The Minneapolis City Council voted 8-5 Thursday to enact a six-month moratorium on new large-scale data centers, temporarily pausing construction and permitting for facilities larger than 350,000 square feet while the city studies their environmental and infrastructure impacts.
The interim ordinance is now in effect and does not require Mayor Jacob Frey’s approval. The measure will go to a committee June 16, when a public hearing will also be held. 
The moratorium is a scaled-back version of what its sponsors originally sought. The original proposal called for a one-year moratorium with no exemptions, but Council Member Aisha Chughtai said she supported the compromise to make “meaningful progress,” even as she called it shortsighted to believe data centers were the solution to downtown vacancies. 
The moratorium exempts data centers smaller than 350,000 square feet located within the downtown core bounded by Interstate 35W, Interstate 94, Plymouth Avenue and the Mississippi River, and runs through Nov. 21, 2026. During that period, council members will work to update zoning ordinances and produce a public report covering environmental impacts, permitting constraints and utility infrastructure. 
The vote was proposed by Council Members Aurin Chowdhury and Jason Chavez. The interim ordinance would create a new chapter in the Minneapolis Code of Ordinances to temporarily block new, re-established or expanded data center uses while the city prepares analysis and recommendations on zoning, permitting and development standards. 
“I think it gives the city time to do research and figure out those best practices and how we can govern well without dismissing the boon data centers may provide to our city, particularly downtown,” said Ward 11 Council Member Jamison Whiting.
Beyond the council vote, state environmental law imposes its own set of requirements on data center development, and officials at the Minnesota Environmental Quality Board say those rules extend to facility expansions, not just new construction.
Minnesota’s Environmental Review Program, governed by Minn. Statute 116D and Minn. Rule 4410, requires projects with the potential for significant environmental effects to undergo review before any government permits are issued or final approvals granted. The program includes mandatory categories with set thresholds; when a data center project meets one or more of those thresholds, environmental review is required.
“Projects that require environmental review must complete the process prior to the issuance of any final government decisions to grant a permit, approve or begin a project,” EQB official Priscilla Villa-Watt told the Daily Planet. “Minnesota’s environmental review processes also apply to facility expansions that require governmental actions such as permits or approvals.”
That distinction carries weight as the data center industry evolves. Buildings being converted or upgraded to handle modern AI workloads, often requiring substantial electrical and infrastructure changes, may fall under the same review obligations as entirely new facilities.
On the question of permitting authority, EQB officials said coordination runs through Minnesota Business First Stop, an interagency team within the Department of Employment and Economic Development designed to help navigate the permitting process for complex projects. The Minnesota Data Center Regulatory Guide provides a project overview, and DEED staff are available through the Business Development Office.
Enforcement and public accountability
If a facility makes significant infrastructure changes without obtaining the required permits or completing environmental review, the EQB itself has no direct enforcement authority. Officials said enforcement falls to whichever agency issued, or should have issued, the permit.
“Enforcement of permits is done by the permitting agency,” EQB officials said. “If a local government unit requires a building permit for construction of a facility, their ordinances and rules address its enforcement if the project does not comply.”
Residents or news organizations that identify potential permitting or environmental review failures can bring concerns to the relevant permitting agency. The EQB does accept written and verbal public comments at its monthly board meetings. Parties who disagree with a final decision on the need for an environmental assessment worksheet or environmental impact statement may also seek judicial review under Minn. Stat. 116D.04, Subd. 10.
More broadly, the public can participate in the environmental review process by submitting comments during public comment periods or formally petitioning for review of a specific project. The EQB Monitor publishes public notices of projects currently undergoing environmental review.
Opponents warn of economic risk
Opponents of the moratorium argued that the pause, even in its amended form, risks sending the wrong message to developers at a moment when the city can least afford it. Downtown property values have fallen for five consecutive years through 2025, shifting an increasing share of the property tax burden onto homeowners. 
Council Member Michael Rainville was among the dissenters. “Developers, they’re going to invest their money in a city where they have confidence,” Rainville said. “I want investors to have confidence in the city of Minneapolis.” 
Supporters of the moratorium pointed to broader public concerns about AI-driven data infrastructure. A Gallup survey from March found seven in 10 Americans oppose constructing AI-supporting data centers in their local area, with nearly half strongly opposed compared to just seven percent strongly in favor. 
The debate has also played out against the backdrop of a high-profile downtown real estate transaction. The Sleep Number building, which houses a data center built for AI and cloud-computing companies, sold earlier this year for $235 million, more than eight times its assessed value as of early 2025, while most downtown buildings have been selling at deep discounts.  Supporters of allowing data centers cited the sale as evidence that the facilities can dramatically lift downtown property values.
Council Member Elizabeth Shaffer noted that the building’s higher property value represents the difference between paying $250,000 and $2 million in city taxes. 
The Minneapolis Building and Construction Trades Council said in a statement it does not believe a moratorium is needed, but acknowledged the council’s effort to “minimize unintended harms” by limiting the scope to six months and exempting smaller downtown projects. 
Minneapolis is not acting in isolation. At the state level, a bill introduced in March would establish a statewide moratorium on new data centers and require the Public Utility Commission to submit a report on their energy impacts.  The Minneapolis council had delayed its original vote to allow time for state lawmakers to act first.
This is a developing story.
