It attracted a great deal of attention when the Ministry of Local Government and Regional Development issued new guidelines in 2023 stating that the land use designation «industry» did not include data center activities, and that data centers could therefore not legally be established in areas designated for industrial purposes in older zoning plans. According to the ministry, the correct land use sub-designation for data centers was «other commercial activities». This came as something of a surprise in the data center industry, where there had long been a consensus that the land use designation «industry» permitted establishing data centers within the designated area.
This issue came to a head in a recent court case concerning the establishment of a data center on a property in Nordland country which had “industry” as its land use designation. The background of the lawsuit was that a municipality had rejected an application for the establishment of a data center, with reference to the fact that such activities were ineligible with the permitted land-use pursuant to the “industry” land-use designation. The County Governor upheld the municipality’s decision on administrative appeal. The developer then filed a lawsuit against the Government regarding the validity of the decision(s).
The developer argued that the municipality was not allowed to reject the establishment of a data center, since such use – in the developers’ view – complied with the permitted land use designation, which was “industry”. The developer initially won in the district court, which concluded that data centers was covered by the land use designation “industry”. The Government appealed the verdict of the district court, and the case has now been heard by Borgarting Court of Appeal.
Unlike the District Court, Borgarting Court of Appeal agreed with the Government that data center activities are not covered by the land use designation «industry». Consequently, the Court of Appeal concluded that the municipality and the County Governor had the required legal basis to reject the application for the establishment of a data center.
The Court of Appeal agreed with the Government’s interpretation of the term «industry», and that data center activities do not fall within a natural understanding of this term within the context of land use designation(s). The Court of Appeal placed particular emphasis on the fact that if the developer’s expansive interpretation alternative were applied, this would undermine other sub-designations within the main land use designation category (which is «commercial buildings»). The Court of Appeal agreed with the Government that the correct land use sub-designation for data centers is «other commercial activities».
It is worth noting that the Court of Appeal did not give weight to the developer’s argument that there has previously been a perception amongst actors in the data center business that data centers fell within the land use designation “industry”.
If the verdict becomes legally binding, it could affect many sites where the establishment of data center operations is planned. Land subject to older zoning plans which allow industrial use may have to be subjected to a new zoning plan process before any data center can be established on the specific property. Further, the decision may also affect the right to establish data centers in buildings that have received a municipal permit of use allowing industrial activities in older constructions. Typically, this could affect older factory buildings and other constructions that are generally well-suited for establishing data centers.
Data center operators and property owners must therefore carry out a thorough assessment of current zoning plans and the most recently approved land use before entering into agreements on the establishment of server parks/data centers and before submitting applications for building measures for establishment of such operations.
The lawyers at Simonsen Vogt Wiig have experience from several data center establishments, and are well acquainted with the public law issues that arise in connection with data center operations.
This article was first published at bygg.no 15 April 2025.