Press Releases

Question 1: Under the applicable state and federal law, what authority does a county with no zoning ordinances in place have to regulate a proposed data center before a county construction permit is issued?

Brief Response: Under Arkansas law, a county that has not adopted zoning ordinances has limited authority to regulate a proposed data center before issuing a construction permit. It may not deny the permit on zoning or land-use compatibility grounds because no zoning scheme exists under which the proposed use can be prohibited or conditioned. But the county may enforce otherwise valid ordinances and statutory requirements concerning matters such as health and safety, flood-prone areas, subdivision development, road access, setbacks, and applicable building requirements.

Question 2: Under the applicable state and federal law, what authority does a county with no zoning ordinances in place have to regulate a data center after a county permit is issued and construction has begun?

Question 3: After a county with no zoning ordinances in place has issued a construction permit and construction has begun, does said county have the authority to enact an ordinance changing the requirements for the permit by imposing additional requirements for the permit, increasing the standards to be met or fees to be paid, delaying construction, changing the methods of construction, requiring reports, or increasing compliance expenses?

Brief Response: In response to Questions 2 and 3, a county retains regulatory authority after issuing a construction permit; however, in one case the Arkansas Supreme Court held substantial reliance on a building permit equitably estopped the county from revoking the building permit. A permit, standing alone, does not create a contract or a vested right to remain governed by the laws in effect when the permit issued. Thus, the permit holder generally remains subject to later regulations lawfully enacted under the government’s police power.

Question 4: Under the applicable state and federal law, does a county with no zoning ordinances in place have the authority to enact an ordinance to regulate a data center based upon the amount of electricity or the amount of water it is expected to use, after the data center has secured contracts for such services and the Public Service Commission and the particular utility entities have approved such contracts?

Brief Response: Public Service Commission (“PSC”) approval of utility-service contracts does not foreclose otherwise lawful county regulation, but the county may not override matters committed to the PSC by the General Assembly.

Question 5: If a county with no zoning ordinances in place causes foreseeable damage to a data center through an action that is later determined to be ultra vires on the part of the county, may the county be held liable for such damages in state or federal court?

Brief Response: Arkansas Code § 21-9-301 generally immunizes counties from tort liability, including negligence claims, except to the extent the county has applicable liability-insurance coverage. A finding that county action was ultra vires does not itself create a damages remedy or overcome statutory immunity. Rather, ultra vires claims are limited to prospective injunctive relief, and monetary damages may be recovered only if immunity has been waived through applicable insurance coverage.

Question 6: After a county issues a construction permit upon the applicant’s satisfaction of all conditions, and the applicant enters into contracts on the strength of that permit and begins construction, does said county have the authority to enact an ordinance that retroactively adds conditions to the permit and causes work to cease until new conditions are met?

Brief Response: When a permit has been lawfully issued, the permit holder has entered contracts and incurred liabilities in reliance on it, and construction has begun, the Arkansas Supreme Court has held that the permit holder may acquire “a kind of property right” entitled to protection in some circumstances. In Tankersley Bros. Industries, Inc. v. City of Fayetteville, the Arkansas Supreme Court explained that, after such reliance, a permit generally may not be revoked without cause or in the absence of public necessity. An ordinance that retroactively adds new permit conditions and stops construction until those conditions are satisfied could therefore operate as a material alteration or effective revocation of the permit and might be subject to challenge under Tankersley.