Phoenix is touting a courtroom win over one of the state's most prominent law firms in a fight over how far the city can go to shield neighborhoods from data centers. Mayor Kate Gallego said Wednesday that Phoenix secured what she called an important partial victory in a lawsuit brought by Snell & Wilmer on behalf of its data-center client, WBR, though she cautioned that the legal battle is far from over.
Gallego laid out the dispute in a social media post, writing that Snell & Wilmer
, which she described as Arizona's largest law firm, is suing the city on behalf of WBR over Phoenix's ability to protect neighborhoods from the negative impacts of data centers. “Today, we won an important partial victory in the case. There's more work to do, but,” Gallego wrote, signaling that Phoenix still faces unresolved legal questions even after the win.
A City Already Tightening the Rules
The lawsuit lands against the backdrop of a broader push by Phoenix to rein in where and how data centers can operate near homes. Last summer, the City Council approved an ordinance making it harder to build new data centers near neighborhoods and other sensitive areas, according to azfamily.com. That same report notes the city has nonetheless issued waivers in some cases, allowing projects to move forward despite the ordinance.
Proposed rules for Phoenix data centers include noise standards and a 150-foot setback.
Money has already become a flashpoint in at least one case tied to the city's zoning fights. The seller of one property had requested $10 million in compensation from the city, according to bizjournals.com.
Gallego Points to a South Phoenix Project as a Model
Gallego has previously pointed to a planned data center near Seventh Avenue and Grant Street as an example of smaller-scale development, telling KTAR it would run about 24 megawatts, dramatically smaller than the closest data center, and would be expected to draw on existing Arizona Public Service power. She contrasted that project with a West Valley data center that has applied for an air quality permit for a cruise ship engine, according to the same KTAR report.
The mayor has also said Phoenix created a new program requiring a special-use permit for every data center, a step she framed as addressing health and safety concerns tied to the industry's rapid growth in the Valley.
A Boom Straining Water, Heat and Neighborhood Patience
Phoenix's zoning fights are unfolding amid a statewide data-center building spree. Arizona had 164 data centers as of last year, mostly concentrated in the Valley, according to research firm Baxtel cited by Axios Phoenix. One high-profile project, MenLo Digital, is just one of nearly 50 new data centers under construction or in development across the state, Courthouse News Service reports.
That growth carries real resource costs. A 2025 analysis found that data-center water demand in the greater Phoenix area could surge by more than 450% if all planned projects are built, Courthouse News Service reported, noting that individual facilities can use tens or even hundreds of millions of gallons of water each year for cooling. The same report cited an Arizona State University study examining temperatures near data centers.
Around the MenLo Digital site specifically, Phoenix has already stationed inspectors at the million-square-foot construction site and negotiated measures intended to ease disruption for nearby residents, according to Courthouse News Service. Those measures reportedly include moving construction traffic farther from homes, restricting early-morning deliveries, relocating employee parking, and monitoring noise levels.
How Phoenix Compares to Its Suburban Neighbors
Mesa's Ordinance 5957 has been connected to Proposition 207 waivers.
Snell & Wilmer itself has described Arizona's regulatory landscape as shifting on three fronts simultaneously, pointing to federal executive orders, state regulation, and local rules all moving at once to reshape how developers build data centers in the state. Gallego's partial-win announcement came as the broader legal and regulatory fight over data centers in the Valley continues.
