EL PASO, Texas (KFOX14/CBS4) — As calls grow for the City of El Paso to cancel its incentive agreement with Meta’s planned data center project, city officials responded and said such a move could expose taxpayers to significant legal and financial risks.

The discussion comes after City Representative Josh Acevedo placed an item on next Tuesday’s City Council agenda seeking to terminate the city’s Chapter 380 Economic Development Program Agreement with Meta and its development entity, Wurldwide LLC.

Acevedo cited concerns about water consumption, environmental impacts, and infrastructure demands associated with the hyperscale data center project.

However, city officials maintain that the agreement, approved by the City Council in 2023, is legally binding and cannot simply be revoked without consequences.

According to the city manager and city attorney, Meta has already invested millions of dollars in land acquisition, engineering, planning, infrastructure, and ongoing construction activities based on agreements approved by the city. Construction on the project is already underway.

Because of those investments and contractual commitments, officials argue that terminating the agreement without cause would likely trigger extensive legal challenges and potentially expose the city to substantial financial liability, city officials said.

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“The City cannot simply decide to terminate the agreement,” city officials said, noting that Meta relied on the approved agreements when making major investments in El Paso.

City leaders also said the issue is ultimately one of fiscal responsibility.

They said legal expenses associated with attempting to cancel the project are not currently budgeted and could require taxpayers to fund years of litigation. Potential costs could include outside legal counsel, expert witnesses, court fees, staff resources, and possible damages if a court determines the city violated its contractual obligations.

Previous city briefings have warned that terminating agreements without legal cause could create financial exposure exceeding $1 billion.

Officials also stressed that filing or defending a lawsuit would not necessarily halt the project. Instead, the city could spend millions of dollars on litigation while construction and legal proceedings continue simultaneously.

El Paso Mayor Renard Johnson also said in an Instagram post that said the city must operate within the law and protect taxpayers from unnecessary financial risk.

Community members and advocacy groups have raised concerns about water use, energy demand, air quality impacts, and the proposed natural gas power plant intended to support the facility.

At the same time, city officials note that the project was lawfully approved and includes enforceable agreements governing investment levels, job creation, and development timelines.

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Officials said the City Council has already voted to oppose incentivizing future hyperscale data centers in El Paso, reflecting growing concerns about their long-term impacts.

However, officials emphasize that policy decisions affecting future projects are separate from agreements already executed and relied upon by private investors.

The City Council is expected to consider Acevedo’s proposal during its June 9 meeting.

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