Data Center Developers Sue Arkansas County Over New Regulations
A Connecticut-based company behind a planned data center in Arkansas filed a federal lawsuit against local officials, alleging that new regulations targeting projects like its own infringe on federal authority and violate state open meetings laws. The 38-page lawsuit, filed in the U.S. District Court of Eastern Arkansas, accuses Pulaski County of enacting rules that limit AVAIO Digital’s planned data center, claiming they infringe on the federal government’s authority to regulate interstate electrical transmission and commerce.
AVAIO asked the court for an injunction to prevent the regulations from being applied to its project, monetary damages, and for the disclosure of public records it said had been withheld. This marks the second lawsuit filed in federal court this year connected to data center projects in Arkansas over the last two years.
The regulations AVAIO is contesting went into effect earlier this week after the quorum court overrode Democratic Judge Barry Hyde’s veto of them. They were drafted in response to community anger over AVAIO’s project located just off 145th Street. The company wrote in the complaint that the regulations create uncertainty and threaten its “existing business, financial, and investment arrangements.”
The lawsuit also accused Democratic nominee for county judge, Wendell Griffen, of having “unlawful control over the Pulaski County Quorum Court,” pointing to his role in authoring and advocating for the regulations. Griffen told the Arkansas Advocate that the lawsuit was expected and said it was the county’s “constitutional power” to regulate data centers within its boundaries.
A spokesperson for Pulaski County did not immediately respond to a request for comment Friday evening. The company said Griffen and several members of the qu,orum court engaged in polling and deliberations that violated the Arkansas Freedom of Information Act. The lawsuit also named Democratic Justice of the Peace Julie Blackwood, who was the lead legislative sponsor of the regulations.
Griffen disputed AVAIO’s characterizations of his communications with quorum court members, saying, “If they contend that a private citizen exercising his First Amendment right to approach members of the legislative body of the county about a matter of public interest is unlawful authority, then they need to reread the First Amendment to the Constitution of the United States.”
The ordinance, AVAIO wrote in its complaint, “is without effect because it is an obstacle to the full exercise of the federal government’s authorities under the Federal Power Act to regulate the transmission of electricity.” The alleged polling, the company said, also makes the passed ordinance invalid. Judge Lee Rudofsky, who oversaw Entergy’s lawsuit against the Democrat-Gazette, is the assigned judge on the case.
Liberty and accountability
A company’s lawsuit against local regulation raises competing questions about property rights, lawful zoning, and the authority of elected officials. The court should evaluate the actual ordinances and alleged legal defects rather than presume either the developer or county acted improperly. Libertarians favor predictable rules, transparent decisions, and opposition to selective tax favors. Residents also deserve disclosure of who will pay for additional power, water, roads, and other public infrastructure.