Fort Smith Board Considers Water Surcharges for Data Centers

The Fort Smith Board of Directors is reviewing regulations for data center development to manage water consumption and protect the regional water supply. During a study session on August 12, Director Kevin Settle proposed requiring formal board approval for all data center development plans, specifically targeting facilities located outside city limits that rely on the city's water system. Settle also proposed implementing a four-times water rate surcharge for these facilities.

While Director Andre Good supported the surcharge, Director Christina Catsavis warned that such measures could lead to unintended consequences, such as companies adopting closed-loop cooling systems that increase noise pollution. Acting City Administrator Jeff Dingman noted that while no data center projects are currently proposed for the city, the board is considering zoning code amendments and updated agreements with 30 nearby communities that depend on Fort Smith's water.

These deliberations follow a surge in Arkansas data center projects, including a $1 billion Google facility in Pulaski County and a $6.6 billion Serverfarm project in Clarksville. Local governments are navigating these developments under Act 851 of 2023, a state law that prohibits cities from banning data centers outright, forcing officials to use zoning and utility rates to regulate growth.