AI company backtracks on change to data center campus after Birmingham’s new rules

The AI cloud developer currently constructing a multibillion-dollar data center in Birmingham is shifting gears. Nebius Inc. has opted to retract a recent permit revision request following the implementation of strict new municipal zoning rules for the data center industry.

Navigating New Regulations

Nebius initially sought city approval to modify the design of its second building at the Oxmoor Valley site, hoping to incorporate basement space for mechanical equipment. However, the company faced immediate regulatory friction due to new zoning ordinances that took effect June 13.

Nebius spokesman John Sutter confirmed that the proposed changes were strictly interior and did not impact the project's footprint, power needs, or overall compute capacity. Given the new hurdles, the company chose to withdraw the revision and move forward with its original, previously approved plans.

According to requests filed by Hoar Construction on June 11, the company had hoped to adjust the structure's height to accommodate the proposed basement. [Can’t see the map? Click here.]

City Standards for Data Centers

Birmingham city spokesman Rick Journey clarified that the city's temporary moratorium on data centers officially expired on June 13, giving way to the new ordinance. Any expansions to existing facilities—even those with previously approved permits—are now subject to these updated requirements.

Under the new framework, the existing Nebius facility is classified as "legal, non-conforming." This designation means that while the project was lawful prior to the ordinance, any future modifications must now navigate a formal exception process via the city’s Zoning Board of Adjustment. Additionally, staff determined that the proposed basement expansion would have triggered a new review by the Oxmoor Steering Committee.

A Contested Landscape

The city's move to pass these regulations follows a heated council meeting where officials expressed concerns about unregulated growth. The new ordinance establishes 20 specific conditions covering water usage, power, and size for hyperscale projects.

Despite the city's insistence that they cannot halt the Nebius project, the development continues to face significant pushback. Between local advocacy groups and a lawsuit filed by local homeowners, the project remains at the center of a complex legal and regulatory battle.