government bodies will have.

Moreover, he has no issue with critics of the project speaking out and protesting, though he draws a line at the threats he says some company leaders and public officials have faced stemming from their involvement in the matter.

"Peaceful protest is legitimate, and we have no quarrel with it," said Palandjian, CEO and co-founder at O'Leary Digital.

Through it all, he also stresses that the perspectives of the owners of the 40,000 undeveloped acres where the data center and power-generation complex would be built should be factored into the discussion. O'Leary Digital is pursuing the development with support from Utah's Military Installation Development Authority, a state entity that promotes economic development tied to military initiatives.

"One point that has been almost entirely missing from the public coverage — every single landowner in the MIDA project zone has signed a letter of support. The ranchers and family farmers who own this land are unanimously in favor of moving forward," Palandjian said.

The data center initiative spearheaded most publicly by Kevin O'Leary, the celebrity businessman and chairman of O'Leary Digital, has sparked plenty of questions and fierce opposition. Representatives from numerous environmental organizations and many grassroots Utahns worry that the facility would tax northern Utah's limited water supplies, reduce the flow of water into the Great Salt Lake, and raise the temperature in the area around the operation.

In written responses to questions put to him by KSL, Palandjian addressed some of the concerns and defended the project, alternately known as the Stratos Project Area and Wonder Valley Utah. The long-term initiative calls for the development of a data center complex and 7.5 gigawatts to 9 gigawatts of power-producing capacity, at least a portion of which is fueled by natural gas, to serve the facility, spread across three swaths of Box Elder County land totaling 40,000 acres.

The developers have also created a website, boxelderstratos.com, to further explain the project's parameters and address concerns raised by the public.

Need for the project

Data center boosters tout the role the facility would have in improving national defense by bolstering the military's cloud-computing ability.

"Sovereign, U.S.-located compute infrastructure is increasingly central to national defense. The Department of Defense, the intelligence community and federal (research and development) programs depend on access to compute at scale, and they contract with the same hyper-scalers that serve the commercial market," Palandjian said.

He stressed the project area's proximity to other entities involved in U.S. defense, including Hill Air Force Base, the Promontory facilities of defense contractor Northrop Grumman, and the Utah Test and Training Range, among others. A top U.S. Air Force official asked the Military Installation Development Authority to identify potential locations for a facility to bolster the military's computing power and the Stratos initiative "is a direct response to that request."

Environmental concerns

While opponents of the project have called for further study into the possible impacts of the data center before the project gets a green light, Palandjian noted the regulatory oversight it would receive as development unfolds. The board of Military Installation Development Authority on April 24 approved guidelines outlining project development and a tax-incentive plan while Box Elder County commissioners on May 4 passed two resolutions allowing the initiative to proceed.

"The project is moving through the standard permitting and review processes that apply to a development of this scale," Palandjian said.

The Utah Division of Water Rights and the Utah Division of Air Quality will review water rights change applications and draft air permits, respectively, with public comment, he said. Moreover, other state bodies will have oversight roles as development proceeds, including the Division of Water Quality, the Division of Drinking Water, the Division of Wildlife Resources and the Military Installation Development Authority's Design Review Committee.

"Significant additional technical study will be required by statute, by tenants and by financing counterparties as the project advances," Palandjian said.

Proponents have said the project, tapping into existing water rights that would be transferred for use by the data center, would use less water than the current users, ranchers and farmers. The new Stratos website addressed worries about jumps in the temperature in the project area, noting the gradual, long-term development timeline of the project and likely advances in technology to be used as time passes.

A new request to transfer water rights has been filed and Palandjian said more are to come. The first request for transfer of water rights, since withdrawn, though to be refiled, generated more than 3,800 formal protests, and the new request had generated 89 protests and counting as of Tuesday afternoon.

Property rights

Palandjian, like Box Elder County officials when they acted on the matter on May 4, emphasized the rights of the landowners where the project is to take shape.

"These are the people who actually live on and steward this land. Their voice deserves real weight in this conversation, and outside groups organizing against the project should reckon with the fact that the landowners themselves are choosing this path," he said.

The area is characterized by "marginal soils," with limited agricultural production value, he said. The data center project, he went on, is an opportunity for the landowners "to monetize a portion of their land in order to preserve the rest."

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