For the first time, the federal government just quietly approved a warehouse-sized AI data center on public land.

On June 26, the Bureau of Land Management (BLM) greenlit a plan by Townsite Solar 2 (TS2) to move forward with building an 86-acre facility roughly ten miles from Lake Mead National Recreation Area, one of America’s most popular National Park Service sites. Located near Boulder City, Nevada, the proposed center comes at a time when more than 95 percent of the Colorado River Basin watershed is experiencing drought and researchers are measuring water levels in Lake Mead at historic lows.

The move sets a precedent, opponents say, that could reshape America’s public lands.

“How this project is handled will have immense consequences for projects in Nevada, where approximately 88 percent of our state is public land, and the rest of the West,” U.S. House Representative Dina Titus, whose district includes Boulder City, told Outside.

Supporters argue that the project will advance America’s energy initiatives. In an email to Outside, a BLM spokesperson said the agency approved the TS2 Data Center in June to “accelerate permitting for data center infrastructure.” The decision is consistent with a 2025 Trump executive order directing federal agencies to expedite approvals for data centers, the spokesperson added.

“This project reflects the growing role of public lands in supporting the infrastructure needed to power innovation, advanced technology, and the nation’s future economic growth, while advancing the Bureau’s commitment to responsible stewardship and sustainable use of public lands for current and future generations,” a spokesperson told Outside.

If built, the Townsite Data Center would cover a section of the Mojave Desert roughly the size of the Mall of America, replacing desert tortoises and yucca trees with server racks, power lines, and round-the-clock lighting.

“While the Boulder City project might be the first approved on BLM land, we know it won’t be the last,” Olivia Tanager, director of the Sierra Club’s Toiyabe Chapter, which covers Nevada and eastern California, told Outside. “We have already seen documents from other projects indicating more data centers on BLM land in the region are forthcoming.”

More broadly, Tanger says the project could help determine how BLM makes decisions on future AI infrastructure, and how much say the public has in the process.

“The precedent that this bait and switch sets, locking the public out of public land to enrich Big Tech, sets a horrible precedent for all forthcoming projects,” she said.

Data centers are large facilities that house computer servers and provide enormous computing power for technologies, including artificial intelligence. These servers run around the clock and generate significant heat, requiring large amounts of electricity and cooling. Depending on the cooling method, the facilities can consume significant quantities of water directly, or indirectly through electricity generation.

On July 27, the Sierra Club, the Center for Biological Diversity, and residents of Boulder City filed an appeal, asking federal officials to put the project on hold while they challenge its approval. These groups say such facilities strain electrical grids, increase utility costs, and compete for water, especially in areas as drought-prone as the American Southwest.

The project’s future now hinges on whether federal officials agree to postpone further development while the appeal proceeds. It’s a process that the Department of the Interior, which oversees the BLM, says could take up to two years.

How a Solar Permit Became an AI Data Center Loophole

The project did not begin as a data center, or even on public land. Nevada-based development company TS2 initiated two proposals: one for a solar facility on land owned by Boulder City and a second for another solar facility on nearby BLM land, according to the proposal.

According to Boulder City Town Council documents, in November 2025, the Council voted to move forward with the proposal, while the BLM simultaneously approved the second solar proposal on BLM land following an environmental review. The following year, TS2 changed both applications to instead include an AI data center—not a solar facility, according to public planning documents and applications reviewed by Outside.

The Sierra Club’s appeal alleges that the BLM violated environmental laws by relying on assessments from a previously proposed solar facility and failing to accurately consider the effects of a data center on the surrounding environment. The appeal also claims that BLM did not give the public enough time to review and comment on the data center proposal.

The Water Crisis at Lake Mead Meets the AI Energy Boom

Project documents say the Townsite facility would use an air-cooling system, which uses less water than traditional water-cooled data centers. It would rely primarily on reclaimed water from Boulder City’s water system—water that’s already been drawn from Lake Mead for drinking and other municipal uses.

Those appealing the decision argue that the project’s water would ultimately still come from Lake Mead and could instead be put to better use. The group also raised concerns about a provision allowing the data center to use water from other commercial sources within 50 miles if reclaimed water isn’t available.

“This region’s water supply is already vulnerable and many of the landscapes fragile,” Hawk Hammer, a spokesperson for the advocacy group American Rivers, told Outside. “Any impacts to these valuable and irreplaceable resources should be transparent, and the impacted public should have the opportunity to weigh in.”