A federal lawsuit challenging Pulaski County’s new data center regulations could have implications for communities across Arkansas, including Russellville, where city officials have spent months developing safeguards for potential future developments.
AVAIO Digital, a Connecticut-based company planning a $6 billion data center project in Pulaski County, is behind the legal challenge filed Thursday, Oct. 29, in U.S. District Court. The lawsuit was filed by ADP Little Rock Data Hub LLC, an affiliate of AVAIO.
The company argues that Pulaski County exceeded its authority by adopting regulations that interfere with federal oversight of electricity transmission and interstate commerce. It also alleges violations of the Arkansas Freedom of Information Act involving discussions among county officials.
The lawsuit comes as Arkansas communities take different approaches to regulating the growing data center industry. In Russellville, the City Council approved a six-month moratorium in July and established a committee to research possible zoning and land-use changes before any developer submits a proposal.
The Pulaski County Quorum Court voted 10-4 Tuesday, Oct. 27, to override County Judge Barry Hyde’s veto of new data center regulations, allowing them to take effect.
The ordinance establishes requirements for developers seeking to construct large data centers in unincorporated areas of the county.
Among other provisions, developers must submit electrical demand analyses, water and wastewater plans, land-use studies and plans for eventually decommissioning their facilities.
Projects must also demonstrate that they will not significantly interfere with utilities or other public infrastructure serving surrounding properties.
The ordinance does not establish specific limits on how much electricity or water a data center can consume.
Supporters of the regulations have raised concerns about the potential impact of large data centers on neighboring properties, utility infrastructure and residents.
Hyde vetoed the ordinance in September, citing concerns about whether the county could legally and effectively administer the new requirements.
In its 38-page complaint, AVAIO’s affiliate argues that the county’s regulations interfere with federal authority over electricity transmission.
The company is asking the court to prevent the regulations from being enforced against its project. It is also seeking monetary damages and the release of public records it alleges were improperly withheld.
The lawsuit names several local officials and challenges the process used to develop and approve the ordinance.
Among those named is Wendell Griffen, the Democratic nominee for Pulaski County judge, who helped develop the regulations.
Griffen has defended the county’s authority to regulate data center development and disputed the company’s allegations about his involvement.
The case has been assigned to U.S. District Judge Lee Rudofsky.
The allegations have not been adjudicated, and the filing of the lawsuit does not establish that county officials violated state or federal law.
While Pulaski County’s regulations were adopted amid controversy over an already planned development, Russellville officials decided earlier this year that they wanted rules in place before any company approached the city.
Councilmember Justin Keller first raised the issue in June, expressing concern that Russellville’s existing zoning code did not adequately address the potential impacts of modern data centers.
The city’s existing data center regulations largely focused on noise, particularly issues associated with cryptocurrency mining facilities.
In July, the Russellville City Council voted 6-2 to approve a six-month moratorium on new data center proposals while officials examined possible changes to the city’s regulations.
The moratorium followed an earlier proposal that would have paused new projects through January 2028.
Mayor Fred Teague repeatedly emphasized during those discussions that the city had not received a data center proposal and was not working with a developer.
The council subsequently established the Data Center Zoning and Land Use Amendments Committee, inviting residents and subject-matter experts to participate in developing recommendations.
At its first formal meeting Aug. 18, the committee divided its work into five areas:
Committee members have discussed concerns ranging from electricity rates and water consumption to noise, emergency services and what would happen to a large data center facility if it eventually closed.
One possibility raised during the discussions was requiring some form of financial guarantee to ensure an abandoned facility would not become a burden on the community.
Keller has emphasized that the committee’s purpose is not to prevent data centers from operating in Russellville, but to establish clear expectations for any company considering a project.
“It’s not to keep them out,” Keller said during the committee’s August meeting. “This is to, if something was to come here, these are the rules they’re going to have to play by.”
He also cautioned that whatever regulations Russellville adopts must be legally defensible and cannot amount to a functional ban on data centers.
Councilmember Paul Gray has identified zoning as one of the city’s strongest tools for addressing potential impacts.
“I think where we can have teeth in this body and with you folks helping us is through our zoning, because that’s where we control something,” Gray said during the August meeting.
The Pulaski County lawsuit underscores the legal questions Russellville officials have already discussed as they work to develop their own regulations.
Although the two communities have taken different approaches, both are dealing with questions about how much authority local governments have over an industry whose utility demands and environmental impacts can extend well beyond the property where a facility is built.
Russellville and Pulaski County are not alone.
The city of Van Buren approved data center regulations Oct. 26 after receiving preliminary inquiries from companies interested in potential development.
Other communities across Arkansas have also considered new restrictions as technology companies pursue increasingly large facilities to support artificial intelligence, cloud computing and other digital services.
Data centers house large numbers of computer servers and supporting infrastructure. Large facilities can require substantial amounts of electricity and, depending on their cooling systems, water.
Supporters point to potential construction jobs, tax revenue and investment in local infrastructure.
Critics have raised concerns about rising electricity costs, water consumption, noise and the effects of industrial-scale facilities on surrounding communities.
