Data center developer DC Blox has sued Nashville’s city government in federal court, challenging a moratorium and new regulations that have stalled the company’s planned data center project next to the Nashville Zoo.

At the center of the conflict is a property of more than 23 acres next to the Nashville Zoo that DC Blox purchased for $23 million. The company plans to build two data centers on the site, which previously housed office space and a data center operated by tech services company Asurion. DC Blox argues that data center use was permitted under local zoning rules when it applied for permits.

Public opposition to the project has been strong, led in part by the Nashville Zoo. Zoo officials raised concerns about the potential effects of the facilities on animals, while nearby residents and Metro Council members also opposed the development. A petition seeking to stop the project has collected more than 500,000 signatures.

Nashville officials responded by changing the regulations for data centers. The Metro Council adopted rules governing their size and location and approved a moratorium on data center permitting through December 1. Mayor Freddie O’Connell also issued an executive order restricting large-scale data center development.

A Larger Constitutional Challenge

DC Blox contends those actions came after its project had already established legal protections under Tennessee land-use law. Its lawsuit argues that the property has vested rights based on the regulations that applied when the company began the permitting process. Metro officials dispute that position.

The company also alleges that Nashville treated its project differently from another proposed data center. According to the complaint, Metro continued reviewing another application that was pending when the moratorium took effect while stopping work on DC Blox’s demolition and building permits.

DC Blox is asking the federal court to prevent Nashville from applying the new regulations to its property, require Metro to resume processing its permits and award damages. The case could also test how far local governments can go in changing data center rules after a developer has begun the permitting process.

That claim forms part of a larger constitutional challenge. DC Blox is alleging violations of its due process and equal protection rights and argues that Nashville’s actions were specifically intended to prevent its project from moving forward. The lawsuit cites public statements from O’Connell and Metro Councilmember Courtney Johnston as evidence supporting that argument.

Metro Legal Director Tyler Yarbro said Metro is confident it acted lawfully and is preparing to defend against DC Blox’s claims. The legal battle is only one part of Nashville’s effort to control the property: The Metro Council has also authorized the city to pursue eminent domain, which could allow the government to acquire the site for future public use.

The Nashville conflict is part of the growing friction surrounding data center development as AI drives enormous demand for new infrastructure. Middle Tennessee already has at least two dozen data centers, including Meta’s 900-acre facility in Gallatin. Another proposed project at Fisk University in North Nashville has also encountered opposition.