Local Prohibition of Data Centers – Alan N. Walter, Counsel

The data center backlash has gone national, and it is moving faster than the law that governs it. Trackers count hundreds of local pauses and prohibitions across dozens of states. San Marcos, Texas removed data centers from its list of allowed uses in June. Lysander, New York approved a six month pause. In New Jersey, East Orange introduced an ordinance barring the use from every zoning district while Jersey City voted unanimously on August 19 to strip it from the city’s remaining industrial land. On what legal basis can a town actually do this?

The answer turns on the state, and the differences are significant. The identical ordinance can be routine in one state and almost certainly unconstitutional in the next, and a temporary pause that a Michigan township adopts without difficulty is flatly illegal in New Jersey.

Zoning Power Is Delegated Power; the Terms of the Delegation Control

Land use control is a state power. A municipality has only the authority its state legislature has handed down, usually through a statute called a zoning enabling act, and the terms of that grant decide what a town may do. In home rule states, courts generally assume the municipality may act unless the legislature has taken the power away. In what are called Dillon’s Rule states, the assumption runs the other way, and a town has to point to specific statutory language authorizing what it is doing. Virginia is the classic example. So a lawyer in one kind of state starts by finding the statute that permits the ordinance, and a lawyer in the other starts by checking whether any statute forbids it.

Most American zoning works by permission. A use is either listed in the ordinance as allowed in a particular district or it is not allowed there at all, which means silence operates as a prohibition. That structure is doing most of the work in the current wave of ordinances, because a town does not need to enact anything called a ban. It only needs to leave data centers off the list of permitted uses, or to strike them from the districts where an earlier ordinance had put them. Much of what gets reported as a data center ban is an amendment of exactly this kind. The Jersey City ordinance is the textbook example. It removes data centers and cyber hotels, meaning facilities that rent out server space to other companies, from the uses allowed in an industrial district, and it adds a definition making clear that the use is not warehousing.

Definitions Decide More Cases Than Prohibitions Do

That definition matters more than it looks. Developers argue that server farms are really warehouses, light industrial buildings or public utilities under codes written before anyone imagined a hundred megawatt electrical load on a suburban street. Those arguments succeed when the code says nothing, because courts usually resolve an ambiguous ordinance in favor of the property owner. A community that has never defined the use has already made a decision, just not a deliberate one. The definitions that hold up describe what the building does and how much power it draws.

Total Exclusion Is Where State Law Splits

Removing a use from some districts is one thing. Barring it everywhere in town is another.

New Jersey gives municipalities considerable room. Its courts have long held that a town may exclude a commercial or industrial use from the entire community if the exclusion reasonably serves the general welfare, a principle running back to a 1962 decision upholding a townwide ban on trailer parks. The Mount Laurel rulings require New Jersey towns to make room for affordable housing, but that applies to homes and not to server halls. The East Orange ordinance ties its prohibition to the public purposes the state zoning statute lists and records that no developer had yet acquired protected rights at the site, which is the language a judge looks for.

Pennsylvania runs the other way. A line of state cases from the 1970s holds that banning a lawful use everywhere in a municipality strips the ordinance of the usual assumption that it is valid and puts the burden on the town to prove the ban is reasonable. A township that bans data centers outright should expect to defend the ordinance with evidence rather than with the findings recited in its preamble.

Texas is testing a third variation. A state senator has announced plans to challenge the San Marcos prohibition under a 2025 statute limiting how long a town can pause development and a 2023 law restricting local ordinances that conflict with state policy. The same senator forced a reversal in Hill County after a developer sued for $100 million.

The Moratorium Is the Most Popular Tool and the Most Dangerous

A moratorium is a temporary halt while a government decides what its rules should be, and it is the instrument of choice nationally. New York went first at the state level when Governor Hochul signed an executive order on July 14, freezing the state environmental permits that projects drawing 50 megawatts or more need, until state agencies finish studying the industry’s effects. The distinction matters, because an order reaching state permits is not a construction ban and does not change any town’s zoning.

Whether a municipality may adopt its own pause is entirely a question of state law. Some states expressly allow it, subject to written findings, public notice and a time limit. Others allow it under a town’s general power to protect health and safety, with no rules attached, which leaves the ordinance open to a claim that the town acted arbitrarily. New Jersey prohibits it almost entirely. A town here can pause development only on the written opinion of a qualified health professional showing a clear and imminent danger to residents, and then for no more than six months. New Jersey courts also strike down phased growth schemes that function as pauses by another name, and they treat the statute as creating a right the developer can enforce under the state civil rights act, so a town that gets this wrong can be ordered to pay the developer’s legal fees.

The practical instruction is the one municipal attorneys least like to hear. Do not copy an ordinance from another state. The model circulating on a listserv may be perfectly lawful where it was drafted and void where you sit.

Courts Are Deciding These Cases on Procedure

The litigation has arrived, and the early results share a pattern. Judges are not ruling on whether data centers belong in a community. They are enforcing the rules about notice and process, and that is proving decisive.

Prince William County, Virginia is the clearest example. The Digital Gateway would have been the largest data center corridor in the world, 37 facilities across roughly 2,100 acres beside Manassas National Battlefield Park. A trial court threw out the county’s 2023 approvals because the public notice of the hearing did not meet state and local requirements, the Virginia Court of Appeals unanimously agreed in March, and the developer dropped its final appeal on July 2. The project died over a defective notice, after the county spent nearly $2 million defending it.

Procedure cuts both ways. In Frederick County, Maryland, more than 20,000 residents signed petitions to put a 2,615 acre data center zone on the November ballot. The Supreme Court of Maryland blocked the referendum, holding that zoning ordinances cannot be put to a popular vote under the county charter and that the petition forms were legally defective anyway. The chief justice pointed out that the case was not about data centers at all.

New Jersey now has three towns in court at once. Monroe faces a twenty count, $300 million lawsuit from Hexa Builders, moved to federal court in Camden, which argues that data centers carry speech and that banning them therefore violates the First Amendment. That theory is a long shot. The rest of the complaint is not, because it rests on the sequence of events. The township added data centers as a permitted use in 2025, the developer amended its application, and the ban followed weeks later. Montgomery was sued by a developer whose application had been accepted as complete days before the ordinance passed, which in New Jersey is the moment the old rules lock in. Andover was sued after its committee introduced data center standards, reversed course five days later and adopted a ban instead, without explaining the change.

The lesson for municipalities is uncomfortable but simple. Public statements that officials intend to reject a project, reversals with no stated reasons and ordinances timed to a pending application are the evidence these cases turn on.

Constitutional Guardrails Are Smaller Than the Demand Letters Suggest

Developers threaten to sue for a taking, meaning a claim that regulation has stripped the land of its value and the government must pay for it. It is the loudest threat and usually the weakest, because a ban that still lets an owner build anything else the district allows rarely destroys all value, and courts weigh several factors rather than lost profit alone. The sharper constraint is timing. Every state fixes a moment when a project locks in under the existing rules, whether that is a building permit and money spent in reliance on it or, in New Jersey, the filing of a complete application. Facilities already operating are grandfathered. Data centers get no federal protection comparable to the deadlines Congress imposed on towns reviewing cell towers, and developer arguments under Section 253 and the Federal Power Act aim at utility pricing rules rather than at zoning.

The State Can Take the Pen Back

Because zoning authority is delegated, a legislature can reclaim it at any time. West Virginia has barred its municipalities from adopting any ordinance that limits large data center projects. A pending Pennsylvania bill would move approval of large energy projects to a state board and give towns fixed deadlines to act, with applications automatically approved if a deadline passes. New Jersey has bills that would add a statewide definition of the use to its land use law. The approach taking shape borrows from housing law, disciplining local zoning through objective standards rather than abolishing it. An ordinance drafted today should survive a statute enacted tomorrow.

The Bottom Line

A municipality in most states has solid legal footing to prohibit data centers, but only through the front door. That means a properly adopted zoning amendment, reviewed by the planning board, supported by a finding that it fits the town’s master plan, and backed by a record connecting the prohibition to the public purposes the state zoning statute identifies. Jersey City is the model, with a 6-0 planning board recommendation and a master plan that had called for removing the use since 2020. Definitions and the treatment of existing projects decide the litigation. And the safest approach for many communities is not a flat ban but a conditional use framework, allowing data centers only where they meet written standards on power, water, noise, setbacks, removal of the building at the end of its life and money posted up front to guarantee it. That achieves most of what a ban achieves while presenting a smaller target.

Municipalities and landowners alike should be planning now, because the applications are arriving faster than the ordinances.

In brief: towns are lawfully excluding data centers by amending their zoning ordinances rather than by declaring bans, but the legality of total exclusion, the availability of a moratorium and the point at which a developer’s rights lock in all turn on state law that varies dramatically from one town to the next, and a fast growing body of state legislation may soon reshape how much authority local governments retain.