Imperial Valley's $10 Billion Data Center Said It Wouldn't Touch the Colorado River. It's Suing Over 260 Million Gallons of It.

In December 2025, the developer behind a proposed $10 billion AI data center complex in California's Imperial Valley told anyone who'd listen that the project would not draw from the Colorado River. Sebastian Rucci, the Huntington Beach lawyer and developer fronting Imperial Valley Computer Manufacturing, made that pledge repeatedly over the following months, as public opposition to the 330-megawatt complex built across the county. The plan, as described to regulators and the press, was recycled wastewater from the nearby cities of Imperial and El Centro — not the already-overallocated river that seven states and Mexico fight over every year. On June 5th, IVCM sued the Imperial Irrigation District in Imperial County Superior Court for roughly 260 million gallons of Colorado River water a year. The recycled-water pledge didn't survive contact with the agencies that would have had to supply it.

What broke the recycled-water plan

IVCM's account of its own negotiations, laid out in its complaint, is that it spent months trying to reach a deal with Imperial and El Centro for recycled wastewater, including offers to help fund treatment-plant upgrades and to route surplus recycled flow toward the shrinking Salton Sea as a goodwill gesture. Both cities walked away from the table. IVCM's saga ran months ahead of the water-disclosure statutes Governor Newsom signed in September, but it's close to the exact scenario those laws are built to head off going forward — a water-supply assessment and a signed allocation worked out before site approval, rather than after, when a developer's only remaining move is a lawsuit against whichever agency still controls water it needs. With the recycled-water path closed, IVCM applied directly to the Imperial Irrigation District — the agency that controls by far the largest Colorado River allocation in the valley, water originally decreed for irrigation — for roughly 287 million gallons a year of new service. IID denied the application on May 1st, nine days after it was filed, citing Regulation 21, a rule that bars new water connections within 300 feet of an already-accessible supply. IVCM calls that denial pretextual and is now asking a judge to order the district to serve the project anyway, at a reduced ask of around 260 million gallons annually — a little under 800 acre-feet, drawn from an allocation system where every acre-foot not used by a retiring farm is an acre-foot someone else wants.

The zoning approval didn't survive either

The water fight isn't IVCM's only legal front, and as of September it isn't even the one that's gone worst for the company. Imperial County's Board of Supervisors approved a lot merger for the project site on April 7th — Resolution 2026-057 — treating it as a routine land-use action rather than the trigger for full review under the California Environmental Quality Act. The city of Imperial and the Sierra Club sued, arguing the merger was in substance an approval of the entire 950,000-square-foot complex and couldn't be waved through without a CEQA analysis of what that complex would actually do to the area's air, water, and grid. On September 1st, Imperial County Superior Court Judge L. Brooks Anderholt issued a tentative ruling agreeing with them, citing "mounting evidence" that the project could have significant environmental effects. "The court finds the county prejudicially abused its discretion by approving the lot merger without first completing the CEQA review required for the whole project," Anderholt wrote. The ruling became final on September 9th. The project that broke ground on the strength of an administrative lot merger now has to go back through the review process the county tried to skip.

The county's own moratorium didn't fare much better

Facing sustained public pressure over water and power, Imperial County's supervisors voted in late July to freeze all new data center development on county land until mid-2027 — the kind of emergency moratorium dozens of jurisdictions nationwide have reached for this year. IVCM sued over that too, and a different judge, Jeffrey Jones, handed the company a win: a tentative ruling in late August, made final on September 22nd, found the county hadn't shown the "current and immediate threat to public health, safety, or welfare" that California law requires to justify an emergency moratorium specifically — as opposed to the ordinary, slower rezoning process a county would otherwise have to use. The county says it's drafting a replacement moratorium built to clear that bar — the same kind of redo Buffalo's council built into its own two-year moratorium by pairing the freeze with a task force mandated to produce a real zoning rulebook before time runs out, rather than just letting a pause expire back into the status quo. In the space of three weeks, then, IVCM lost the fight over whether its specific project needs environmental review and won the fight over whether the county can freeze all data center projects county-wide without one. Both rulings are consistent with the same underlying principle: a government can't skip the process that's supposed to apply to a specific decision, whether that decision is approving one company's lot merger or blocking every company's future application.

The utility stopped waiting on the lawsuits

While all three cases were working their way through Imperial County Superior Court, IID made its own move. On September 16th, the district adopted new pricing and curtailment rules for large industrial customers that put data centers at the front of the line for power cuts during a shortage — behind agricultural and residential load, not ahead of it. IID isn't a party trying to decide whether IVCM's project gets built; its job is keeping the grid balanced regardless of how the litigation comes out. A 330-megawatt draw — IID's own filings put it at 250 MW from the 230kV S-Line and another 50 MW from the 92kV R-Line — is large enough, relative to a county that used roughly half that much power across all other users combined in 2024, that the utility apparently decided it couldn't afford to treat the question as hypothetical while the courts sorted out the rest.

The diligence angle

We grade every claim in a Kill Test on an evidence ladder, and a developer's own public pledge about where its water will come from sits at the very bottom of it — below a utility's informal preliminary read, below a signed term sheet, below everything except a claim with no backing at all. IVCM's recycled-water pledge was a real commitment at the time it was made, repeated often enough and specifically enough that it shaped months of public debate over the project. It was never, at any point, an enforceable water right, a signed service agreement, or anything a lender could underwrite against. When the counterparties who would have had to actually deliver that water — two cities with their own treatment capacity and their own residents to answer to — declined to sign anything, the pledge converted instantly into a lawsuit against a different agency entirely, one that had already told the company no once in writing.

The CEQA ruling tells the same story from the zoning side: a lot merger that functioned, in practice, as approval for an entire 950,000-square-foot complex is not the same evidentiary rung as a project-specific environmental review that's actually been completed, and a court agreed the county couldn't treat the first as a substitute for the second. GridPermit works Colorado, not California's Imperial Valley, and nothing in Xcel Energy's territory looks exactly like IID's Regulation 21 or a lot-merger-as-CEQA-shortcut. But the pattern is portable: a developer's own description of its water source, its power source, or its entitlement status is a claim, not evidence, right up until the counterparty who actually controls that resource puts their name on something. IVCM is finding out this fall what that gap costs in practice — a reopened environmental review, a water case it may still lose, and a utility that's already decided where the company sits in line if the grid gets tight before any of it resolves.