Pocatello’s City Council will reconsider a conditional use permit for a proposed artificial intelligence data center on July 16, as a new state law imposing restrictions on water usage by such facilities takes effect just weeks before the hearing.
Lex Developments filed an appeal after a hearing examiner denied the company’s conditional use permit request on May 19. The developer seeks to build the data center on vacant land in Pocatello, but the initial application faced significant hurdles during a public hearing held May 14, when company representatives struggled to provide concrete figures on water consumption and power requirements.
New State Law Reshapes the Landscape
House Bill 895, which becomes effective July 1, establishes new parameters governing how artificial intelligence data centers may access and use water resources across Idaho. The law’s restrictions are expected to influence the city’s decision-making process as councilmembers evaluate the appeal during their 6 p.m. session on July 16.
The timing places the council in a position to apply the statute’s provisions directly to this case, potentially altering the conditions under which such a facility could operate within city limits. Pocatello officials had signaled before the law’s passage that local code updates would be necessary to properly regulate data centers.
Earlier Denial and Outstanding Questions
Hearing examiner Kathleen Lewis issued the initial denial following testimony and evidence presented at the May 14 public hearing. A central problem emerged when Lex Developments representatives were unable to specify exact water and power usage needs—information typically required to assess whether municipal infrastructure could support an industrial operation of that scale.
During that hearing, Gus Shultz, representing Lex Developments, expressed confidence in the project’s viability. “I believe it does [qualify for a CUP]. The city can service it. Water can service it,” Shultz stated, asserting that the municipality possessed adequate capacity to accommodate the facility.
Pocatello’s mayor acknowledged the regulatory gap at the time. “Like a closed-loop water system or power issues and things like that need to be addressed,” the mayor said, indicating that council members viewed the current code framework as insufficient to handle data center applications adequately.
Path Forward
Should the council approve the conditional use permit during the July 16 hearing, Lex Developments has indicated it would proceed to submit detailed site plans for city review. The company’s willingness to move forward suggests confidence that addressing the water and power concerns—possibly in ways consistent with House Bill 895’s requirements—remains feasible.
The appeal represents a test case for how Pocatello will regulate high-water-demand industrial projects in the artificial intelligence sector. State lawmakers in Boise have grown increasingly concerned about data center proliferation and the strain such facilities place on regional water supplies, particularly in rural and agricultural communities where water rights and access form the economic bedrock.
For Bonneville County and the broader East Idaho region, the Pocatello decision may signal how neighboring jurisdictions will approach similar proposals. Idaho Falls and other communities have watched the data center debate unfold, aware that artificial intelligence infrastructure development represents both economic opportunity and resource management challenges.
What Comes Next
The City Council hearing on July 16 will allow both Lex Developments and members of the public to present arguments and evidence. Council members will then deliberate the appeal in light of House Bill 895’s new water restrictions and Pocatello’s updated understanding of what municipal code changes may be necessary. A decision from the council could come that evening or at a subsequent meeting, depending on how the deliberations proceed and whether additional information is requested.