330 MW data center sues California irrigation district for Colorado River water rights

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IVCM petition asked Imperial County judge to overturn IID's refusal to sell it roughly 287 million gallons to cool a proposed 330 MW data center

The company pledged in writing as recently as February that the project would not touch Colorado River water

The case turns on whether fallowed farmland water can be reassigned to industry, a precedent worth far more than the volume in dispute

A recent petition filed in Imperial County Superior Court has asked a judge to order a public utility to start selling water to the largest data center project in the state of California.

The volume at issue is modest by the standards of the Colorado River: 880 acre-feet a year, which the petition itself calculates at ~0.03 percent of the Imperial Irrigation District's 3.1 million acre-foot entitlement.

The legal precedent that it would set if such a motion was to be granted might however have far-reaching implications beyond the relatively minuscule requirement that Imperial Valley Computer Manufacturing (IVCM) is currently gunning for.

A prolonged 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 Imperial Valley, has declined IVCM's request to provide approximately 287 million gallons of water for its upcoming 330MW data center, the largest in the state.

The developer, Sebastian Rucci, spoke to Business Insider , stating that the project would not add to demands on the Colorado River as it would effectively stop irrigating nearby farmland to balance its consumption, calling it a "zero impact" situation.

IID rejected the application on May 1, 2026, nine days after it was submitted. The stated ground was Regulation 21, which governs small-parcel service and bars new connections within 300 feet of an accessible potable water supply; the district redirected IVCM to the 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 inadequate public notice and lack of compliance with the California Environmental Quality Act (CEQA), it is unlikely to be a place where the data center builder is going to find any relief, and it has turned to courts of law to get what it feels is its fair share.

(Image credit: Microsoft) The subsequent legal action by IVCM might be a litmus test for how such interactions could unfold in the future, at a time when there is considerable blowback from communities living near such data centers, who see them as resource-greedy and driving up water and power prices, especially in drought-stricken regions.

The developer's plan to "buy and dry", as per Michael Cohen, a senior fellow at the Pacific Institute focusing on Colorado River Basin water use, might actually have made matters worse, with it being seen as detrimental to jobs in the area even as individual landowners profit 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 exemption is pending. On June 16 2026, the county imposed a 45-day moratorium on data center approvals; on July 14 it extended that to a full year, blocking permits until June 2027 while an advisory committee rewrites zoning rules.

Rucci called the first moratorium defective 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 supply permission for a facility the county currently cannot permit.

What is being litigated is whether an irrigation district chartered to serve farms can lawfully decline to serve an industry, and whether fallowing counts as conservation when the county is the buyer but not when a data center is.

One thing is for certain: the ruling will be read closely by every developer eyeing the West's agricultural water, which is roughly what the valley is afraid of. The gallons are a rounding error on the Colorado, but the precedent it sets here may determine everything for the region.