Lowndes County Commission sued for second time over data center tax break

The Lowndes County Commission faces a lawsuit filed Tuesday challenging tax breaks it granted to a proposed hyperscale AI data center campus.

The community group Protect Lowndes County and the Alabama Rivers Alliance are the second group of plaintiffs to sue the commission over the tax breaks. They allege the commission violated Alabama’s Open Meetings Act and Open Records Act as it considered and approved more than $2.7 billion in local and state tax abatements for Project Red Clay, the largest data center development proposed in Alabama.

Attorneys with the Southern Environmental Law Center and the Natural Resources Defense Council represent the plaintiffs, who seek to invalidate the tax breaks.

The proposed 1,500-megawatt, 2,200-acre data center would sit in northeastern Lowndes County near the junction of U.S. 80 and Alabama 21, about six miles southwest of Montgomery.

County commissioners voted 3-2 to approve the tax breaks at an October 13 meeting.

The plaintiffs allege the commission violated the Open Meetings Act by misleading residents about when and where it would consider the tax abatements. The lawsuit alleges the commission led residents to believe the meeting would take place October 20, then considered and approved the abatements a week earlier.

The suit also alleges commissioners violated the act by discussing the project without using their microphones, leaving members of the public unable to hear, and by “arbitrarily limiting public comment and cutting off speakers opposing tax breaks for the data center.”

The plaintiffs also allege the commission violated the state’s Open Records Act by failing to release public records related to Project Red Clay.

“We refuse to stand by and allow our government to ignore the law and cut the public out of the process,” said Adrian Johnson, a member of Protect Lowndes County who lives next to the proposed data center site. “We’re suing because Alabama law is clear—we have a right to be heard and have a role in this process.”

Todd Gleason, senior litigating counsel with the Natural Resources Defense Council, said Lowndes County residents “deserve full visibility into projects that stand to alter their local economy, infrastructure.”

“This lawsuit seeks to ensure that major public decisions are made openly and with meaningful public participation,” Gleason said. “Regardless of where people stand on Project Red Clay itself, residents deserve a fair opportunity to understand how decisions are being made, review the information underlying those decisions, and participate in the process before major governmental actions are taken.”

Prince Chestnut, the commission’s general counsel, did not respond Thursday to a request for comment on the lawsuit.

The lawsuit follows an earlier challenge by Lowndes County residents who sued the commission in October, alleging it failed to provide adequate notice of the meeting at which it approved the tax breaks.

Before the commission approved the tax breaks, some Lowndes County residents and nearby landowners had raised concerns about the facility’s location, water use and potential effects on the local water supply and electricity rates.

The site is also along the Selma to Montgomery National Historic Trail, a 54-mile route used during the Selma to Montgomery marches in support of the Voting Rights Act.

“I don’t think it’s an accident this developer came to Alabama’s Black Belt,” Tom Gardner said. Gardner is the pastor of Beulah Primitive Baptist Church in Hope Hull, which sits about 100 feet from the Project Red Clay site.

“In a county where Black residents had to organize, march, and risk their lives for a voice in their own government, a siting process that sidelines the public is not a neutral choice—it echoes that history,” Gardner added. “We will continue to fight to ensure that all Lowndes County residents have the fullest opportunity to participate in government decisions.”

Until this week, the project’s Houston-based developer, Cloverleaf Infrastructure, had not disclosed who would operate the data center.

San Francisco-based AI infrastructure company Lambda Inc. announced Wednesday that it will operate the proposed center and pledged to invest $33 million in the facility.

In its announcement, Lambda outlined commitments aimed at addressing residents’ concerns about utility rates, noise and water use.

Lambda said it and Alabama Power, the site’s prospective utility provider, have signed the White House Ratepayer Protection Pledge. Technology companies and utilities that sign the pledge commit to keeping the costs of data center development and operation from being passed on to ratepayers.

The developers also pledged to use a closed-loop liquid cooling system that they said “significantly” reduces water consumption compared with a traditional open-loop system.

Closed-loop systems use less water than traditional evaporative or open-loop cooling systems, but they still produce wastewater.

The systems require flushing before they become fully operational and may produce more wastewater when flushed for maintenance. Once in service, closed-loop systems may contain corrosion inhibitors, glycol or other additives.

The Natural Resources Defense Council alleges industrial wastewater will “strain local resources and infrastructure,” calling the potential effects “particularly troubling” given Lowndes County’s ongoing sanitation problems. As many as 80 percent of homes in Lowndes County lack reliable access to sewage systems.

The group also noted that Project Red Clay has requested 100,000 gallons of water per day.

Cloverleaf said it needs that amount during construction and expects average daily water use to fall to levels “similar to that of an office building” once the facility is complete.

A Lowndes County commissioner and the superintendent of Lowndes County Schools voiced support for Project Red Clay, citing projected tax revenue and Lambda and Cloverleaf’s pledges to invest and hire locally.

Despite the billions in tax breaks the commission granted the facility, Cloverleaf projects that it will generate more than $2.8 billion in local tax revenue through 2049, including more than $1.6 billion for Lowndes County Schools.

“Project Red Clay is a significant investment in Lowndes County and the future of our community,” Lowndes County Commissioner Charlie King Jr. said. “Lambda’s commitment to hire qualified county residents and contractors will provide Lowndes County workers and businesses with opportunities, while the jobs and local tax revenue the project is expected to bring will improve our schools, support community priorities and create lasting value for residents.”

Cloverleaf and Lambda have pledged to invest $10 million through a community benefits agreement with the Central Alabama Community Federation. Lambda said it is “working to ensure the investment reflects community input and supports locally identified priorities.”

The project is expected to employ more than 1,000 construction workers.

Lambda expects the facility to require 225 full-time positions. The company said it will “work with local partners to identify opportunities for Lowndes County residents to fill operational positions and for local contractors to support construction.”