Alabama town left powerless against massive new Bitcoin mining data center after developer finds loophole in state zoning laws

Morgan County's 12-month moratorium has no enforcement power thanks to Dillon’s Rule limiting its ability to act against a proposed 50 MW Bitcoin mine by VoltCoreThe town of Somerville never adopted zoning, and the site sits outside the town limits, leaving its 18-month moratorium equally unenforceableThe developer trades under three different corporate identities, was refused easements by all four affected landowners, and is routing utilities through the county right-of-way instead

Somerville, Alabama, a town with fewer than 800 residents and the state's oldest surviving courthouse, had no reason to think about land use law until this summer.

However, a 50 Megawatt data center designed to mine cryptocurrencies spanning 15 acres could now disrupt life in an otherwise idyllic town.

This is despite there being two different moratoriums in place, one from Morgan County and another from Somerville's town council, to prevent its construction, moves that lack legal teeth to follow through.

Local governments limited by an arcane Iowa Supreme Court ruling?

Alabama is one of 31 states that follow Dillon's Rule, a principle written into its 1901 constitution, which holds that local governments may exercise only the powers the legislature grants them.

County commissions in Alabama cannot zone property, pass ordinances, or raise taxes without first going to Montgomery for local legislation. Morgan County has no zoning in its unincorporated areas because it has never been given the authority to create any.

In a nutshell, the developer found the perfect loophole: a lack of rules that would allow the county to enforce zoning in its own domain.

Morgan County Commission Chairman Ray Long has been unusually candid about how little his own resolution, which was passed unanimously after residents collected 450 signatures, accomplishes, calling it a 'message' rather than an actual mechanism to force the developer to vacate its plans. When asked what tools were left, he said the county could essentially tell the company, "We really wish you wouldn't do it."

Somerville's position is only marginally better: Municipalities in Alabama do hold zoning power, and a long list of cities have used it this year, but Somerville never adopted any in the past. Mayor Darren Tucker told The Decatur Daily he had pushed his council to pass zoning for years, and it had failed every time, meaning nothing would stop a data center from buying land inside the town limits and building on it.

The 18-month moratorium the council approved on June 30 is the town's attempt to buy time to do exactly that, and part of the plan is to ask the Alabama League of Municipalities whether a town without zoning can legally block a data center in the first place.

The company building out the data center is VoltCore, but the original buyer of the 15-acre parcel is Texas-based Sovereign Global Solutions Inc., which later transferred it to Alabama-based Sovereign Gazelle LLC. Residents reportedly could not reach the listed agent for the latter two and also noted that the former's phone and email contacts were invalid. A third LLC also linked to the data center, Project Avalanche, was created on the fourth of August.

The developer, which needed utility connections for a proposed 10-acre facility on the 15-acre parcel, was denied access by four landowners; it offered a mix of cash, a gas line to their houses, and free internet connectivity, among other perks. It responded by pushing for a right-of-way approach that cannot be legally turned down.

This is not an isolated case; more than 500 moratoriums have been documented across 42 states, and South Dakota has passed a law restricting installations of 10 MW or more, with proposals moving in New York, Oklahoma, and North Carolina. Developers are also fighting back, however, and despite $130+ billion in canceled AI data center projects so far, plenty more is to come as AI buildouts continue unabated in a never-ending hunt for cheap land, power, and access to water.

The lesson a developer takes from the situation in Somerville is ironically that public opposition in an unincorporated county is legally inert, and that the cheapest land, the cheapest power, and the weakest local government often tend to be one and the same. A fix might be in the works, but in this case it could come months or years after the concrete is already poured.