Legal Battle Over Failed Data Center Cogeneration Project Settles Out of Court

Court documents reveal that both sides will be responsible for their own legal costs.

Karen Riccio

March 20, 2017

2 Min Read
Legal Battle Over Failed Data Center Cogeneration Project Settles Out of Court
Hundreds of residents of Newark, Delaware, turned out for a March 19, 2014 hearing on the fate of the data center with an on-site energy generation facility. (Photo: NRAPP)

After a lengthy and often nasty legal battle that pitted The University of Delaware against The Data Centers LLC, a Baltimore superior court judge dismissed the lawsuit last week following an undisclosed out-of-court settlement between the two parties.

Terms of the deal prevent the plaintiff and defendant from commenting, but court documents did reveal that both sides would be responsible for their own court fees and costs.

The Data Centers, developers of a $1.3 billion plan to build a data center and 280-megawatt cogeneration plant fueled by natural gas on the school’s STAR Campus in Newark, sued the university in 2015. The company claimed that officials succumbed to community pressure to halt the project, reneging on a signed 75-year lease agreement and providing defensible-by-law reasons for doing so instead of providing the absolute truth. The Data Centers said it lost $200 million, possibly more, as a result.

"Succinctly, the university repeatedly lied to the public to save the skins of its internal bureaucrats who had signed all the contracts to bring the project to Delaware, but who had failed to anticipate the backlash from local objectors and extremist activists," the lawsuit stated.

See also: Firm Behind Failed Data Center Construction Sues University

This project’s storyline definitely had a few unpredictable twists and turns and a “not in my backyard” theme. Proposed back in 2013, the community largely welcomed the plan to build a large-scale data center on 43 acres, site of the former Chrysler auto plant. Plus, the company promised to employ 290 people. However, it was ultimately the power plant and fear of the unknown that worked up residents, environmental activists and faculty at the university.

Shortly after plans were made public, The Data Centers met with representatives of the environmental group, The Sierra Club, seeking their endorsement. The outcome was not what they expected.

“Once we realized the nature of the plan, we let them know we would not ‘endorse’ a power plant and immediately set about to let neighbors in Newark know of the plan,” the group said.

A non-disclosure agreement between The Data Centers and the city of Newark quickly became a trust-killer for residents, who were left with the impression that developers and local officials had something to hide. Residents reached out to news media to air their grievances, and NRAPP launched the website to publicize its grievances.

The decision to halt the project finally came after a group of faculty and administrators conducted a report that raised concerns about the environmental impact and how noise and pollution might affect those living nearby. The report didn’t reveal any specific bad effects, only that a question mark remained about the potential for a negative impact  from the combined heat and power cogeneration plant.

That was enough to halt the project, and the rest is history—barring any further legal action by either party.

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