Data Center Plan at Nvidia-Leased Site in San Jose Faces Appeal Over Environmental Review

A proposal to develop a data center at a property currently leased by Nvidia in San Jose, California, has been appealed by a labor organization shortly after receiving approval from local planning authorities. The challenge centers on the project’s exemption from environmental review, raising questions about the regulatory oversight of AI infrastructure development in Silicon Valley.

The San Jose Planning Commission earlier this month approved a special use permit and an environmental review exemption for a 4.86-acre site at 300 Holger Way, which includes a 97,800-square-foot (9,085 sqm) building. The property is leased by Nvidia under an agreement signed in December 2024 that runs through 2035. Although Nvidia is not explicitly named in the planning application, the GPU maker has previously stated its intention to invest “significant capital performing a complete custom build-out into a state-of-the-art data center/lab facility” at the location.

According to planning documents, the proposed data center would deliver 20MW of capacity and involve only interior tenant improvements, including the installation of data racks. The documents specify that “no changes to the site and building exterior are proposed” and that “no expansion of the existing building footprint or site improvements are proposed.”

However, Citizens for Responsible Industry, a labor organization, has filed an appeal against the commission’s decision, specifically challenging the project’s exemption from environmental review. The appeal could delay or alter the project’s timeline as the city considers the group’s concerns.

The property at 300 Holger Way is owned by real estate firm Menlo Properties, which acquired the site in November 2021 for $35 million from KBS. KBS had originally purchased the property in 2013 as part of an eight-building portfolio known as District 237, formerly the Corporate Technology Centre. The site was previously occupied by Ericsson-owned Redback Networks. Menlo was reportedly looking to sell the property as recently as January 2025.

The appeal highlights growing tensions between the rapid expansion of AI-driven data center infrastructure and community concerns over environmental impacts. As demand for high-performance computing surges, similar disputes over permitting and environmental reviews are likely to become more common in densely populated tech hubs across North America.