AVAIO brings federal lawsuit against Pulaski County, Barry Hyde, and JP over data-center regulations

ADP Little Rock Data Hub, LLC — the real estate holding company behind the $6 billion AVAIO Digital data center outside of Wrightsville — has filed suit in federal court against Pulaski County, County Judge Barry Hyde and Justice of the Peace Julie Blackwood. The complaint alleges that the data center ordinance that went into effect on Tuesday, following an override of Hyde’s earlier veto at this week’s Quorum Court meeting is “unlawful, unconstitutional, and without effect.” 

The complaint alleges that Ordinance 26-OR-19 was made in violation of FOIA rules, violates federal laws on electricity utility-rate disclosures and goes against approvals it claims to have received from the Planning Board in August, among other claims. 

The case, represented by Kutak Rock and filed on Thursday in the U.S. District Court for the Eastern District of Arkansas, has been assigned to Judge Lee Rudofsky. Rudofsky also presided over the lawsuit brought in September by Entergy against the press and a private citizen in July for leaked data center documents related to Google‘s data-center project in the Port of Little Rock. 

In the summary of claims, ADP Little Rock Data Hub alleges that Wendell Griffen, Democratic candidate for Pulaski County Judge and the initial drafter of the data-center ordinance, has “exercised unlawful control over the Pulaski County Quorum Court despite holding no office authorizing the exercise of official governmental power.” 

It also alleges that Griffen deliberated with other members of the Quorum Court outside of public meetings to override Hyde’s veto, potentially in violation of Freedom of Information Act law. 

ADP also argues that the ordinance was adopted “due to ill will against ADP and to deny ADP rights enjoyed by similarly situated businesses located in Pulaski County in violation of the Equal Protection Clause of the United States Constitution.”

The lawsuit comes as little surprise to those following the county’s tug-of-war to regulate the AVAIO Digital data center project, a battle that has roiled the Quorum Court for months. The data center was pushed forward by county and city officials without public knowledge for more than a year before residents called on the Quorum Court to intervene. 

JP Douglas House mentioned at Tuesday night’s meeting that AVAIO was ready to sue using many of the arguments contained in the complaint, suggesting JPs had an early review of the lengthy complaint.

Blackwood and Hyde — defendants in the lawsuit — were both aware of the threat of litigation ahead of Tuesday night’s vote, as were the other JPs. 

“These folks are fixin’ to go to court with us,” House said at Tuesday’s Quorum Court meeting. “They have already told us they’re going to sue. I have asked them to wait and let this process work out and they have so far withheld the legal action at this time. They’re not going to wait any longer.”

When reached for comment on Friday, Griffen said the lawsuit comes as no surprise and that a complaint does not mean the company has “proof of liability.” He did express concern about the First Amendment implications of the lawsuit, which attempts to paint conversations outside Quorum Court meetings as unlawful. 

“I find it interesting that First Amendment activity and actually interacting with public officials is somehow deemed by this plaintiff to be illegal,” Griffen said.  

The claim also contains numerous bombshell revelations about AVAIO’s utility agreements and how the tech company might have worked to stay ahead of regulations. 

ADP said it already secured Final Site Plan approvals from the County Planning Board on August 11, language that could play into a decision, given that the ordinance may not apply to such projects. 

The lawsuit also notes that ADP secured in August a binding Electricity Service Agreement with Entergy Arkansas to supply up to 150 megawatts of electricity to the data center “at an annual cost of tens of millions of dollars.” It also says that AVAIO’s Entergy agreement has a required start date for construction and operation. To meet the start date, the claim said, AVAIO must begin construction immediately.

The complaint also notes that AVOIA has already spent tens of millions of dollars on the data center. 

The complaint likewise heavily focuses on the ordinance’s language regarding electricity utility rates, which the complaint says is preempted by federal law. “Enforcement of Ordinance 26-OR-19 will directly affect transmission rates,” the complaint says, which it argues is the exclusive authority of the Federal Energy Regulatory Commission. 

Blackwood, Pulaski County and John Malone of AVAIO Digital were contacted for comment but were not reached by time of publication. 

The Pulaski County ordinance does not ban data centers. Instead, it would submit the AVAIO project to a conditional use permit process and require it to abide by regulations on noise, setbacks and disclosures on water and electricity consumption, among other requirements.

Griffen said the lawsuit is an attempt to evade basic regulations on its project.

“AVAIO Digital wants more than anything else a federal court ruling that the conditional use permit regulatory framework — that has been lawfully enacted, in public, by the duly-elected and properly constituted legislators of Pulaski County, the Quorum Court — cannot be enforced against it because it does not want to be regulated,” Griffen said 

The request is for the court to make a judicial declaration that Ordinance 26-0R-19 is invalid on its face, as well as granting AVAIO preliminary and permanent prospective injunctive relief, damages, and the reimbursement of its attorneys’ fees and costs.

Given the lawsuit is in federal court, the outcome could have implications for communities pursuing regulations on data centers nationally. 

The full complaint can be read below: