Dozens of NJ towns are banning data centers. Can they survive legal challenge?

Andover Township, New Jersey, is facing a lawsuit from data center developer National Land Developers over its recently enacted ban on data centers. The township's decision to ban the facilities followed significant public outcry, including viral videos of residents protesting, against initial plans to rezone an industrial property for data center development. Mayor Tom Walsh expressed confidence in the township's legal position, stating their actions were justified.

National Land Developers' complaint claims that Andover Township’s reversal of its zoning, which now prohibits data centers, is arbitrary and lacks "sound planning." This legal challenge is poised to be a pivotal case, as more than 25 other New Jersey municipalities have already enacted similar data center bans, and at least a dozen more are considering such ordinances. These local actions are often driven by concerns over increased energy and water demands, noise pollution, and other environmental impacts associated with data centers.

The surge in local prohibitions comes amidst a substantial 22% increase in electricity costs for New Jersey residents, a higher spike than in any other state, which energy experts like Abe Silverman of Johns Hopkins University partially attribute to the rapid growth of AI data centers. While Governor Mikie Sherrill has signed legislation requiring large facilities to cover their energy and infrastructure upgrade costs, she has not pursued a statewide ban on the industry. Legal analysis from Matthew Hale, a political science professor at Seton Hall University, suggests that New Jersey municipalities are on solid legal ground for enacting such bans, citing the state’s robust Municipal Land Use Law which grants significant local control. The outcome of the Andover lawsuit is anticipated to establish an important precedent for other towns grappling with data center development.