Data Center Legislation

Of the 14 bills passed into law in the last legislative session, HF16 – Data Centers is the first bill to address data center regulation in the state of Minnesota. Though the resulting bill addresses water usage, electricity cost protections, inter-agency notifications, and data center fee structures; conspicuously absent is any restriction on data center location, building size, or set-backs.  For the last year, the Coalition for Responsible Data Center Development has advocated for stricter data center regulations as a result of the proposed data center in Farmington Minnesota. The site, as designed, will sit squarely between 2 residential neighborhoods and would become the 8th largest data center in the United States when built (as of January 1, 2024.) 

On June 16th, DFL Dakota 20/58 interviewed members of the coalition to get their feedback on the resulting legislation. The following is a synopsis of that discussion.

Dakota 20/58: At the beginning of the session, local legislators – representative Drew Roach (R 58B) and senator Bill Lieske (R 58) – proposed bills to restrict data center locations in municipalities to industrial districts. Did they request input from the coalition to write those bills?

Coalition: The coalition was not asked formally.  Drew Roach did attend a number of townhall and planning commission meetings. Bill Lieske did not, but had conversations with some of the coalition members and knew of our concerns. As a result, he proposed the zoning change legislation (SF0608) to provide protection for Farmington residents. Drew proposed the companion bill (HF1109) on the house side.

Dakota 20/58: Senator Lieske’s bill was dropped from the agenda before its presentation to the State and Government committee. And Drew Roach’s companion bill was never addressed on the house side. What happened to them?

Coalition: The senate bill was dropped by the chairman, Senator Tou Xiong. Tract (the developer of the Farmington site) did not want location restrictions as part of any bill. Tract stated that they would use union labor in the build out if the location restrictions were dropped. The chairman was pressured by the unions to drop the provision. This, along with the projected budget shortfall in the next biennium (and the promise of long-term jobs), was enough of a carrot to remove location restrictions from the resulting legislation.

Dakota 20/58: A different bill, HF2928, was presented to the Energy Finance and Policy committee by representative Pattie Acomb (D 45B). The resulting bill in the special session was HF16. As a summary, the bill focused on inter-agency communication, protections on consumer electrical rates, adherence to the state’s 2040 net zero carbon policy, fee structures based on water usage with resulting funds dedicated to home winterization, and a preliminary analysis requirement by the DNR for data centers estimating to use more than 100 million gallons of water per year. What are your impressions of the bill?

Coalition: Terrible! None of that legislation will help Farmington residents. Take water usage: Tract signed an agreement with Farmington to use the city of Farmington’s water supply. By contracting with the city, this data center (which normally would have a lower water prioritization in case of restrictions) will now be mixed with the same water prioritization as the city’s residents. This consolidation makes it difficult to know what the city will do if the DNR imposes water restrictions on the city. Originally the metropolitan council had an issue with this. The met council’s reason for denying Farmington’s 1^st attempt at having the revised comprehensive plan approved, was because of the DNR’s strong concerns for increased water demand, which the city never addressed. The water prioritization was raised by the Coalition and other environmental groups, but never mentioned by legislators or the Met Council. The city countered by saying no water usage changes were to occur until 2026. The met council then had no issue with the proposal and approved the changes to the city’s comprehensive plan for the proposed site. That, and the fact that data center water usage reporting requirements are yearly, not monthly, makes monitoring of water usage during restrictive times of the year difficult, if not impossible. 

And the promises of increased employment and stable electrical costs are not what is being seen in other areas of the country where these projects are being built.  Employment increases will be seen during the build out, but long term, these data centers will run with very few people.

Dakota 20/58: Any other issues?

Coalition: The promise of lower local property taxes comes at the expense of no sales taxes on things like equipment, software, consultants – including the frequent upgrading of the computers, etc. Per the US Census Bureau, sales tax revenue for the State is 18 times higher than the property tax revenue. This is a tax break for billionaires which will drive the state toward bankruptcy. Sure, the city’s property taxes go down, but the sales tax revenue, which would be spread across the state, is substantially reduced. One positive is the sales tax on electricity is maintained.

Dakota 20/58: During the presentation of HF16, Pattie Acomb stated that the bill did not go far enough, and that the location issue would be addressed in the next session. Thoughts?

Coalition: We’ll see, promises like that have been made before, but never materialized. And please note, both Drew Roach and Bill Lieske voted against HF16. 

Dakota 20/58: What other activities is the coalition involved in?

Coalition: The coalition has submitted a lawsuit against the city of Farmington. [The lawsuit states that the zoning change puts the data center into a light industrial area, bordered by residential neighborhoods, when it’s anything but; and that there was a breach of the Orderly Annexation Agreement (which protects the citizens of Castle Rock)]. We are currently in the discovery phase, but expect a decision in early 2026. The lawsuit acts as an injunction against Tract. Even though Tract can continue with design, it can’t start building until the lawsuit is resolved. 

The Coalition organized as a 501 (c) (4) non profit organization and registered as a Minnesota lobbying group. We have also created a website and Facebook page to share awareness that this Data Center issue is affecting so many communities across the United States. We have connected with many other communities that are already suffering from the effects of large data centers as well as communities that are currently lobbying against proposed data centers and the developers that use predatory and secretive tactics to influence city leaders. We have collected research-based articles and information that detail why data center development is such a hot topic now everywhere-even worldwide. We realize that we all use the internet and that with the growth of AI that the need for data centers is growing rapidly. But we ask, “At what cost to people’s health and property rights, as well as our environment and natural resources.  Our answer is to create awareness, inform others and to connect with Minnesota legislators to provide some guard rails on data center development in Minnesota.

Dakota 20/58: How is the coalition handling the legal fees?

Coalition: Being a small group of citizens, the coalition has limited resources to contribute to legal fees. We put on meat raffles and other fund raising activities but could really use donations to help continue the fight. If we are successful in this lawsuit, it will completely change how data center development is approached in MN – at least we hope this is the result, we are in this fight for every person, community and property owner!  Even if we lose the lawsuit, we will appeal, but we need money to do that.

Dakota 20/58: Where can people find out more about the coalition?

Coalition: Go to our website at https://www.datacenterresponsibility.com/. There are plenty of reference materials there, and people can donate if they so choose. For the latest updates you can go to our Facebook page, Coalition For Responsible Data Center Development. Remember, this is a statewide problem. The reason data center developers targeted Minnesota was for the tax incentives, lack of regulation, and plenty of water; it affects us all!

Dakota 20/58: Thanks for your time