Are Moratoriums on Land Use Approvals of Data Centers Legal?
It is no secret that the public conversation around data centers has heated up in recent months. Across Michigan, many municipalities are implementing moratoria on the development of hyperscale data centers in response to public opposition for data center construction. These temporary bans are intended to provide municipalities time to craft more targeted ordinances to govern these novel and resource intensive land uses.
In Michigan, there is no statutory authority specifically granting municipalities the right to enact “moratoria.” However, both federal and Michigan courts have recognized their legitimacy in a zoning context. Tahoe-Sierra, U.S. (2002); Central Advertising Co. v. St. Joseph Township, 125 Mich. App. 548, 554-555 (1983).
Traditionally, moratoria have been typically upheld if they are short in duration, adopted in good faith, and linked to a particular public purpose. Bronco’s Entm’t v. Charter Township of Van Buren, 421 F3d 440 (6th Cir 2005). But indefinite or multi-year moratoria risk being struck down by Michigan courts if they are arbitrary, exclusionary or otherwise unconstitutional.
However, these temporary bans may be subject to increasing scrutiny from courts as municipalities continue to adopt them. For instance, a recent case may make it easier to challenge zoning moratoria. In SW Nashville EB Owner, LLC v. Metropolitan Government of Nashville & Davidson County, the 6th Circuit Court of Appeals held that the decision to delay ruling on a site application was sufficiently ripe for purposes of judicial resolution of a takings claim under the 5th Amendment brought by a property owner. No. 25-5781, 2026 LX 467103, at *14 (6th Cir. Aug. 14, 2026). In effect, the court stated that where a property owner had a permitted use for his land, any delay by a municipality ruling on their site application was actionable.
In practical terms, this means is that municipalities risk legal action by data center developers who purchase property allowing data centers as a permitted use and then apply for site plan review only to be faced with a newly enacted moratorium. Moratoriums passed before such an event, however, would not face the same risk.
This issue may possibly be avoided altogether through permanent bans of these uses before developers apply for site plan applications. Under the Michigan Zoning and Enabling Act (MZEA), exclusion of a use altogether is illegal only if “(1) there is a demonstrated need for that land use in the township or surrounding area, (2) the use is appropriate for the location, and (3) the use is lawful.” Adams Outdoor Advert., Inc. v. City of Holland, 234 Mich. App. 681, 694, 600 N.W.2d 339, 345 (1999)(emphasis added)(citing to MCL 125.297a which was repealed and recodified in substantially the same form as MCL 125.3207).
But proving a “demonstrated need” for data centers may be a difficult hurdle for developers. Showing such a need requires focusing on the local citizen’s need for such activity where the use is proposed. Adams Outdoor Advert., Inc. v. City of Holland, 234 Mich. App. 681, 694, 600 N.W.2d 339, 346 (1999)(holding that the “plaintiff did not sustain its burden of proving a demonstrated need for the land use of new billboards by the residents of the city of Holland.”)(cleaned up). This cannot be satisfied merely be showing commercial demand or economic self-interest. Outdoor Sys., Inc. v. Oakland Circuit Court Clawson, 262 Mich. App. 716, 721, 686 N.W.2d 815, 819 (2004) (“Presumably any entrepreneur seeking to use land for a particular purpose does so because of its perception that a demand exists for that use. To equate such a self-serving demand analysis with the “demonstrated need” required by the statute would render that language mere surplusage or nugatory, in contravention of usual principles of construction.”)
In summary:
Municipalities face legal risk when passing moratoriums on data centers construction when: (1) developers are currently seeking approvals for these uses—or where developers have purchased property for this purpose—and (2) these uses were not previously prohibited.
However, where land has not been purchased for the construction of data centers and site plan approvals have not been sought, moratoriums are an effective land use tool for municipalities so long as they are time-limited and oriented towards the development of a comprehensive data center policy.
Finally, permanent bans on data center uses may be available to municipalities due to the difficulty in developers showing a “demonstrated need” for these uses.
Drafted by Attorney Joseph Brennan