Gallup council delays wastewater deal for proposed data center

Gallup put the brakes on a wastewater deal tied to a proposed 330-acre data center, leaving unanswered whether the city’s system can absorb a load that could rival a major share of what the plant produces each year. The Gallup City Council voted 4-1 Tuesday night to delay action on the agreement, giving members more time to weigh the impact on water service, public costs and the city’s infrastructure.

The proposal would let Teraplex Data Centers LLC take nearly 110 million gallons of Gallup wastewater each year from the city’s treatment plant. Gallup’s wastewater plant currently produces an average of 2.33 million gallons of treated effluent a day, a figure that makes the project’s volume a serious test of capacity, especially for residents who already rely on the same utility system. The project area is described in the city agreement as roughly 330 acres in McKinley County, adjacent to Gallup and within the city’s service area.

The deal has been building for years. Gallup and Coles Gray LLC signed the original effluent option agreement on July 25, 2023, then amended it on July 25, 2024, and again on August 7, 2025. Coles Gray assigned its rights to Teraplex under a March 6, 2026 assignment and assumption agreement. The city’s third amendment, posted in April 2026, says the change would not take effect unless Teraplex paid the city $5,000, and the agreement also says Gallup may terminate the option if the developer does not take fee title to the property within four years of the effective date.

Mayor Marc DePauli said he remained cautious but found the wastewater piece compelling. The majority of the council wanted more information before moving ahead, a pause that leaves the city with a basic accountability question: can Gallup support an industrial-scale data center without putting pressure on the wastewater system that serves local homes and businesses?

The meeting also drew a small but vocal group of protesters who objected to the environmental and community effects they see coming with a large data center in a rural area. Toni Pinedo, an Indigenous activist and Gallup resident, warned that the project would harm the sky, the land and the air, a sign that the debate has already widened beyond spreadsheets and utility formulas.

Greg Thompson, the co-founder of Teraplex, told the council the company has been in informal talks with Gallup officials for months. He said the meeting was only the first of many steps, that Teraplex does not yet have a tenant, and that Oracle, Microsoft, Meta and Amazon are possible candidates. Thompson said the project would generate its own power with a mix of solar and natural gas and could eventually employ about 300 people.

The proposal lands in a city that has spent years pitching the Gallup-McKinley County TradePort as an integrated logistics, industrial and energy platform with direct access to Interstate 40 and the BNSF Southern Transcon rail line. It also arrives as the city’s wastewater system remains under regulatory scrutiny, including a 2025 public notice period for the Gallup Wastewater Treatment Plant’s Section 401 certification. Gallup now has to decide whether the promise of jobs and investment outweighs the strain on the basic system that keeps the city running.