- The IVCM filing asked the Imperial County judge to overturn IID’s refusal to sell it about 287 million gallons to cool a proposed 330 MW data center
- The company promised in writing as recently as February that the project would not touch Colorado River water
- The case is about whether abandoned agricultural water can be transferred to industry, a precedent worth far more than the amount in dispute
A recent petition filed in Imperial County Superior Court has asked a judge to order a public utility to begin selling water to the largest data center project in the state of California.
The amount at issue is modest by Colorado River standards: 880 acre-feet per year, which the petition itself calculates to be ~0.03 percent of the Imperial Irrigation District’s 3.1 million acre-feet entitlement.
However, the legal precedent it would set if such a motion were to be granted could have far-reaching consequences beyond the relatively small claim currently pursued by Imperial Valley Computer Manufacturing (IVCM).
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A protracted dispute over water that is exacerbated by who the customer is
The Imperial Irrigation District, a local agency that supplies water from the Colorado River in the Imperial Valley, has denied IVCM’s request to supply approximately 287 million gallons of water to its upcoming 330MW data center, the largest in the state.
The developer, Sebastian Rucci, spoke Business Insiderthat stated the project would not increase demands on the Colorado River since it would effectively stop irrigating nearby farmland to balance its use, calling it a “zero impact” situation.
The IID rejected the application on 1 May 2026, nine days after it was submitted. The reason given was Rule 21, which regulates small parcels and bars new connections within 300 feet of an accessible drinking water supply; the district redirected IVCM to City of Imperial.
With the City of Imperial already locked in a legal battle with IVCM over the very existence of the $10 billion project, citing insufficient public notice and non-compliance with the California Environmental Quality Act (CEQA), it is unlikely to be a place where the data center builder will find any relief, and it has turned to the courts to get what it feels is its fair share.
The ensuing lawsuit by IVCM may be a litmus test for how such interactions might develop in the future, at a time when there is significant pushback from communities living near such data centers, who see them as resource-hungry and driving up water and electricity prices, especially in drought-stricken regions.
The developer’s plan to “buy and dry,” which according to Michael Cohen, a senior fellow at the Pacific Institute focusing on Colorado River Basin water use, could actually have made matters worse, as it was seen as harmful to jobs in the area, even as individual landowners benefit from the exercise.
The water suit is one of at least three fronts, and arguably the least immediately consequential.
The City of Imperial’s CEQA challenge to the project’s waiver is pending. On June 16, 2026, the county imposed a 45-day moratorium on data center approvals; on July 14, it extended it to a full year and blocked permits until June 2027 while an advisory committee rewrites zoning rules.
Rucci called the first moratorium flawed and sought a restraining order against it, and has said he will challenge the second. Even a clean win on the water petition would result in a utility permit for a facility that the county currently cannot permit.
What is being litigated is whether an irrigation district chartered to serve farms can legally refuse to serve an industry, and whether set-aside counts as conservation when the county is the buyer but not when a data center is.
One thing is certain: The decision will be read carefully by any developer looking at the West’s agricultural water, which is pretty much what the valley is afraid of. The gallons are a rounding error on Colorado, but the precedent it sets here could decide everything for the region.
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