RCM Hill LLC Sues Hill County Over Data Center Moratorium

The RCM Hill v. Hill County data center lawsuit is a $100 million federal case filed on May 27, 2026, by developer RCM Hill LLC against Hill County, Texas, after county commissioners imposed a one-year moratorium on data center construction. The suit prompted the county to rescind the moratorium less than two weeks after adopting it, but the federal case remains active, with the developer still seeking damages and a declaration that the ban was unlawful.¹

What the Moratorium Did

On May 12, 2026, the Hill County Commissioners Court voted 3-2 to pause construction of data centers, large battery storage facilities, and power generation projects in unincorporated areas of the county for one year.² Supporters framed the pause as time for the county to study impacts on water, electricity, emergency services, and other infrastructure.³

Texas counties, unlike Texas cities, generally have no zoning authority over unincorporated land. That gap sits at the heart of the legal dispute.

The Developer and Project Aquila

RCM Hill LLC is a Texas company developing “Project Aquila,” a proposed 1,235-megawatt data center on more than 800 contiguous acres in unincorporated Hill County, near Hillsboro.⁴ The company had signed contracts with four landowners for more than $80 million, roughly $100,000 per acre, and said it had spent nearly $1 million on due diligence covering surveys, environmental studies, water assessments, and power and fiber analyses.

The timing matters. On the same day the moratorium passed, the Electric Reliability Council of Texas approved Project Aquila for “Batch Zero” status as an Interconnecting Large Load Entity. Batch Zero is ERCOT’s combined study process for large loads seeking to connect to the Texas grid, designed to filter out speculative projects.⁵ To hold that slot, RCM Hill faced a $50,000-per-megawatt capacity deposit totaling $61,750,000, due July 24, 2026. The company argued the moratorium put that eligibility at risk and could delay the project by a year or more, disrupting negotiations with investors and tenants.⁴

The Legal Claims

RCM Hill filed suit in the U.S. District Court for the Western District of Texas, captioned RCM Hill LLC v. Hill County, No. 6:26-cv-00340. The complaint named the county along with three officials who voted for the moratorium: County Judge Shane Brassell, Commissioner Jim Holcomb, and Commissioner Larry Crumpton.⁶ It seeks $100 million in damages.

The core theory is that the moratorium was ultra vires, meaning Hill County acted beyond its lawful authority when it purported to block development in unincorporated areas. The complaint alleged that county officials had been warned by their own county attorney and by other commissioners that the moratorium was illegal or against the law before the vote.³ RCM Hill also pointed to written confirmation it said it had received from Judge Brassell stating that the county lacked zoning or building permit requirements for unincorporated areas, which the company described as a critical factor in its investment decision.⁴

Beyond the authority argument, the suit advances constitutional claims. Under the Fifth and Fourteenth Amendments, RCM Hill alleges a regulatory taking, arguing the moratorium wiped out the economically viable use of land purchased at data center prices and destroyed investment-backed expectations. The company notes that the 800 acres it contracted to buy were valued at roughly $7,100 per acre for agricultural use, making the data center effectively the only viable use at the $100,000-per-acre contract price.⁴ The complaint also raises federal due process claims and, under the Texas Constitution, inverse condemnation, denial of due course of law, and impairment of contracts through retroactive application of the moratorium to pre-existing development rights.³

Hill County Rescinds the Ban

On June 4, 2026, roughly two weeks after adopting the moratorium and eight days after the lawsuit was filed, the Hill County Commissioners Court held a special meeting and voted unanimously to rescind it.⁷ At the same meeting, Precinct 3 Commissioner Scotty Hawkins, who had voted against the original moratorium, resigned.

In place of the ban, the county adopted a “Major Industrial Development Review Policy” and checklist. It requires developers of data centers, battery storage, generation, and renewable projects to submit a detailed review package before pursuing discretionary county approvals, and to deposit $150,000 into escrow to fund an independent technical review by professional firms retained by the county. The findings are advisory to the commissioners court, not binding.⁸ Judge Brassell said the new framework was on “firmer legal ground” than the moratorium.¹

Where the Case Stands

Rescinding the moratorium did not end the litigation. As of mid-June 2026, the federal case remains active. RCM Hill continues to seek a judicial declaration that the moratorium was unlawful, injunctive relief, and compensation for economic harm the company says began the moment the ban was adopted.³ Open questions include whether the developer will amend its complaint and whether the county’s new review framework will itself face challenge over whether the county has authority to enforce it.⁹

Wider Texas Context

The Hill County fight is one of several between data center developers and rural Texas counties. Nearly half of planned data centers in Texas are slated for unincorporated areas, up from about 12 percent previously, placing them in jurisdictions with limited regulatory power.¹⁰ In Hood County, commissioners approved a data center project without conditions after the developer threatened suit. In Somervell County, officials passed a resolution opposing new projects pending state guidance.¹¹

No state legislation preempting local data center moratoriums had been enacted as of June 2026. Governor Greg Abbott directed public utilities to ensure data center electricity costs are not passed to residents and said he would work with legislators to codify protections. The Republican Party of Texas has signaled that regulating large-scale data centers will be a priority in the 2027 legislative session.¹¹

1
Route Fifty. Texas County Rescinds Its Data Center Moratorium After $100 Million Lawsuit From Developer
2
KWTX. Hill County Commissioners Approve One-Year Moratorium on Data Center Construction
3
KERA News. Hill County Drops Data Center Moratorium After Lawsuit, Adopts New Review Requirements
4
KWTX. Data Center Developer Files Lawsuit Against Hill County Moratorium
5
Houston Public Media. ERCOT Votes to Streamline Process for Data Centers Looking to Join the Power Grid
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KXXV. $100M Lawsuit Filed Against Hill County Officials Over Data Center Moratorium
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KWTX. Hill County Commissioners Court Rescinds Moratorium on Data Center in Wake of Lawsuit
8
Hill County, Texas. Commissioners Court Agenda and Attachments, June 4, 2026
9
Fox 4 News. Hill County Texas Data Center Moratorium Lifted
10
Texas Tribune. Texas Hill County Moratorium Rescinded Data Centers
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KERA News. Rural North Texas Counties Face Data Center Moratorium Regulation and Lawsuits