Data Center Dilemma: Experts weigh in on banning facilities and other legal questions
The article explores legal questions surrounding data center development in Alabama, particularly whether local governments can ban facilities. It highlights conflicting views on land-use authority and the risks of lawsuits if outright bans are enacted. Birmingham recently adopted regulations to restrict data centers but did not ban them, while facing lawsuits from residents regarding an already permitted project.
The article details a legal debate in Alabama over local governments' ability to regulate or ban data centers amidst a surge in development across the state. In Birmingham, the City Council adopted regulations restricting data centers, but not an outright ban, despite questions from residents. Hunter Garrison, deputy director of the Office of Resilience and Sustainability, initially stated a ban was impossible due to U.S. zoning law, a claim disputed by Blake Hudson, dean of Samford University’s law school, who clarified that states and their delegated local governments typically hold land-use authority, not the federal government.
Hudson explains that Alabama cities and towns generally have broad authority to ban land uses if justified for public health, safety, and welfare. However, Kellen Zale, a land-use law professor at the University of Houston, warns that such bans, while possible, carry the risk of lawsuits from developers under the Fifth Amendment's "regulatory taking" clause, potentially requiring the government to compensate landowners for lost value. Zale suggests an indirect approach of zoning restrictions, like minimum distances, can effectively block large data centers without an outright ban, as seen in Kerrville, Texas, compared to San Marcos, Texas, which enacted a direct ban and faces higher lawsuit risk.
A key issue in Birmingham involves a hyperscale data center in Oxmoor Valley, which received permits before new regulations and a temporary moratorium were imposed. Legal experts Zale and Hudson agree that applying new rules retroactively to already-permitted projects is legally challenging due to "vested interest" rights. Birmingham's decision not to apply its new regulations retroactively to the Oxmoor Valley project is seen as a safer legal position, though the city still faces multiple lawsuits from residents and the Greater Birmingham Humane Society concerning the project.
The article concludes by noting the perception that data center developers target "acutely anti-regulatory" states like Alabama. Experts suggest state-level intervention might be a more effective solution to address public concerns across various jurisdictions, rather than a piecemeal local approach. An upcoming Alabama law will require large data centers to fund their own infrastructure and ensures they don't unfairly raise utility bills for other customers.