But concerns over pollution and Colorado River water use have turned one of the projects into a charged legal fight, where a developer is accusing city officials in Imperial, California, of "economic sabotage" for circulating flyers about the development. Meanwhile, activists are warning that the projects are getting approved without protecting local residents.
Last year, developer CalEthos announced plans to turn 315 acres of farmland into a complex that could eventually be a $5.5 billion project, with the first phase including a 200,000-square-foot data center. A second company, Imperial Valley Computer Manufacturing LLC, proposed a $10 billion, 950,000-square-foot data center close to the city of Imperial, located near the Mexican border, roughly 90 miles east of San Diego.
Local critics have emerged, warning that building water- and energy-intensive data centers could have dire consequences with no guaranteed benefit to residents. Anahi Araiza, the head of policy and community research for Imperial Valley Equity and Justice, said her community group opposes both projects.
"We are one of the hottest places on earth," Araiza told SFGATE over the phone. "It's mind-boggling to believe that these projects won't have an impact on our water and energy infrastructure or significantly contribute to air pollution and noise pollution."
'Economic emergency'
The Imperial Valley, located south of the Coachella Valley and stretching all the way to the border, is well positioned to power Silicon Valley's AI boom. Data centers require huge amounts of power to run servers, as well as water to cool down the machines. The Imperial Valley has both and is in dire need of economic stimulus.
The valley sits on top of a vast deposit of geothermal energy that provides climate-friendly power, and infrastructure is already being built to extract this energy specifically for servers. A company recently announced plans to build a massive geothermal plant to power data centers.
The water required to cool data centers is also plentiful, at least for now. The valley has California's largest rights to the Colorado River's water, using more of the river's water in 2022 than all of Arizona and Nevada combined, according to CalMatters. The Colorado River is a critical water source for the Southwest and is the subject of intense negotiations between states over who has access to the resource. It also fills Lake Mead, America's largest reservoir, which is shrinking.
For over a century, the river's water has powered the Imperial Valley's booming agricultural economy, producing a wide range of crops and livestock, including cattle, alfalfa and lettuce. But the local farming economy was dealt heavy blows last year. President Donald Trump's tariffs cut into exports to China and Saudi Arabia, two major purchasers of Imperial County hay. And then the county's beet processing plant closed, removing a vital rotation crop and manufacturing employer. The county now has the highest unemployment rate in the state at 18.6%, and its government declared an "economic emergency" in September.
Massive facility
Imperial, a sleepy town of roughly 22,000 people located about 10 miles from the Mexico border, was initially receptive to the idea of a new data center project in its city, according to City Manager Dennis Morita. It would bring a multibillion-dollar investment into the community, and Morita said the city engaged with the project beginning in 2024 believing it would go through normal environmental review processes.
Plus, building and running the site would create over 1,600 construction jobs and 100 permanent jobs, as well as $28.75 million in annual tax revenue, according to a January lawsuit. It would be the largest data center in the state, according to developer Sebastian Rucci, though it's not clear if there's a larger tech company attached to the data center. Morita said Rucci told the county the project was for Google, but Chrissy Moy, a Google spokesperson, told SFGATE in an email that the company is not involved in a data center project in Imperial County. Rucci declined to say for whom the project is being built but said in an email to SFGATE that it's backed by "one of the four hyperscalers."
The project would use immense natural resources. The latest plans call for a 16-acre, 330-megawatt substation, as well as additional emergency generators and backup batteries. An investigation by KPBS, a San Diego public radio station, found that the data center would buy 6 million gallons of water daily from nearby cities and consume more energy in a year than the entire county used in 2024.
Rucci's company, Imperial Valley Computer Manufacturing LLC, started purchasing land for the project in 2024, spending $12 million on 95 acres in the city of Imperial, as well as $15 million more for land in the county and nearby city of El Centro, according to a lawsuit filed last month. One of Rucci's selling points for locating in Imperial was the belief that a data center project would not need to go through the California Environmental Quality Act process. CEQA is a state law that requires agencies to review a development's impacts and create specific and legally binding plans for how to mitigate those impacts.
Rucci has said that his company has plans to mitigate any impacts from the construction and operation of the center and that it has funded studies that have found the facility will have no health impacts on neighbors. His company has also said that the data center will send its used water to the Salton Sea, helping reduce air pollution from the drying body of water.
But the city rejected that interpretation last summer. After repeated attempts to push the approval through, Rucci abandoned the process with the city in August and instead decided to build the project on nearby county land.
The county has been much friendlier to the developer, agreeing that his 950,000-square-foot project — roughly six times the size of an average Costco — should not go through CEQA. The county is now one vote away from its final decision, according to KPBS. And Rucci said in an email to SFGATE that he expects to break ground on the project in 2026.
'It's time to put up or shut up'
The city of Imperial is now trying to block the data center's current approval process through the county. In December, the city filed a lawsuit against the county and Rucci's company, arguing that the approval should be halted because the site is partially on urban farmland and the project requires the company to secure conditional use permits for its battery storage facilities, a process that would include public comment.
The county responded in court last month, asking a judge to dismiss the city's lawsuit, arguing that the city missed its chance to appeal the permitting decision.
While that lawsuit continues in court, Rucci responded in January by filing his own lawsuit against the city, the city attorney, a city council member, a development director and Morita, the city manager. The lawsuit alleges that the city violated the company's due process rights and that city officials "launched a coordinated campaign to sabotage the data center." The lawsuit's evidence includes the fact that the city partnered with environmental groups and circulated "misleading flyers to incite public hostility," among other actions.
Morita told SFGATE the city has not yet responded in court, but they "vigorously disagree" that they tried to sabotage the project.
"Unless you would interpret the effort by the city to let the neighbors know what was happening as sabotage," Morita said. "I guess one person's sabotage is another person's letting folks know."
Rucci told the Imperial Valley Press last month that he would drop his claims against the city and only pursue action against the public officials named in the lawsuit if those officials personally paid for their own defense, saying "It's time to put up or shut up."
Araiza, of Imperial Valley Equity and Justice, said her group is deeply concerned that the county's dire economic situation will force the county to quickly approve the project.
"We know that we have had the highest unemployment rate. We know that there are a lot of factors in the valley that make us easier to exploit, that make the community feel like they need to just accept crumbs," Araiza said.
She said the pending approval of the project could also lead more developers to run into the valley to build even bigger projects.
"It continues to set a precedent where we become a sacrifice zone, an area where people can come in and cause as much environmental damage or mitigate their damage to the smallest degree and keep hurting our residents," Araiza said.
© 2026 SFGate, San Francisco. Visit www.sfgate.com. Distributed by Tribune Content Agency, LLC.
