Sullivan commission approves crypto mining/data center zoning

BLOUNTVILLE — The Sullivan County Commission unanimously has adopted a zoning amendment that would require data centers and energy processing be in a Planned Manufacturing District in the middle of an industrial park. However, Allison Cathey, a retired attorney from Middle Tennessee but now living in Sullivan County and concerned about the issue, said she fears that could open the door to legal challenges to the county's new data center zoning. She said efforts are tricky to address the ever-changing world of data centers and often-associated battery storage areas. County Attorney Dan Street agreed the vote might be grounds for a challenge of the county zoning, which has a one-year moratorium lasting until January, but the commission vote was 18-0 with six absent. BACKGROUND Sullivan County Planning Director Luke Meade said that the zoning change, approved by the Sullivan County, Kingsport and Bristol, Tennessee planning commissions, cannot be amended by the commission. As outlined at last month's zoning meeting, he said options were to go back to the drawing board and get all three bodies to vote on an amended plan or to go ahead and approve something and then consider possible amendments or changes in the future. Cathey, 501 Hill Road, during public comment in zoning said the issue is full of uncertainties and ever changes. She said a bill the General Assembly made law earlier this year appears to have prohibited the cost of providing high electricity service levels to data center being passed on to residential customers, but she said it has "significant loopholes." She also cited a nationwide Gallup poll that recently found 70% of American are against data centers nationwide. "I don't think we can expect a lot of protecting from the state in our utility rates," Cathey said. She said "clear and open" communications with area electric a water provides, two things required by data centers and related operations, are needed. "We don't want to be early adopters who pay the price." Meade confirmed to commissioners that no property zoned PMD-3, Planned Manufacturing District, exists in an industrial park in operation now across the county. Commissioner Dwight King of Piney Flats brought up battery storage facilities, used to power data centers in cases of power outages or peak demands by the data centers. Those, like the data centers powered by them, under the amendment adopted Thursday night must be in a PMD-3 district in the middle of an industrial park. The original four-month moratorium was approved in January to May by the commission. However, in April the commission extended that moratorium to a full 12 months, meaning it ends in January of 2027. TWO MOTIONS Initially, Commissioner Gary Stidham of Kingsport made a motion, seconded by Commissioner Larry Crawford of Kingsport, to send the matter back to the planning commissioners for a redo. Stidham said such a change could have separated the data centers from crypto mining and changes be made later. Meaded pointed out the commission must approve "something" at the end of the moratorium late this year as the justification for the moratorium already extended once. However, Commissioner Herschel Glover of Bluff City urged the commission go ahead and pass the proposed zoning amendment, with agreement by Mark Ireson of Kingsport and David Akard of Bristol. Akard said since a new 24-member commission will be seated Sept. 1, something needs to be "on the books." Stidham withdrew his motion to start over, and Ireson moved, with a second by Darlene Calton of the Kingsport area, to go ahead and approve the changes as approved by the three planning commissioners. Absent were Commissioners Hunter Locke, Joe Carr and Joe McMurray and Daniel Horne of Kingsport, Andrew Cross of Bristol and Sam Jones of Colonial Heights. Ireson said only one thing is certain about the data centers and energy processing facilities issue: "It's coming." POSTSCRIPT After the zoning session ended, Cathey again addressed commissioners during regular public comment and asked Street if the reason for the moratorium still existed or could it be argued in court by a data center proposer that it should be ended since regulations are now in place. Street pointed out he asked that question before the vote but added that if the county officials continue to research the matter and possibly made changes, that argument wouldn't hold much water. Street agreed with the other attorney that it might give grounds to a data center developer wanting to start before the moratorium. "I don't know that answer. You raise a good point," Street said. "I'm sure someone will use that argument" if they want to bring a data center and/or large battery facility to Sullivan County. He urged the county "continue to study the amendment as is."