Hill County dropped its data center ban after a $100 million lawsuit. Now the developer has dismissed the case.
Hill County, Texas, enacted a one-year moratorium on data center construction due to public concerns, but developer RCM Hill LLC filed a $100 million lawsuit in response. The county subsequently rescinded the ban and adopted a development checklist. The lawsuit was eventually dismissed with prejudice, highlighting ongoing legal questions regarding counties' authority to regulate such developments.
Hill County, Texas, became the first county in the state to enact a one-year moratorium on new data center construction in early May, a decision driven by public concerns over water usage, electricity demand, and noise from eight proposed data center projects. Just weeks later, on May 27, developer RCM Hill LLC filed a federal lawsuit in the U.S. District Court for the Western District of Texas, seeking over $100 million in damages. The company, which had existing contracts for over 800 acres for data center development, argued that the county exceeded its lawful powers as Texas counties lack inherent police power to halt development.
Facing legal challenge and questions regarding its authority, the Hill County Commissioners Court unanimously voted on June 4 to rescind the moratorium. In its place, the county adopted a Data Center Development Checklist requiring detailed disclosures from developers on infrastructure, traffic, water, and resource impacts. County Judge Shane Brassell acknowledged that while the moratorium didn't stop all projects, it did deter less desirable ones and allowed the county time to understand projects in the pipeline.
Despite the moratorium's reversal, the legal battle lingered as RCM Hill LLC initially did not indicate a dismissal. However, on July 9, the company filed a Stipulation of Dismissal with Prejudice, formally terminating the $100 million lawsuit and preventing future refiling of the same claims. This case is seen as a significant test of local government power, especially as nearly half of planned data centers in Texas are in unincorporated areas where counties have limited regulatory authority compared to cities. The new checklist approach may also face future legal challenges, reflecting a broader intensifying debate over data center development across the nation.