26MAY

Hill County folds, lawsuit lives on

3 min read

11:34UTC

Hill County, Texas rescinded its data-centre moratorium on Thursday 4 June, seven days after developer RCM Hill sued it for $100 million. The suit is still live.

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Key takeaway

A $100m taking suit reversed a Texas data-centre ban in a week, before any judge ruled on it.

Hill County, Texas voted unanimously on Thursday 4 June to rescind its moratorium on data-centre development, not because a court ordered it but to cap taxpayer liability. The county had blocked RCM Hill LLC's 1,235 MW Project Aquila campus near Hillsboro; on Thursday 28 May the developer sued for $100 million, calling the freeze an unconstitutional taking of property . Seven days later the county folded. ¹

Rescinding the moratorium did not end the litigation. RCM Hill still seeks a court declaration that the original freeze was unlawful, plus damages dated from the day it passed. That keeps the Fifth Amendment taking question alive even with no moratorium left to challenge. The Fifth Amendment bars government from taking private property without compensation, and developers are now testing whether a building freeze counts as exactly that. A ruling for RCM Hill would chill every other county weighing a ban.

The county did not abandon oversight altogether. It replaced the moratorium with disclosure rules: applicants must now declare water use, traffic, noise and economic effect, and notify the public more widely than before.

Three moratoriums have now fallen by three different routes. Maine's first-in-nation statewide ban fell to a governor's veto ; Prince William County's fast-track rezoning fell to an appellate court ; Hill County fell to a single lawyer's letter. Each consent tool has met a sharper instrument of restraint, and developers have learned that the threat of a ruling can work faster than the ruling itself.

Deep Analysis

In plain English

Hill County in rural Texas voted to block all new data-centre construction in 2026. A developer called RCM Hill had been planning a giant computer campus there, called Project Aquila, that would have used as much electricity as a city of roughly 900,000 homes. The county freeze stopped all construction. Seven days after RCM Hill sued the county for $100 million, claiming the freeze illegally took away its property rights under the US Constitution, the county reversed course and voted unanimously to lift the ban. The lawsuit is still alive: RCM Hill still wants compensation for the time its project was blocked. The case shows that a rural county with a small budget faces a very unequal legal fight when it tries to stop a billion-dollar data-centre project without a clear legal basis for doing so.

Deep Analysis

Root Causes

Hill County's original moratorium reflected a common pattern in rural Texas counties: a large-scale industrial project arrives with insufficient advance engagement, local officials face constituent pressure and respond with a blanket freeze rather than a structured review process. The county had no pre-existing land-use framework for facilities drawing more than 200 MW, so the moratorium was the default response in the absence of a permitting mechanism.

Project Aquila at 1,235 MW would have drawn roughly 1.5% of ERCOT's peak demand from a single rural county, an impact scale that requires a genuine public-interest analysis rather than a blanket halt.

RCM Hill's $100 million lawsuit converts the county's failure to design a permitting process into a direct fiscal liability, which is why the rescission came before any court hearing: the county's legal counsel almost certainly calculated that defending the moratorium in federal court was more expensive than permitting the project.

What could happen next?

Precedent
RCM Hill's pre-adjudication reversal establishes that a federal taking lawsuit is sufficient deterrent to force rescission without a court ruling, lowering the bar for other developers facing rural moratoriums.
Short term · Assessed
Risk
Rural counties across Texas and other ERCOT states with no large-load permitting frameworks face the same asymmetric litigation exposure if they impose blanket moratoriums rather than structured review processes.
Medium term · Assessed
Consequence
The active damages claim creates an unresolved legal question on the quantum of loss for data-centre downtime, which could establish a precedent figure that all future taking claims cite.
Medium term · Reported

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: In Knick v. Township of Scott (2019), the US Supreme Court reversed the Williamson County rule and allowed regulatory-taking claims to go directly to federal court without exhausting state remedies first.

RCM Hill's choice of federal court, rather than Texas state courts, is consistent with the Knick pathway: federal jurisdiction is now the faster route to a taking determination. Hill County's unanimous rescission seven days after the federal filing (ID:3833) suggests county counsel recognised the Knick exposure immediately.

Counter-parallel: Municipalities in Arizona and Nevada that imposed short-term data-centre construction freezes in 2023 and 2024 for water-impact reviews avoided taking liability by completing the review and granting permits within 90 days: the decisive variable was demonstrating a good-faith planning purpose. Hill County's moratorium lacked a defined review endpoint or process, which is precisely the element that distinguishes a legitimate planning pause from a compensable taking.

Project Aquila's 1,235 MW planned capacity positions it in the top five largest single data-centre campuses in the US by nameplate power. At current Texas industrial electricity prices of around $45-55 per MWh, that capacity represents $485-600 million in annual electricity spend, a major economic multiplier for a rural county with a tax base measured in tens of millions of dollars.

The $100 million lawsuit, if fully litigated, would likely exceed Hill County's total annual budget by a factor of two to three. The fiscal asymmetry is why the county rescinded without any court hearing: the litigation risk alone was sufficient to reverse a local political decision within seven days. This asymmetry will recur wherever rural counties with thin budgets face large-scale developers with capitalised legal teams.

Consensus view: Kaplan Kirsch & Rockwell infrastructure attorneys, writing in the Texas Bar Journal in 2025, argued that local moratoriums on data-centre development carry unusually high taking-clause exposure because sites like Project Aquila typically have executed interconnection agreements, executed land contracts, and capital already deployed: those three elements together satisfy Penn Central's investment-backed expectations test far more strongly than a greenfield speculative project.

Counter-view: Professor Timothy Mulvaney at Texas A&M Law, whose work on regulatory takings is cited in state-court commentary, argues that a temporary moratorium pending legislative review falls within the police-powers exception in Tahoe-Sierra Preservation Council v.

Tahoe Regional Planning Agency (2002), where the Supreme Court held that a 32-month construction freeze was not a per se taking: duration and purpose both matter, and Hill County's freeze was short enough to argue it was a planning pause rather than a permanent deprivation.

Key tension: Whether the active lawsuit survives now that the moratorium is rescinded, given that RCM Hill still seeks damages from the freeze period: the county's rescission removes the forward-looking injunctive claim but leaves the backward-looking damages claim intact, and no court has yet set the quantum of loss for data-centre downtime.

Sources:Texas Tribune

Mentions:Hill County →RCM Hill LLC →Project Aquila →Maine →Prince William County →Arizona →Nevada →Texas →Fifth Amendment →

First Reported In

Update #6 · Oregon bills data centres, not homes

Texas Tribune· 10 Jun 2026

Read original →

Causes and effects

Caused by

Texas developer sues county over pause

RCM Hill's $100m taking lawsuit filed 28 May was the direct trigger for Hill County's unanimous rescission seven days later.

Occurred 28 May 2026

Read story →

This Event

Hill County folds, lawsuit lives on

A developer reversed a county ban using the threat of a constitutional ruling rather than a ruling itself, a faster lever than any electoral or appellate route.

Different Perspectives

Global hyperscale operators

Operators are still filing gigawatt-scale campuses and Meta is proceeding with its $10bn Lebanon, Indiana site despite the county-level bans nearby, betting Q2 capex outruns the patchwork of restrictions. Industry framing casts New York's freeze, Oregon's surcharge and Indiana's bans as taxes and levies that push build-out toward faster-permitting jurisdictions such as India and the Gulf.

EirGrid

EirGrid set a 900 MW instantaneous demand-loss ceiling because a single voltage dip can trip many data centres onto backup power at once, risking imbalance above 1,150 MW. It wrote the limit into a standing procedure rather than waiting for an emergency to force one.

US host communities and ratepayers

Prince William residents backed the 8-0 denial of Dulles South over the Occoquan watershed, drinking water for eight million people, while Oregon's approved tariff cuts residential bills 1.3% by charging large loads 29% more. Their position: consent and cost-attribution belong in law, not left to a developer's or a utility's discretion.

Hassan Allam Digital Infrastructure

Hassan Allam Digital Infrastructure, an Egyptian conglomerate rather than a foreign hyperscaler, reportedly secured a domestic hyperscale licence with a $400m first phase, per single-source reporting still to be verified. It reads as home-grown sovereign compute ambition, building national capacity rather than importing a US or Gulf operator's campus.

Damac Digital

Damac Digital keeps building toward roughly 6,000 megawatts of hyperscale capacity across 13 countries while Virginia taxes power and New York weighs a freeze. Every dollar or month of delay a US state adds is capacity a Gulf developer can site somewhere with faster permitting and no equivalent levy.

Acequia communities, Santa Fe County

Santa Fe County commissioners voted unanimously on 2 July to freeze any data centre over one megawatt, citing the acequia irrigation commons that has shared scarce water since Spanish colonial rule. They expect the low threshold to draw the same Fifth Amendment challenge RCM Hill brought against Hill County, Texas.