Committee advances six-month pause on large data centers amid environmental and equity concerns

The Minneapolis Business, Housing & Zoning Committee voted June 16 to advance a six-month moratorium on permitting large data centers while staff and the Planning Commission study draft regulations and gather public comment.

Vice Chair Chaudhary, lead author of the moratorium proposal, told the committee that "a temporary moratorium provides a city with an opportunity to listen to community concerns, study potential impacts, develop safeguards and establish a modern and strong regulatory framework before major decisions are made." The pause will run in parallel with a set of ordinance and zoning proposals planned for completion this fall and a final committee vote in November.

Supporters — including neighborhood residents, environmental groups and public-interest organizers — urged the pause to allow the city to evaluate the industry's energy and water demands, noise and clustering effects, and potential to concentrate burdens in historically overburdened neighborhoods. Alejandro Richardson, a Powderhorn resident, said he could not support projects that might harm his neighbors: "I would be ashamed to drive past a data center on Hiawatha and have to admit to my neighbors that I contributed to its construction."

Opponents, including labor representatives and downtown business groups, warned that a moratorium would chill investment and cost jobs. "A moratorium sends the wrong message to investors and employers," said Kyle O'Neill of IBEW Local 292. Union leaders who testified urged the committee to pursue rules that require project labor and local hiring rather than a blunt pause.

Utility and industry witnesses described mitigation tools already in state law and through utility practice, including take-or-pay contracts and requirements that large customers pay for needed grid upgrades. Ross Lexhold of Xcel Energy said utilities have mechanisms to accommodate large new customers while funding necessary infrastructure, but cautioned that projects create significant recurring energy and potential water demand.

The committee adopted the motion to advance the moratorium (5-1, one member absent). The ordinance, as advanced, includes a downtown carve-out for smaller infill projects; staff said the planning process will include a 60-day public comment period and a Planning Commission review beginning July 16, followed by committee consideration in November. The moratorium is temporary; it is meant to buy time to draft specific zoning, permit and environmental standards rather than to ban all data center development permanently.

Next steps: staff's Legislative Research and Oversight team will deliver an analysis of regional and national regulation models and environmental/economic impacts by Aug. 18, followed by the Planning Commission and additional public hearings this summer and fall.