Hill County commissioners reversed course on a controversial moratorium on new data center development Thursday after a developer sued the county, arguing the ban was illegal.
During a special meeting, the Hill County Commissioners Court unanimously voted to rescind the one-year moratorium it approved in May.
County leaders said the move was intended to protect taxpayers from potential liability stemming from a federal lawsuit filed by developer RCM Hill LLC. The company is planning a large-scale data center project near Hillsboro and argued the county lacked legal authority to impose the temporary ban.
According to the lawsuit, RCM Hill spent more than 16 months and invested nearly $1 million pursuing a proposed 1,235-megawatt data center known as Project Aquila. The company says it secured contracts to purchase more than 800 acres in unincorporated Hill County for more than $80 million and obtained key electrical planning approvals through the Electric Reliability Council of Texas, or ERCOT.
The original moratorium was approved on a 3-2 vote and paused new data center, power generation and large battery storage projects in unincorporated areas of the county. Supporters said the pause was needed to study potential impacts on water resources, electrical demand, emergency services and local infrastructure.
County Attorney David Holmes warned commissioners during the May meeting that Texas counties may not have the legal authority to enact such moratoriums. RCM Hill later filed suit in federal court, seeking to have the measure declared invalid.
In its complaint, RCM Hill alleged county officials were aware of those legal concerns before approving the moratorium. The lawsuit cites comments made during the May 12 meeting in which County Judge Shane Brassell reportedly said the proposal was "illegal," Commissioner Jim Holcomb said it was "against the law," and Holmes advised commissioners that he did not believe the county had authority to enact the moratorium.
The lawsuit names Hill County, Brassell, Holcomb and Commissioner Larry Crumpton as defendants. RCM Hill argued the moratorium jeopardized the project's eligibility for ERCOT's Batch Zero planning process, which could delay the development by a year or more. The company also claimed the moratorium disrupted discussions with potential investors and data center tenants.
Although the moratorium has been rescinded, commissioners approved new policies aimed at increasing oversight of major industrial developments. The newly adopted review process requires developers to provide more information about proposed projects, including expected water use, traffic impacts, noise levels and economic effects.
The policy also calls for additional public notification requirements, including notices to nearby residents and local media when major projects are proposed.
Even with the moratorium repealed, the federal lawsuit remains active. In its filing, RCM Hill argued it suffered damages the moment the moratorium was adopted and is seeking declarations that the policy was unlawful, along with injunctive relief and compensation for alleged economic harm.
Emmanuel Rivas Valenzuela is KERA's breaking news reporter. Got a tip? Email Emmanuel at erivas@kera.org. KERA News is made possible through the generosity of our members.
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