Montana County Seeks Pause on AI Data Centers After Property Owner Withdraws Support

A proposed artificial intelligence data center in western Montana has stalled before construction could begin after the property owner withdrew his signature from a required land-use application on July 6, a move that comes amid growing environmental concerns and public opposition over the rapid expansion of AI infrastructure.

The withdrawal effectively halts the proposed Krambu data center at the development yard in Bonner, east of Missoula, where local residents, conservation organizations and clean-energy advocates have spent months raising concerns about the project’s potential impacts on electricity demand, water resources, public health and the environment.

County officials confirmed Monday that Mike Heisey, general manager of the Bonner Mill Industrial Park, withdrew his signature from Krambu’s special exception application, which is required for the project to proceed.

“After hearing from the public and understanding what the concerns are, I have decided to withdraw my signature from the Krambu special exception application,” Heisey said in a statement provided by Missoula County. “Bonner Property will not be moving forward with the data center proposed by them.”

Although after Krambu’s collapse, no similar projects are currently planned, Missoula County officials say they will continue pursuing a temporary pause on new data center development while they evaluate whether existing regulations adequately address the environmental impacts associated with modern AI facilities.

The county commissioners will hold a hearing on the proposed interim zoning that would pause data center development on July 9th, Svein Newman, Missoula County’s Climate Action Program Manager, told Inside Climate News in an email. “There will be an opportunity for public comment and then action from the Commission,” he wrote. “I suspect that they will probably vote at that meeting, but cannot say with declarative certainty.”

If approved, the interim zoning ordinance would temporarily suspend approval of new data centers and future expansions while county planners update regulations. Under Montana law, the ordinance could remain in effect for up to one year, with the option of a one-year extension.

The proposed facility at the Bonner Mill Industrial Park, developed by Idaho-based Krambu, would have been among Montana’s first AI-focused data centers. Although relatively modest at approximately 7 megawatts, the proposal became a catalyst for a broader debate over how local governments should regulate AI infrastructure before larger facilities arrive.

Jennie Dixon, a planner with Missoula County, said she was surprised by the decision to withdraw the application because county officials had hoped the project could demonstrate how AI data centers might be developed responsibly under stronger local oversight.

“I was encouraging them to stay the course because, wouldn’t it be fantastic if Missoula could be the poster child for how to do a data center the right way?…” Dixon told Missoula Current. “That’s our goal with this interim pause, to figure out how to be the example for the country on how to do these the right way.”

Community opposition to the Krambu center steadily intensified as details of the project became public. Residents submitted public comments, attended meetings and questioned whether the proposed facility could increase electricity demand, consume significant water resources, generate noise and waste heat, and alter the character of the former Bonner mill site.

Earlier this month, more than 100 residents gathered at a community meeting in Bonner to voice concerns over the proposal. Speakers warned that even a relatively small AI data center could open the door to much larger facilities in the future and place additional pressure on Montana’s electrical grid and natural resources.

Environmental organizations also urged county officials to strengthen regulations before approving additional AI infrastructure.

Anne Hedges, executive director of the Montana Environmental Information Center, said in an interview with Inside Climate News that the proposed interim zoning represents an important opportunity for local governments to address emerging environmental challenges before the industry expands further.

“Missoula County is the only county in Montana with regulations to protect people from air and water pollution as well as noise and vibrations,” Hedges said. “However, as people across the country are learning, data centers are far more disruptive and harmful than previously known.”

She said stronger regulations are needed to protect public health, natural resources and private property before additional AI data centers are approved. Hedges also argued that companies developing the data centers, not residential utility customers, should bear the costs of new substations, transmission lines and other electrical infrastructure required to support large-scale AI facilities.

County officials say existing zoning regulations were originally designed to regulate cryptocurrency mining operations and focus primarily on electricity consumption and electronic waste in response to energy use and noise problems with a cryptocurrency mine that operated at the Bonner Industrial Park from 2017 to 2020. Since those rules were adopted in 2020, however, planners have concluded that AI-powered data centers present a much broader range of environmental concerns.

“There are all these other potential impacts that communities are seeing across the nation in their evaluation of data centers,” Karen Hughes, director of Missoula County Planning, Development and Sustainability, told Inside Climate News before the Krambu project stalled. “We want to make sure the regulations we have appropriately address those.”