After months of public hearings, confusion and mounting public opposition, the bureaucratic battle against the proposed Nebius AI data center in Oxmoor Valley fizzled last week.
Birmingham city officials concluded that Nebius did not need the city’s approval to build a switching station and a substation to distribute power to a 300-megawatt data center at the Oxmoor Corporate Park, dubbed BHM01. Neither meets the city’s definition of a “utility substation,” according to City Attorney Nicole King.
The determination effectively nullifies months of deliberation and conflicting votes by the Zoning Board of Adjustment, clearing a path for BHM01 to move into its next developmental phase.
Opponents of the project also had hoped that a temporary moratorium on data centers would halt the Nebius project but also were disappointed on that front; the project already was in the permitting process before the moratorium was enacted and so it doesn’t apply.
The developments add to the compounding confusion regarding the proposed data center, not only for Oxmoor residents but for the city itself.
Confusion over votes
The zoning board discussed the two special exception requests for the substation and switching station during a Feb. 26 meeting, and members left believing they had approved the substation with three votes and denied the switching station. But King in a later memo clarified that passing such an exception requires a two-thirds majority vote. With five members present, that threshold is four votes. King said in her April 9 memo said both requests had failed.
But, citing the city’s zoning ordinance, she concluded that neither of the facilities meets the city’s definition of a “utility substation,” meaning Nebius does not need special exceptions to proceed.
One of the requests was for a permit to build a switching station at 260 Milan Parkway, off Lakeshore Parkway, that would connect the proposed Nebius facility to the existing transmission network. The second request was to build a utility substation to support the extensive electrical needs of BHM01, without which it could not function on the grid. Both stations are to be owned by Alabama Power.
Utility substations themselves do not generate power; they are part of the electrical distribution system where voltage is transformed from high to low, or vice versa, using transformers, to isolate faults in the grid and ensure it is at safe levels for individual use.
Switching stations are a kind of substation that do not have transformers. They facilitate the routing of power and isolate sections of the grid by disconnecting parts of the network without transforming voltage.
Homes, schools and animal shelter nearby
The BHM01 site, previously the Regions Lakeshore Operations Center, already is zoned for data center use. But the high-voltage infrastructure supplements are to be situated in a mixed-use area.
The Oxmoor Apartment Homes is hundreds of feet away from the switching station. On the other side of Lakeshore Parkway, a residential community is under development on Sydney Drive. Along that same street are Oxmoor Valley Elementary and Spring Valley School, a college preparatory school for students with learning difficulties such as dyslexia and dyscalculia.
Red Mountain Park, the largest greenspace in the Birmingham area with about 1,500 acres, is adjacent to the Corporate Park.
The board zoning board again brought up the data center in a March 26 meeting after a request for more information.
Well over one hundred residents attended that meeting, filling the City Council Chamber, an overflow room and the lobby.
The meeting began with comments from Josh Bronitsky of DPR Construction, David Gray of Alabama Power Co., Michael Raymon of Hoar Construction and John Sutter, Nebius’ vice president for public affairs.
Residents’ concerns coalesced around a plethora of unanswered questions about the proposed stations. These included the extent of noise pollution from cooling systems; environmental impacts, including heavy water, energy use and heat discharges; potential declines in property values; lack of transparency throughout the approval process; changes to the character of the area; and uncertainty over what would happen to the site if Nebius no longer required or could not maintain the data center once built.
Representatives clarified that the stations would not generate electricity and would produce minimal sound, noting that both natural and engineered noise abatements would be installed, with noise largely limited to cooling systems. Nebius and Alabama Power representatives provided a sound study and other informational materials.
The project sparked nearly five hours of objections from nearby neighborhoods, including Oxmoor Valley, Ross Bridge and Grasselli Heights, as well as residents from the greater Birmingham area. The comments went beyond the switching station and substation, aiming at the project at large.
Nebius representatives said the AI factory would provide more than 100 jobs and bring in an estimated $80 million for Birmingham city and Jefferson County schools. The company also said partnerships in higher education for workforce development are possible, including with colleges such as Miles College and Lawson State.
A representative from United Way, a nonprofit that serves individuals with special needs located along Lakeshore Parkway near the data center site, would be particularly susceptible to noise pollution from the project.
Representatives from the Greater Birmingham Humane Society also complained of risks posed by the project. Since 2021, GBHS has been developing a medical-model facility at 1052 Sydney Drive, in the same corporate park as BHM01.
Ivana Sullivan, GBHS chief program officer, said continuous disruptions generated by the stations — noise, vibration, changes to the surrounding environment — would have measurable effects on the animals in their care, who are often abused or sick.
Residents in the meeting shared feelings that the project was being imposed on them, that they lacked control and that sufficient information about the project’s long-term impacts and technical details were not provided in advance to allow for meaningful review.
“This is not about opposing development,” said Stephanie Salvago, GBHS director of marketing, “this is about ensuring that decisions of this magnitude are made with complete information and appropriate diligence.”
Concerns about potential effects of data centers extend well beyond the Oxmoor Valley.
More than 3,000 data centers currently operate in the United States, according to a Pew Research Center analysis of data from Data Center Map, and more than 1,500 new data centers are in development. Alabama is fast becoming a key location for this massive build-out.
BHM01 will represent the largest hyperscale data center Nebius has built to date and the first one it has completed in the U.S. Nebius is currently constructing data centers in Independence, Missouri, and New Jersey. It also owns a data center in Mäntsälä, Finland and is leasing or set to lease capacity in the United Kingdom, France, Israel and Iceland.
Data centers qualify as hyperscale if they occupy more than 200,000 square feet or have an aggregate electrical demand exceeding 30 megawatts. With a planned demand of 300 megawatts, BHM01 would be well within the category.
Nebius plans to begin construction this spring and finish full build-out by 2028. Phase I would deliver 100 megawatts of compute power, followed by an additional 200 megawatts in Phase II. Nebius projects that it will have an annualized run-rate revenue of $7 billion to $9 billion by the end of 2026.
Environmental concerns starting early
The environmental concerns about the project begin even before it’s finished.
AI data centers can generate $10 million to $12 million per megawatt each year. Bringing a data center online even a few months early could result in billions in revenue that would otherwise be lost.
To support early startup at BHM01 during the commissioning stage, Nebius plans to run 32 temporary generators for the first three to six months during the second half of this year for an average of six to eight hours per workday. These engines will run on natural gas but can also run on diesel.
Under EPA guidelines, these qualify as temporary, ‘non-road’ engines and can be run on-site for up to a year.
Southern Environmental Law Center attorney Patrick Anderson, part of a team that recently sued xAI for running gas turbines in violation of the Clean Air Act, expressed concerns about the localized impacts of Nebius running 32 temporary generators.
Burning fuels can produce ground-level ozone, or smog, which is a serious risk for respiratory health, and when natural gas is burned, formaldehyde, a carcinogenic air pollutant, can accumulate in the air.
“Granted, assuming these are there for less than a year, the cancer risk is really something you’re dealing with when something’s there, like year on year,” Anderson said, “but it’s still not great.”
Birmingham was ranked 45th-worst among metro areas nationwide for ozone pollution in the American Lung Association’s 2026 State of the Air report, giving it an ‘F’ grade. An average of six days a year, the air here is reaches deemed unhealthy to breathe, according to the report.
BHM01 could add to Birmingham’s ozone levels, especially in the local Oxmoor Valley area, where ground-level emissions have more trouble dispersing into the atmosphere.
Sutter, the vice president of U.S. Affairs for Nebius, said that BHM01 will run the temporary generators for only 20 hours a year. In the event of an outage, the data center will use the generators to shut down the servers in a controlled manner, he said, not run them for extended periods of time.
Plans also call for four 3-megawatt backup diesel generators, each with approximately 24,000 gallons of diesel fuel storage, enough capacity to run the generators for about 24 hours in an emergency event.
Because diesel exhaust fumes are so noxious, the Clean Air Act limits these diesel engines to running about 500 hours a year; most run for 100 to 200 hours a year for maintenance. But if there is an outage and the engines are brought online, those hours do not count toward the total annual limit, and Inside Climate News reports that running the engines more frequently has become commonplace nationally.
Anderson indicated concerns about the diesel engines.
“These engines are in a valley in Birmingham, which has always had some of the worst air quality in the South, or even in the country, especially being in a valley,” Anderson said, “If they had to model all four of these running. It could be really hard for them to not show a violation.”
Strain on electrical grids, water
These projects require flat electrical load at magnitudes that strain most metropolitan grids, necessitating transmission headroom and regulatory clarity.
Nebius chose the Oxmoor Valley because of its zoning and heavy industrial past; the foundational grid architecture of the area already accommodates energy-intense operations, and substation density and industrial feeder lines are abundant.
The BHM01 facility’s staggering projected energy use of roughly 2.6 billion kilowatt-hours annually would be double the total residential electricity consumption of Birmingham households.
Ralph Williams Jr., vice president of Alabama Power’s Birmingham Division, assured residents at the March 26 ZBA meeting that it had an agreement with Nebius not to raise rates through 2027 as a result of this massive energy drain.
Sutter said that the company will pay its full costs, including the substations, and that Alabama Power has assured Nebius that it can service the load.
Hyperscale data centers also infamously consume immense amounts of water to counteract the heat produced by servers.
Nebius has said it plans to incorporate a closed-loop cooling system and 56 industrial chillers across both phases, as opposed to an evaporative system, which would otherwise consume millions of gallons of water per day at the 300MW scale.
While Nebius pledges that it can operate on-grid with minimal intrusiveness, a study published last year by the Gerald R. Ford School of Public Policy at the University of Michigan, in partnership with the Michigan Environmental Justice Coalition, concluded that such goals are often delayed or abandoned after data centers are built, resulting in the direct commissioning of new fossil fuel power plants to keep these facilities online.
Why BHM01 does not fall under the city’s moratorium
The Nebius project has also drawn scrutiny on how it has avoided Birmingham’s temporary freeze on new data centers.
Birmingham is just one of many cities across the country pressing pause on new data centers while the effects are studied. Since 2023 and 2024, data center developers have been buying up land and securing the necessary signoffs without much public attention, often under nondisclosure agreements that obscured the ultimate client, as has happened with “Project Marvel” in Bessemer.
Sutter said Nebius is eager to take a more ‘community-oriented’ approach than some of its competitors have.
Nasdaq-listed Nebius is a cloud provider focused on AI workloads. The firm was spun out from the Russian company, Yandex, and sold off all its Russian assets in October 2024. Microsoft and Meta are customers and have invested tens of billions of dollars in Nebius.
Nebius affiliate Alabama ADC Holdings LLC acquired 201, 250 and 260 Milan Parkway, and 2500 Venice Road from UAB, Regions Bank and U.S. Steel for approximately $90 million. It began buying land on Oct. 1 of last year, before plans for the data center were publicly announced.
Two months later, on Dec. 16, 2025, the City Council proposed a nine-month pause on new data center applications to go before its next meeting, time enough for the council to hear community feedback and evaluate whether existing ordinances adequately addressed high-load data center infrastructure.
At its subsequent Jan. 13 meeting, the City Council delayed the vote on a moratorium, sending it to the ZBA for study.
Nexius filed an application to build the Oxmoor data center on Jan. 26.
The following day, the ZBA voted to ask the city to place a six-month restriction on new data centers while information was gathered.
On Feb. 9, Madelyn Green — president of the Oxmoor Neighborhood Association, who had initial contact with Nebius representatives on Jan. 9 with city Councilor Wardine Alexander and Jefferson County Commissioner Sheila Tyson — convened a special meeting to vote on the Nebius development. More than 100 residents attended the meeting and resoundingly voted not to recommend the special exception for the project, Green said.
The council formally adopted the moratorium recommended by the ZBA for all future data center applications on March 3, by which time the Nebius project had already filed its demolition and building permitting.
The city deemed that the project was grandfathered in by that point and the council could not retroactively apply its moratorium. Doing so could open the city to lawsuits.
“We’ve been sued twice in similar situations and lost both times for that exact reason,” Mayor Randall Woodfin explained in a Facebook post earlier this week. “If we tried it again, we wouldn’t just lose. We’d be on the hook for punitive damages, meaning your tax dollars going out the door and the project still moving forward anyway.
“So this was never a question of whether we wanted to stop it. It was a question of what the law allows us to do.”
Woodfin said the city has noted concerns raised by Oxmoor Valley residents near the Nebius project about noise, water use, energy demand and effect on the quality of life in the area and consider them valid.
“Development should not happen to neighborhoods. It should happen with them,” he said in his statement this week.
“What we are doing is putting a moratorium in place for future projects so we can study the real impact on infrastructure, energy, water and quality of life. We’re going to update our zoning and land use policies so that any data center development in Birmingham happens on our terms, with clear standards that protect our neighborhoods and our long-term growth.”
The Birmingham City Council has scheduled a public hearing for Tuesday during the council meeting to hear comments on the moratorium. Opponents of the Nebius project are calling for protests outside City Hall that morning even though that data center would not be affected by the ultimate decision on a moratorium. And because the city attorney determined Nebius doesn’t need ZBA approval for its power infrastructure, the project can proceed through the permitting process, although legal challenges still are possible.
“We’re excited about being there,” Sutter reflected, “and we certainly hope that as we continue to invest and as our project moves forward, that we’re able to earn the trust of community members in the Oxmoor Valley and around the city through the actions we take, both in construction and design in the building and operation of the building, as well as our investments and the partnerships that we make.”