MISSOULA, Mont. — Last month, the Missoula City Council passed an amendment to its zoning code placing more restrictions on data centers within city limits.
The amendment essentially prohibited data centers within the city, although certain small-scale use cases are still allowed.
That amendment didn’t land well with one local AI company, however, and now a lawsuit challenging it has been filed.
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The suit itself was filed in Missoula District Court, now on the desk of Judge Shane Vannatta.
And after the amendment passed, a local AI company was put right in the crosshairs.
Now, with help from the Frontier Institute, Missoula’s CubCloud AI has filed a lawsuit challenging the zoning amendment.
“Regulations that are passed at the local level, if they're way too broad, and even if they're aimed at the big boogeymen, the big tech, if they're too broad, they can harm the little guys the most. In this case, it's a local small business founded by someone from Missoula, from Montana,” said Kendall Cotton, president and CEO at the Frontier Institute.
Cotton founded the Big Sky Legal Project last year in cooperation with Arizona’s Goldwater Institute.
He says that the goal of his organization is to prevent local government regulation from infringing on individuals’ rights, including the right to build on private property.
And when the Missoula City Council passed a zoning amendment that restricted where and how large data centers can be, Cotton stepped in for CubCloud AI, a local AI company that houses its own small data center within its building.
And while CubCloud AI is currently in compliance with the zoning regulations, Cotton says it prevents them from expanding in the future.
“They're doing it right. And just because they happen to be the wrong type of business, these regulations are targeting them,” said Cotton.
Cotton says that the regulations are illegal because of a law that was passed during the state’s 2025 legislative session, the Right to Compute Act.
“This was the first in the nation law that put on the books and training this principle that the Constitution's protections for free speech and for property rights as fundamental natural rights of every person also extend to the ability to own and use computers. And therefore, regulations that impact people's ownership and use of computers on a small scale or a big scale have to be narrowly tailored to address a compelling public interest in protecting health and safety,” said Cotton.
In a statement, the City of Missoula said, “The City is aware of the lawsuit filed by CubCloud. However, it has not been served the lawsuit as of the present moment. The City is aware of the Right to Compute Act. It is the City's position that the Right to Compute Act does not give data center companies the right to locate wherever they please. The City plans to vigorously defend the City Council decision in this case. However, the City will not comment on the specifics of this case during pending litigation.”
