Project Washington pulls appeal, data center won’t proceed under current plan

Why Should Delaware Care?
The controversial data center plan near Delaware City was the largest proposed in the state, sparking a backlash against the industry that resulted in new local and state regulations. Many residents expressed concerns about the facility’s potential impact on energy costs and the environment. Now the proposal appears to be at a dead end.

Plans for a massive data center to be built near Delaware City appear to be at a dead end, at least in their current form. 

Earlier this year, the development, dubbed Project Washington, faced its first major setback when Environmental Secretary Greg Patterson ruled that the plans would violate the Coastal Zone Act — a landmark Delaware law designed to limit heavy industry along the state’s shorelines.  

The data center project’s developer, Starwood Digital Ventures, then appealed the decision, but it was subsequently upheld by a state board. 

Starwood then appealed again to the Delaware Superior Court. But in early July, the company voluntarily withdrew the appeal with no public acknowledgment. It came two days after the state legislature passed several bills imposing new, stricter regulations on the data center industry. 

Gov. Matt Meyer signed those into law earlier this week. 

Since there are no other challenges to Patterson’s ruling, the proposed data center project is not allowed to move forward under its current design.

Still, the company’s data center aspirations in Delaware are still alive. In a statement to Spotlight Delaware, Starwood spokesman Jim Lamb said the company “is continuing its work with state and local regulators, labor, and the entire community to find a pathway forward” for the project. 

In the statement, Lamb did not specify how the project could move forward. Nor did he say whether the state’s new laws regulating data centers influenced Starwood’s decision to withdraw its appeal.

Delaware’s decades-old regulation

The Delaware General Assembly passed the Coastal Zone Act in 1971 to protect the state’s environmentally sensitive shorelines by prohibiting new heavy industry from them.

In his decision on the Starwood proposal, Patterson pointed to the data center’s proposed use of 516 backup diesel generators, which would operate in the case of a power outage or other emergency situation, as a violation to the Coastal Zone Act. 

Together, those generators would rely on 2.5 million gallons of stored diesel, which Patterson called “entirely unprecedented” in his ruling. 

While Patterson pointed to the generators, many opponents of data centers in Delaware have pointed their ire at the electricity they could pull from the power grid.

Starwood’s proposal would have consumed the same amount of electricity as nearly 1 million homes, according to expert estimates, prompting fears that it could cause power bills to surge. 

Similar concerns also have resonated nationally in recent years as the data center industry has been among the fastest growing in the country, providing the physical infrastructure needed to power artificial intelligence systems.

Since Starwood submitted its plan last summer, several other data center proposals have come to the state. 

A proposed data center near St. Georges, which would be built near the land that currently hosts the popular Halloween attraction Frightland, is still in preliminary stages. 

It also would fall under regulations outlined in the Coastal Zone Act, but it is unclear if the law would prohibit it from moving forward. That would likely depend on how the project were to be powered.

Separately, developers behind a plan for a data center near Newark paused their project recently, according to New Castle County Councilman Tim Sheldon. He said they did so after he brokered an informal deal with them. 

Meanwhile, a smaller data center proposal also recently met its demise in Harrington, after residents rallied against the project.

Dustyn Thompson, chapter director of the environmental group Sierra Club Delaware, said he and others who have been critical of Project Washington are happy that Starwood decided to withdraw their appeal. 

But he said since data centers are not explicitly named in the Coastal Zone Act, data center developers could try to build in coastal areas again. 

He said the state and local governments need to pass laws restricting where data centers can locate, how much water they can use and how much noise they can make. 

“We need consistency across the state on those types of protections,” Thompson said.