Environmental Group Sues City of Lakeville Over Alleged Hidden Data Center Project

The Minnesota Center for Environmental Advocacy (MCEA) has filed a lawsuit against the City of Lakeville and developer Olam Holdings 1 LLC, alleging the city deliberately concealed that a proposed 1.36 million square foot development is likely a data center project, violating state environmental protection laws.

The controversial project, officially called "Olam Lakeville Industrial," spans 152 acres of farmland accessible primarily via 215th W Street (CSAH 70) near Interstate 35. The development would be twice the size of the Xcel Energy Center and could begin construction as early as 2025.

According to the lawsuit filed in Dakota County District Court, the city conducted an Alternative Urban Areawide Review (AUAR) - a form of environmental assessment - but described the project only in generic terms as "light industrial or office park uses." The term "data center" never appeared in the city's project description.

MCEA's lawsuit presents multiple pieces of evidence suggesting city officials knew this was a data center project:

The environmental review estimated the project could consume up to 2.5 million gallons of water per day for "wet industrial users" - a volume consistent with the massive cooling requirements of hyperscale data centers. To put this in perspective, this single facility could consume 912 million gallons annually, nearly exhausting Lakeville's available water allocation from the Prairie du Chien-Jordan aquifer.

The city's own analysis identified "computers and ventilation systems within the building" as the main sources of noise - terminology that clearly suggests data processing facilities rather than typical industrial operations.

The project is managed by Neha Palmer, CEO of San Francisco-based TeraWatt Infrastructure, a company that explicitly advertises specialization in "data centers, clean energy, and mobility" on its website.

Perhaps most tellingly, the city's traffic impact analysis adopted the Institute of Transportation Engineers Land Use Code specifically for data centers.

Lakeville currently has access to 2.8 billion gallons annually from the Prairie du Chien-Jordan aquifer, with existing uses consuming 2.75 billion gallons - leaving only a 50 million gallon buffer. The proposed project alone could consume nearly 20 times that remaining capacity.

The lawsuit notes that the city's environmental review included no groundwater impact modeling, no studies of well interference, and no qualitative discussion of how massive daily water withdrawals could affect the local aquifer system.

The development would require an estimated 27.47 million kilowatt hours annually - more electricity than 3,000+ households consume. Yet the city conducted no analysis of how this new load would be generated or what grid infrastructure improvements might be necessary.

Data centers frequently rely on backup diesel or natural gas generators that can emit nitrogen oxides, particulate matter, and other pollutants. The lawsuit references a Memphis data center with 35 gas turbines that reportedly emit more nitrogen oxides than nearby power plants and oil refineries.

Lakeville's environmental review acknowledged backup generators would be part of the project but stated that "details pertaining to the number, size, and location are unknown at this time."

Residents living near data centers describe the noise as a "low-pitched roar topped with tinny screech" that can travel for miles and contribute to sleep disruption and headaches. The proposed Lakeville site is within a mile of homes, farmsteads, a church, and a high school.

The facility's lighting could also create significant light pollution visible for miles, but the city's review offered no analysis of visual impacts on the surrounding rural area.

MCEA's lawsuit makes three primary legal arguments:

Minnesota environmental law requires "clear, complete and detailed project descriptions" for large developments undergoing environmental review. By failing to identify the project as a data center, the city allegedly violated this fundamental requirement.

The lawsuit argues that without acknowledging the project's true nature, the city couldn't adequately study its environmental impacts. Data centers have unique environmental footprints that differ significantly from generic industrial facilities.

Because the public wasn't told what type of facility was actually being proposed, residents couldn't offer meaningful input during the required scoping period. The city received no comments from Lakeville residents or surrounding communities during this process.

This lawsuit comes as Minnesota faces an unprecedented wave of data center development. According to the Star Tribune, ten hyperscale facilities planned statewide could consume "as much electricity as every home in Minnesota."

MCEA, the environmental group bringing the suit, has a track record of major environmental victories in Minnesota. The organization helped pass the state's 100% Clean Energy law requiring all utilities to provide carbon-free electricity by 2040, and previously won a Minnesota Supreme Court case that struck down permits for the controversial PolyMet copper-nickel mine.

MCEA is asking the court to:

If successful, the lawsuit could establish important precedents for data center transparency across Minnesota and require cities to clearly identify these facilities during environmental review processes.