The Data Center Action Coalition filed a lawsuit against the Guadalupe County Commissioners Court for approvals related to two data center projects. (Michael Milliorn/Community Impact)
On July 20, the Data Center Action Coalition and local residents filed a lawsuit against the Guadalupe County Commissioners Court to stop the development of the data center Cloudburst, along with the development of Palomino Alpha, another data center in the county. The Data Center Action Coalition, formed in 2025, raises awareness of the potential threats of data centers in a cluster outside San Marcos, according to a news release.
The Data Center Action Coalition is alleging that the approvals of the developments were advanced through “inadequate public notice, private negotiations and unlawful conflicts of interest,” according to a news release.
The lawsuit claims the commissioners approved tax abatements and development agreements for the projects while violating the Texas Open Meetings Act, Texas Tax Code and state conflicts-of-interest laws.
“What we saw was a pattern of secrecy that was involved in the processing of these approvals with Guadalupe County,” said Bobby Levinski, Save Our Springs Alliance senior staff attorney and representative for the plaintiffs in the lawsuit. The Save Our Springs Alliance is a public interest legal group dedicated to protecting the Edwards Aquifer, its springs and contributing streams throughout the Texas Hill Country, according to the group’s website.
Bobby Levinski, Save Our Springs Alliance senior staff attorney and representative for the plaintiffs in the lawsuit, spoke to the Crystal Clear Special Utility District about concerns regarding the Palomino Alpha data center. (Michael Milliorn/Community Impact)
The Data Center Action Coalition claims County Judge Kyle Kutscher and his family own 186 acres of land being sold to Palomino Alpha for the data center.
Kutscher recused himself from a Dec. 17, 2024, vote on the project’s tax abatement and an April 15, 2025, vote on a development agreement.
“Abstaining at times is not enough if he continued to preside over related items or help shape agreements behind the scenes,” said Kay Weinberg of the Data Center Action Coalition.
Due to the pending litigation, Kutscher was unable to provide a comment to Community Impact regarding the lawsuit.
Levinski claimed the plaintiffs acquired evidence of active lobbying by Kutscher to get approvals for the Palomino Alpha data center’s tax abatement and development agreement through public information requests.
Additionally, the lawsuit claims at least one commissioner engaged in a “walking quorum” by participating in private conversations immediately before the April 21 vote to approve CloudBurst’s $500 million property tax abatement.
“What the commissioners did and what we will show in the lawsuit is that they violated the public's trust by engaging in secret deliberations, and that these items should be considered void and should not be enforceable,” Levinski said.
Looking forward
The Crystal Clear Special Utility District, or CCSUD, met on July 23 to discuss a request from Palomino Alpha for a contract providing the data center 500,000 gallons of water a day from the district.
Community members spoke during the public comment portion of the meeting, voicing their opposition or support for the development.
Community members appeared at the Crystal Clear Special Utility District’s July 23 meeting to protest two data center projects in Guadalupe County. (Michael Milliorn/Community Impact)
Many residents shared concerns regarding potential heat impacts, heavy water use, noise pollution, impacts on wildlife and farmland, and wastewater discharges into tributaries of the San Marcos River.
Residents in favor of the project cited economic growth benefits, job creation and tax benefits for Navarro ISD. The CCSUD board will vote on the request at their Aug. 27 meeting.
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