A Texas developer has filed a federal lawsuit against Hill County, asking a judge to strike down a one-year data center moratorium that county officials openly acknowledged they believed was illegal before voting to approve it.
The lawsuit, filed on May 28 in a Waco federal court by RCM Hill LLC, sets up a test of whether Texas counties — which lack general zoning authority — have the legal power to halt artificial intelligence infrastructure projects using development moratoriums.
Hill County commissioners approved the freeze on May 12, placing a one-year pause on new data centers larger than 1,000 square feet, as well as battery storage and power generation facilities exceeding 5 megawatts.
Local officials said they enacted the pause to study truck traffic, floodplain impacts, emergency-response capacity, and lithium-ion battery fire risks before writing permanent standards. The restriction immediately stalled “Project Aquila,” a planned 1,235-megawatt data center spanning over 800 acres. RCM Hill indicates it has signed contracts to purchase the land from four local owners for more than $80 million and has already spent nearly $1 million on due diligence.
The developer’s central legal argument rests on the fact that Texas counties do not possess “home rule” or general police powers like cities, meaning they can only exercise authority explicitly granted to them by the state constitution or state statutes. Because no Texas law expressly authorizes a countywide construction moratorium, RCM Hill contends the county’s measure is an “ultra vires” action that extends beyond its lawful power.
According to the federal complaint, Hill County officials admitted to this lack of statutory authority during the public May 12 meeting. The lawsuit quotes County Judge Shane Brassell stating that “it’s illegal,” and Commissioner Jim Holcomb adding that “there’s no right way to do it, cause it’s against the law”.
According to the filing, County Attorney David Holmes cautioned the commissioners, saying “I don’t believe you have the legal authority to enact” the restriction. Despite these recorded admissions, Brassell, Holcomb, and Commissioner Larry Crumpton voted in favor of the ban, passing it 3-2 over the dissents of Commissioner Scotty Hawkins and one other member.
The developer argues that the moratorium places the entire project in structural jeopardy due to upcoming electric grid deadlines. RCM Hill said that the Electric Reliability Council of Texas (ERCOT) recognized Project Aquila in its “Batch Zero” large-load planning process.
The project faces a July 24 deadline to attest that it has obtained all required local approvals. Missing this deadline or failing to submit an accompanying capacity deposit — which equals roughly $61.75 million based on ERCOT’s $50,000-per-megawatt rule — would strip the project of its place in the state’s grid queue, according to the lawsuit.
RCM Hill is currently seeking a federal declaration to void the moratorium, a permanent injunction against its enforcement, and financial damages for what it describes as an unlawful regulatory taking.