Hill County has reversed course on a controversial data center moratorium after a developer filed a $100 million lawsuit challenging the county’s authority to halt new projects.
On Thursday, Hill County commissioners voted unanimously to rescind the temporary moratorium that had been approved just two weeks earlier. In its place, county officials adopted a new checklist that future data center developers will be required to complete before moving forward with projects.
The decision marks a significant development in one of Texas’ most closely watched disputes over data center growth. As demand for artificial intelligence infrastructure and cloud computing facilities continues to surge, rural communities across the state are grappling with how to manage large-scale developments that can require substantial land, electricity, and water resources.
Hill County had appeared to become the first county in Texas to enact a data center moratorium. The measure was designed to temporarily pause new projects for up to one year while local officials evaluated potential impacts and explored options for oversight.
County Judge Shane Brassell said county leaders still view the moratorium as a successful effort despite its short lifespan. According to Brassell, the temporary pause provided officials with additional time to gather information about proposed developments, learn more about projects already under consideration, and create a framework for evaluating future applications.
Brassell also indicated that some developers withdrew interest during the moratorium period, which county leaders interpreted as evidence that the measure helped filter out projects that may not have met local expectations.
The county’s new approach centers on a checklist that officials believe rests on stronger legal footing than a broad development moratorium. Brassell said the checklist draws authority from existing state statutes and will serve as a tool for gathering information from developers rather than directly preventing construction.
The policy shift comes shortly after RCM Hill, LLC filed a lawsuit against Hill County in federal court in Austin. The company argues that county officials exceeded their legal authority by adopting the moratorium and interfering with a major development project.
According to court filings, RCM Hill has contracts in place to acquire more than 800 acres of land and plans to invest more than $80 million in a proposed data center development. The company contends that the moratorium jeopardized its ability to meet requirements established by state electricity regulators, potentially delaying or disrupting the project’s path toward securing power connections.
The lawsuit seeks $100 million in damages and raises broader questions about the extent of county authority over large-scale developments in unincorporated areas of Texas.
Unlike cities, which generally have zoning powers and greater control over land use decisions, Texas counties possess limited authority to regulate private development. That distinction has become increasingly important as developers seek large tracts of land outside city limits for data centers and other infrastructure projects.
The dispute in Hill County reflects a growing statewide trend. Communities throughout Texas are encountering increasing pressure from data center developers attracted by the state’s abundant land, relatively low costs, and access to major power infrastructure.
Recent reporting has shown that nearly half of planned data center projects in Texas are expected to be located in unincorporated areas, a sharp increase from current levels. As a result, county governments are searching for ways to address local concerns despite lacking many of the regulatory tools available to cities.
It remains unclear whether RCM Hill will continue pursuing its lawsuit now that the moratorium has been rescinded. The company has not publicly indicated whether it intends to challenge the newly adopted checklist.
For now, Hill County’s decision highlights the legal and political challenges facing local governments as Texas experiences a rapid expansion of data center development. The outcome may also serve as an important precedent for other counties attempting to balance economic growth with community concerns while operating within the limits of state law.
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