DEVELOPER OF $10 BILLION AI DATA CENTER SUES CITY OF IMPERIAL FOR CIVIL RIGHTS VIOLATIONS, CONSPIRACY, AND RETALIATION
Lawsuit alleges city officials launched a “bad-faith campaign” to block a lawful project, costing the community 1,600+ jobs and $100 million in tax revenue.
Lawsuit alleges city officials launched a “bad-faith campaign” to block a lawful project, costing the community 1,600+ jobs and $100 million in tax revenue.
IMPERIAL, Calif. – Imperial Valley Computer Manufacturing, LLC has filed a verified civil rights lawsuit in the United States District Court, Southern District of California, against the City of Imperial and several senior officials. The litigation alleges a coordinated campaign of administrative obstruction and targeted retaliation designed to derail a permitted $10 billion AI data center project.
Named defendants include the City of Imperial, City Council member Katherine Burnworth, City Manager Dennis Morita, City Attorney Kathrine Turner, and Planning Director Othon Mora.
The lawsuit outlines massive economic losses resulting from the obstruction, including 1,688 construction jobs, 100 permanent high-tech positions, and hundreds of indirect jobs. The City’s actions have allegedly blocked $72.5 million in one-time sales tax revenue and $28.75 million in recurring annual property tax revenue.
LAWSUIT LINKS:
Civil Rights Complaint (1-09-26)
Civil Rights Complaint Combined Exhibits
CITY IGNORED ITS OWN CODES
According to the filing, the data center was originally proposed on land within the City of Imperial zoned I-2, the City’s most intensive industrial classification. The filing cites Section 24.19.550 of the City code, which mandates that a site plan be approved or denied within 15 days. Failure to act within that window results in the plan being “deemed approved” by operation of law.
The developer submitted three distinct site plans, spending millions on technical studies and revisions, including the addition of retail frontage along Imperial Avenue, as requested by officials. Despite the developer accepting all requested modifications, the lawsuit alleges that the City refused to act within the statutory timeframe. Consequently, the filing argues that all three applications were deemed approved by law.
RETALIATION AND “SHAM” LAWSUIT
Facing indefinite delays, the developer pivoted the project to adjacent industrial land within Imperial County, where it was expected to receive ministerial approval. The lawsuit alleges that, in retaliation, the City of Imperial used public funds to file a “sham” lawsuit against the County, falsely asserting that the industrial land required rezoning.
“The County followed the law. The City failed to administer its own code and then attempted to sue the County for doing what the law required,” stated Sebastian Rucci, lead attorney and developer. “It is an unconventional approach to governance: miss your own deadlines, then sue someone else for meeting theirs.”
Rucci continued, “The County was the only entity that followed the law. The defendants were incapable of administering their own codes, so for them to claim superior knowledge of the County’s laws is dumbfounding.”
The developer claims they attempted to avoid litigation. “We want to be a good neighbor and left the City’s jurisdiction without any intention of suing for the millions we spent there,” Rucci said. “Shockingly, the defendants chased us onto the adjoining county land with coordinated media attacks and a sham lawsuit. It was simply too much. They can now defend the damages for obstructing an approved $10 billion data center! The public should demand that they pay the legal fees and damages. After all, they caused the damage.”
ALLEGATIONS OF CONSPIRACY AND CONFLICTS OF INTEREST
The lawsuit alleges that Councilwoman Katherine Burnworth coordinated with outside groups–specifically Comite Civico Del Valle and Luis Olmedo–to use CEQA litigation as a pretext to extract settlements and block economic growth.
The filing includes 43 exhibits outlining a conspiracy between the defendants and specific officials at the area’s electric utility, IID. The lawsuit claims IID delayed the data center project by six months to favor projects by Z-Global, an energy consulting firm with deep ties to specific IID board members. “While the public’s rates went up 69%, IID prioritized Z-Global’s projects over a data center that would have generated up to $30 million a year in net revenue for the utility,” the litigation states.
The timeline presented in the exhibits alleges that IID and City officials engaged in synchronized attacks on the project immediately after the project transferred to County jurisdiction. “We were in front of the City of Imperial and IID for over a year, and not one public meeting was requested,” Rucci noted. “Once we pivoted to the County, the coordinated attacks calling for public input started, simply because the County was following the law and the City didn’t. It’s absurd.”
ENVIRONMENTAL HYPOCRISY AND THE SALTON SEA
The lawsuit further charges that the City sabotaged a critical environmental initiative. The developer had secured an agreement to purchase reclaimed water, treat it, and release 5.25 million gallons of fresh water daily into the Salton Sea watershed — a substantial benefit for dust suppression and salinity dilution.
According to the filing, the City reneged on its agreement to sell the water after the developer had already funded the City’s selected consultant for the reclaimed water study. Emails attached to the lawsuit reportedly show City Manager Morita pressuring the City of El Centro to terminate their “will-serve” letter for the project.
“They are using fake environmental harms to cover up their destruction of thousands of jobs and enormous tax benefits for some sinister motive,” said Rucci. “We offered $10 million in plant upgrades and $3 million per year for water that would have saved the Salton Sea. Blocking this was not for public benefit; it was economic sabotage.”
SEEKING DAMAGES AGAINST INDIVIDUAL OFFICIALS
The lawsuit seeks damages against the city officials individually for weaponizing the City to block lawful economic development.
“Defendants are spending the City’s money to stop a project that benefits society and requires approval by law,” Rucci stated. “If they truly believe in their false claims that ministerial projects on industrial land fall under CEQA, then they should pay the legal fees from their own pockets, rather than hiding behind the taxpayers they are harming.”
Rucci concluded with a challenge to the officials: “If the public officials who caused this mess agree to pay for their own legal fees, to fight for their position that CEQA applies, WE WILL DISMISS THE CITY, which is being harmed by their actions. As the saying goes: it’s time to PUT UP OR SHUT UP.”
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