The People of Utah vs. Kevin O’Leary

On the morning of May 11th, the celebrity investor Kevin O’Leary appeared on Fox Business and announced that he was under attack by Chinese agents. For weeks, he had been going on TV and posting online to tout his project, called Wonder Valley, after his nickname from the reality show Shark Tank, Mr. Wonderful. It was going to be enormous, “the largest data center in the world,” sitting on 40,000 acres north of Great Salt Lake in rural Box Elder County, Utah. A dedicated gas power plant would tap into an interstate pipeline and generate 9 gigawatts of electricity, more than double the average consumption of the entire state. The project was coming so fast, thanks to Utah’s governor and legislative leaders, O’Leary said, that “it shows China and the rest of the world we aren’t messing around.” But now, wearing a black baseball cap printed with the words “Utah National Security,” he told Maria Bartiromo that he had noticed something baffling. Ever since the three county commissioners unanimously approved his data center the week before, O’Leary had observed a sudden increase in people mad at him online. For this he could see only one explanation. “Who would want us to stop building our electrical grid? Who would want to stop us from having compute capacity to develop AI? Which adversary would want that?” he asked Bartiromo. “There’s only one: It’s China.” “I got my guys to go a deep dig into the IP addresses,” he told Bartiromo. Brandishing a sheet of paper, he began to read the names of people who had — or he believed to be somehow connected to people who had — criticized his data center online. “Come out, come out, wherever you are and let’s shine the light of transparency on what you’re doing,” he exclaimed, looking up from his paper to address the camera and inviting them to clear their names. “It’s the CPP [sic] at work here. There’s no question about it.” Six weeks later, Bartiromo closed out a segment by pulling up a note O’Leary had posted the day before, white text on a black background: “Recently I appeared on various news programs and would like to clarify that I have no evidence that Alliance for a Better Utah, Elevate Strategies, Gabrielle Finlayson, Taylor Knuth or Josh Kanter are funded by China or the Chinese Communist Party.” “How the heck would anybody think you could build something out here?” Nor was Fox News Media aware of any evidence that they are funded or directed by China or the Chinese Communist Party, Bartiromo said. “Fox News Media apologizes for the error.” O’Leary’s “clarification” was an abrupt shift in tone. From the moment he announced the project he had proclaimed it as all but inevitable: blessed by state leadership, approved unanimously by local officials, demanded by national security, and opposed only by sinister outside forces. Now came a quiet retreat. Less than three weeks later, O’Leary and Fox were sued for defamation by Alliance for a Better Utah, Elevate Strategies, Gabrielle Finlayson, and Joshua Kanter. O’Leary and Fox moved to have the suit dismissed in late September.In March, to the people of Box Elder County, the data center was just a rumor. Over the past five months, I spoke with more than two dozen local officials, residents, and others involved with the project, including the CEO and cofounder of O’Leary Digital, Paul Palandjian, who, after describing himself as “an open kimono” of transparency, responded to emailed questions and requests to speak with O’Leary with a message from a lawyer threatening legal action over any false statements. These interviews, along with thousands of pages of emails and text messages obtained through public records requests, show a project that moved with the urgency of an emergency. Everyone was racing — the developers against other speculators, O’Leary against rival projects chasing the same few tenants, Utah against other states, the United States against China — right up until they slammed into the residents of Box Elder County they had neglected to tell. The very county commissioners whose unanimous approval O’Leary touted on Fox were officially told the project was coming only five weeks before they were expected to vote on it. Before then, all they had heard were rumors.Landowners in the area appreciated the peace and quiet. To Lee Perry, one of the three county commissioners, the rumors sounded farfetched. But in early March, he drove north out of Brigham City, Utah, past the bird refuge, past the Northrop Grumman test range, past miles of white salt flats and pale grass, to a fork in the road where Tim Munns waited in his truck. For weeks, Munns had been texting and calling Perry and the two other commissioners to say that someone was going around talking to landowners about buying property for a data center near his ranch in Hansel Valley. Perry was skeptical. There was nothing out there: no power, no water, only a few roads, mostly gravel, lined with tires mounted on posts and spray-painted with “keep out.” Hardly anyone lived there but Munns. He had bought his place 50 years ago because no one else wanted it. All the good pasture was already locked away in generational farms whose heirs now lived elsewhere. Now he lived there with his son Bud and Bud’s family, and he appreciated the peace and quiet. So Munns had not been pleased to hear the data center rumors, and he had not been happy to get the call himself from one of the developers several weeks ago. If you want to talk to me, it’ll be at my kitchen table with my sons, looking me straight in the eye, he recalls telling the man. At 4:30 the next morning, Munns drove to Salt Lake City to try to get some answers. But no one at the Rural Caucus Breakfast, where people from the Department of Natural Resources and other agencies met each Friday, seemed to know what he was talking about. He contacted his state senator, Scott Sandall, and Utah House Speaker Mike Schultz. Either they didn’t know anything or they weren’t telling him.Nearby, Golden Spike National Historical Park commemorates where the final railroad spike was hammered in. Perry told Munns that he hadn’t heard anything about a data center either. Neither had the other two county commissioners. Perry had known Munns a long time. When Perry was serving in the state legislature, Munns had spoken with him about stopping a landfill being built near his ranch. The battle had lasted years, but in the end the landfill was stopped. Now Munns wanted Perry’s help stopping the data center. The difference was that, unlike the landfill, it wasn’t clear there was anything to stop. No one had filed building permits, no one had spoken to the planning and zoning people. Perry had heard all manner of proposals for Hansel Valley over the years: solar farms, movie studios, amusement parks. They were typically presaged by phone calls and meetings. Most never became more than that. “Everything is about speed right now. Everything.” But Munns was convinced something big was coming. He believed one of the landowners in the valley had already signed documents. There were rumors that the state government was involved somehow, maybe the military too. Perry was preparing to run for reelection, and the people outside Brigham City always felt ignored, so it seemed worth the drive to appease him.When the tracks came together in Box Elder County, the first transcontinental railroad was complete. The other two commissioners apparently felt similarly. They’ll be along shortly, Munns told Perry. He had asked them to come too. Then we can all hop in my truck and go see what the rumor mill is talking about, Munns said. As they drove over the ridge, Perry saw a vast expanse of sagebrush and alkaline pools, the white shimmering rim of the Great Salt Lake just visible on the horizon, if he squinted. “It was just kind of a desert,” Perry says. “How the heck would anybody think you could build something out here?” A few days after Perry’s visit to the ranch, a resident asked him if he’d seen a strange announcement. It was a post on PR Newswire from a few weeks earlier saying that a “large-scale powered compute campus” was planned for “the Golden Spike District of Box Elder County, Utah,” referring to the stretch of land south of Munns’ ranch where the two ends of the first transcontinental railroad were joined in 1869. The campus was a joint venture between “West GenCo LLC” and O’Leary Digital. Combined with another O’Leary project in Canada, it would be the “largest integrated powered compute infrastructure development currently underway globally.” “We recognize the leadership demonstrated by Governor Spencer J. Cox, Senate President J. Stuart Adams, and Utah’s federal delegation,” O’Leary wrote in the announcement. “Projects of this magnitude require disciplined execution and close collaboration with state and local leadership.” For Perry, the document raised more questions than it answered. Such as: What local leadership? No one had spoken to him or his fellow commissioners. And also: the Shark Tank guy? This year, Goldman Sachs estimates that $580 billion will be invested in AI infrastructure in the United States, much of it tied to the enormous data centers being built by Google, Amazon, Meta, Microsoft, Oracle, and others. Superlatives have fallen by the wayside. This is more than federal, state, and local governments are on pace to spend this year building public infrastructure, nearly twice what the US spent going to the Moon, adjusted for inflation, and almost as much as it cost to build the entire interstate highway system over 40 years. At nearly 2 percent of GDP, the AI buildout rivals the railroad boom of the late 19th century, a construction frenzy that transformed the nation, triggered multiple financial crashes, laid tracks to nowhere, created a new politics of anti-monopoly populism, and established a new oligarchy. Data centers have existed for decades, but those of the AI boom are orders of magnitude larger than the boxy structures built to store our emails and videos. In 2019, a notably large data center might have been the size of an Ikea and consumed as much electricity as 50,000 US homes; it would probably have been located near others of its kind, clustered near electricity and fiber connections in a place like “Data Center Alley” in Loudoun County, Virginia. A modern AI data center like Meta’s Hyperion, for comparison, stands alone on 5 square miles of rural Richland Parish, Louisiana. It will be powered by 10 new gas power plants with 7.5 gigawatts of generating capacity, more than the power demand of all the 250-plus data centers in Data Center Alley combined. Meta CEO Mark Zuckerberg illustrated its size by posting an animation of a Facebook-blue building crushing Manhattan. While size is important, speed is paramount. “Everything is about speed right now,” said Reyk Knuhtsen, an analyst at the consulting firm SemiAnalysis. “Everything.”On the other side of the Great Salt Lake, Meta’s Eagle Mountain data center is expected to expand.AI companies and data center developers alike have expressed that they’re locked in an arms race. AI, as every executive says, is a race. Like all arms races, this one is driven more by fear than hope. OpenAI’s founders were afraid that some less responsible company might build powerful AI and that it might, per a famous thought experiment, do something like consume all the resources humanity required to survive in the single-minded pursuit of a poorly defined goal. After OpenAI launched ChatGPT in 2022, it was fear that OpenAI might build it first that prompted every other major tech company to join the race. What winning looks like may be a bit vague, but everyone is clear that losing would be existential, either for human civilization or their particular company. And because AI improves with more computing power, whoever builds the most data centers wins. It would not be the first time speculators have come to this part of Utah seeking wealth and promising a new technological future “If we end up misspending a couple of hundred billion dollars, I think that that is going to be very unfortunate, obviously, but what I’d say is, I actually think the risk is higher on the other side, if you build too slowly,” Zuckerberg said last September. This year the company cut construction time by putting billions of dollars’ worth of servers inside tents.Environmental regulations are being cut in the name of data center development expediency. Lately, this corporate arms race has become an actual arms race, with executives and government officials invoking the urgency of staying ahead of China, which had approximately half the compute capacity of Microsoft alone at the end of last year, according to Epoch AI, but is building more. Citing national security, the Trump administration has cut environmental regulations, promised to fast-track permitting, and moved to end the requirement that the public be notified before air pollution permits are issued and construction starts. In June, the Justice Department asked a judge to dismiss an air pollution lawsuit against Elon Musk’s Colossus 2 data center, arguing that the facility was needed by the military. Because the most profitable companies in history will pay more for a gigawatt of compute tomorrow than a gigawatt of compute next year, there is money to be made in getting them what they need as fast as possible. Even before the boom, it could take a year or more to navigate the process of connecting something as big as a data center to the electric grid, so speculators started filing requests with multiple utilities to see which came through first, jamming queues further. Rather than wait, developers started building their own power plants on-site, almost always gas, because gas offers a faster route to 24-hour power than nuclear or renewables. A report published in July by the Environmental Integrity Project counted 71 proposed gas plants in the US dedicated to serving data centers. Now large gas turbines are back-ordered for years.Data centers need gas and power, which the Ruby Pipeline will supply to Stratos. “They said ‘Shh, don’t tell anybody, don’t tell anybody.’”A “powered land assemblage” — land with power, permits, and proper zoning — can be incredibly valuable to developers and speculators. In addition to land and power, developers need building permits, air permits, and sometimes rezoning. Never a fast process in the best of times, it has become more fraught as local opposition has grown. At least 75 projects were blocked or delayed in the first quarter of the year. Hyperscalers will pay a premium for land that is permitted and shovel-ready, sometimes 20 times what the land was worth before. They are paying for speed. The business of putting these ingredients together is known as “powered land assemblage.” Commercial real estate firms and dedicated companies like Cloverleaf Infrastructure are searching the country for suitable plots and power