Court of Appeals Finds City’s Decision to Decline a Data Center EIS Was Erroneous

Originally published in the September 2026 issue of Bench & Bar of Minnesota Environmental Law Update, Minnesota State Bar Association.

The Minnesota Court of Appeals recently issued an opinion in Archer Datacenters Env't Assessment Worksheet, No. A25-1617, 2026 WL 1648141 (Minn. Ct. App. June 8, 2026) finding the City of Faribault’s (City) determination that an environmental impact statement (EIS) was not required for a proposed data center project was unsupported by substantial evidence, arbitrary and capricious, and erroneous. The Minnesota Center for Environmental Advocacy (MCEA) challenged the City’s decision on three separate grounds related to: (1) air-quality and noise-pollution analyses; (2) greenhouse-gas-emission estimate; and (3) cumulative-potential-effects analysis. 

After finding MCEA had adequate standing to challenge the City’s decision, the Court turned to the first of MCEA’s three arguments. When determining whether an EIS is necessary, the Minnesota Environmental Policy Act (MEPA) requires responsible governmental units, such as the City, to evaluate the applicant’s environmental assessment worksheet (EAW) and comments received during the comment period. The Court reviewed the City’s evidentiary record, and found there was insufficient evidence concerning both air-quality and noise-pollution impacts of the data center. There was also a lack of responsive information from the data center developer providing additional detail. The Court found the City failed to “adequately explained how it derived its conclusion,” which was ultimately “unsupported by substantial evidence.”

Regarding greenhouse gas emission estimates, the Court again ruled in favor of MCEA. The EAW contained greenhouse gas calculations that resulted in “concern and confusion about the high level of emissions and power usage.” The record further showed that the City, “did not adequately explain on the record how it concluded that the project will not have significant environmental effects in the form of greenhouse gas emissions,” when there was nothing to explain the figures or calculations that were used in calculating greenhouse gas emissions. The Court also rejected the idea that further environmental analysis could be deferred to a later permitting stage.

Finally, the Court agreed with MCEA on its third argument and concluded that the City erroneously determined that there would be no cumulative potential effects. The Court found nothing in the record related to the City’s consideration of cumulative potential effects from the data center, leaving the Court “left to guess” at how the City arrived at its conclusion. The Court remanded back to the City, and required the City to either make a positive declaration requiring an EIS or postpone its decision in order to obtain the lacking information.

For more information or questions, contact Cody Bauer.