• A Delaware board upheld the state environmental agency’s decision to prohibit the “Project Washington” data center.
• The Delaware Department of Natural Resources and Environmental Control (DNREC) ruled the project violated the 1971 Coastal Zone Act.
• The developer, Starwood Digital Ventures, argued the project’s infrastructure did not fall under the act’s regulations.

Project Washington’s prospects in Delaware appear murkier after a board stood on the state environmental agency’s decision to prohibit the data center proposal.

The public hearings with the Coastal Zone Industrial Control Board kicked off in Dover on March 24 at the Delaware Department of Natural Resources and Environmental Control’s Auditorium near Legislative Hall. It finished on March 26 after days of testimony from witnesses supporting and opposing the DNREC decision on the data center, which would be the largest in the state.

Project Washington was prohibited by DNREC in February because the agency said it violated the Coastal Zone Act, which was signed in 1971. Project Washington’s developer, Starwood Digital Ventures, filed an appeal of that decision soon after.

A little more than 30 people attended the meeting on March 24. It was modeled more like a court hearing than a public government meeting. The next two days included testimony from witnesses from both Starwood Digital Ventures’ and DNREC’s attorneys.

The Coastal Zone board consists of nine members, five of which are appointed by the governor and approved by the state Senate. Four other members are the state director of the Division of Small Business and Tourism and the chairs of the planning commissions of each county.

It’s the first time this assembly of the board has been called to action. Board members said they are making decisions on a fact and law basis, and are trying to cut out the noise this project has caused on social media and in other public meetings.

Witnesses and experts explained a ton of technical definitions for generators and got into the nitty-gritty of emissions and infrastructure. It was up to the board to take those facts in stride and make their decision.

“What we have to do is come back to the purpose of the appeal,” said Willie Scott, a member of the board during a break between sessions on March 24.

They voted unanimously to uphold the DNREC decision to prohibit the project based on the Coastal Zone Act.

Courtroom-like arguments for and against the data center

The hearing on March 24 began with opening arguments. Attorneys for Starwood Digital Ventures, Project Washington’s developer, argued that Project Washington’s purpose and infrastructure fall outside of the Coastal Zone Act’s regulations, and that DNREC’s definitions of smokestacks and tank farms are flawed.

“It fails every element of the statutory definition, as interpreted by the Delaware Supreme Court and the Delaware Superior Court,” said Jeff Moyer, an attorney representing Starwood. “Its limited diesel infrastructure is not a tank farm within any reasonable meaning of that term, and each of the core three functions of Project Washington – data storage, electrical infrastructure and backup power – are all expressly not regulated.”

DNREC’s attorneys argued the data center campuses fall under heavy industry in a modern context, and it is the kind of project the act is intended to kill. They also argued it has a potential to pollute when backup generators are working if the power fails.

“The law requires that it be prohibited, not recharacterized, not broken into pieces and minimized, but prohibited,” said Michael Hoffman, attorney representing DNREC. “Over the course of the next few days, we will show that Starwood’s proposed hyperscale data center is one such project.”

Closing arguments on March 26 reiterated arguments from both sides, and the board voted to stand with DNREC.

How Project Washington and DNREC got here

The Coastal Zone Act prevents heavy industrial projects from developing along the Delaware River and Bay, Chesapeake and Delaware Canal, Atlantic Ocean, Indian River Bay and other Sussex County bays. The 14 projects that have been grandfathered include the Delaware City Refinery and the Port of Wilmington.

Project Washington’s proposed site falls within the defined coastal zone, which extends west to Dupont Highway in that specific spot. In February, DNREC said the massive data center is prohibited, stifling the project while it worked through state and county permits.

It would be 11 two-story data center buildings surrounded by electrical fields on two large land parcels north of Delaware City accessible by Hamburg Road, Governor Lea Road and River Road. 

DNREC’s beef with the project is in the backup generators and their accompanying diesel tanks. The data center is proposed to run 24 hours a day, seven days a week, 365 days a year. If power goes out, it needs to use the backup generators to keep running. DNREC’s decision says the project includes some 516 double-walled diesel fuel belly tanks, each capable of storing some 5,020 gallons of fuel. That’s about five acres of tank farm.

There would be 516 backup generators with 516 smokestacks, which DNREC said in its original decision is the exact type of infrastructure the Coastal Zone Act targets by prohibiting “heavy industrial” projects.

Starwood Digital Ventures, appealed the decision, mentioning countervailing factors including avoiding wetlands, no direct surface water discharges and projected economic benefits.

Their appeal said the original DNREC decision “solely focuses on alleged environmental risk and worst-case emissions, and does not fairly weigh or explain these countervailing factors in light of regulating criteria.”

Jim Lamb, who is handling media communication for the project, said the backup generators would only run 37 to 45 minutes per month just to test if they are operational. Project Washington will also use a closed-loop cooling system, limiting its water intake.

The appeal required a hearing, which is the first time the board made a decision since 2021.

The developer of the project did not immediately respond to Delaware Online/The News Journal’s request for comment. New Castle County officials did not immediately respond to either.

Shane Brennan covers Wilmington and other Delaware issues. Reach out with ideas, tips or feedback at slbrennan@delawareonline.com.