Inver Grove Heights City Council OKs pause on data center development amid litigation threat

Inver Grove Heights, Minnesota, officials are pausing data center development for one year, with vocal neighbors arguing that the risk posed by a controversial project outweigh the threat of litigation. 

The narrow 3-2 decision was made at a meeting early Friday morning, the third and final such vote on a data center moratorium. In yet another passionate meeting, neighbor after neighbor came to the microphone to voice their opposition to a proposed data center at 5890 Carmen Ave. Various residents raised issues like noise pollution and electricity consumption, mirroring concerns in other communities. 

A law firm representing QLevr, LLC, sent a letter to Inver Grove Heights city government in May effectively threatening a lawsuit if a moratorium were passed. Jacob W. Steen with the Larkin Hoffman said in the letter that Inver Grove Heights did not have the legal authority to pause QLevr's development and that the city's "unlawful actions may exceed $150 million." 

Jason Kuboushek, a partner at Iverson Reuvers, was hired by the city to help explain the risk and to eventually defend them should a lawsuit be filed. He told WCCO that he expects some legal action to be taken now that the moratorium passed. 

The complexity at play in data center debates is often what has prompted moratoriums, with local governments looking for more time to properly take stock of concerns from neighbors and the facts at hand. Inver Grove Heights is joining Minneapolis in actually passing moratoriums. Elk River is strongly considering imposing one after the city's Planning Commission recommended taking that kind of action. 

Professor James Coleman, a legal expert at the University of Minnesota who studies data center infrastructure, said that communities across Minnesota face unique questions when it comes to data centers. Each of the projects are unique, requiring varying amounts of electricity and water, with promises of revenue for the city's they call home. In some cases, like in Elk River, local utility companies are predicting positive impacts on utility rates thanks to data centers paying larger bills for services. 

"It's a lot of revenue. A lot of these communities have been looking to attract revenue-producing businesses for a long time," Coleman said. "That can be really important to cities, but it also can be a pretty big chunk of land and it's also especially a huge amount of electricity consumption." 

A coalition of people who are against data centers gathered at the Minnesota State Capitol on Friday in St. Paul, effectively demanding that the state government take out the guessing work for local communities. They're asking Gov. Tim Walz to implement a two-year moratorium at the state level, arguing that cities shouldn't feel rushed into approving data center projects.

Cathy Johnson, chair of the Coalition of Responsible Data Center Development, is part of a lawsuit against data center development in Farmington, Minnesota. She was among the speakers at the Capitol on Friday. 

"Let's take a look at how this really affects Minnesota citizenry. Who's paying for this? Who's taking a risk? Who's really going to benefit?" Johnson said.