Guadalupe County sued over data center development agreements

The Data Center Action Coalition, along with local residents, initiated a lawsuit on July 20 against the Guadalupe County Commissioners Court, seeking to prevent the development of two data centers: Cloudburst and Palomino Alpha. The lawsuit targets the county's approvals for a $500 million property tax abatement and a development agreement with CloudBurst Texas for a 700-acre data center, as well as agreements for the Palomino Alpha project. The coalition, formed in 2025 to address data center impacts near San Marcos, alleges that these approvals were conducted through "inadequate public notice, private negotiations and unlawful conflicts of interest." Bobby Levinski, senior staff attorney for the Save Our Springs Alliance and representative for the plaintiffs, stated that a pattern of secrecy was involved in the approval process.

The lawsuit specifically claims that the commissioners violated the Texas Open Meetings Act, Texas Tax Code, and state conflicts-of-interest laws. It highlights that County Judge Kyle Kutscher and his family own 186 acres being sold to Palomino Alpha for its data center. While Kutscher recused himself from votes on the project's tax abatement and development agreement, the coalition argues that abstaining was insufficient if he continued to preside over related items or influenced agreements behind the scenes. Evidence of active lobbying by Kutscher for Palomino Alpha's approvals was reportedly obtained through public information requests. Additionally, the lawsuit alleges a "walking quorum" by a commissioner during the vote for CloudBurst's tax abatement.

Separately, the Crystal Clear Special Utility District (CCSUD) met on July 23 to discuss Palomino Alpha's request for 500,000 gallons of water daily. During the public comment session, residents expressed concerns about potential heat impacts, heavy water use, noise pollution, and effects on wildlife and farmland, as well as wastewater discharges into the San Marcos River tributaries. Conversely, some residents supported the project, citing economic benefits, job creation, and tax revenues for Navarro ISD. The CCSUD board is scheduled to vote on the water contract request on August 27.