EL PASO, Tx., June 9, 2026: The El Paso City Council is set to discuss and possibly vote on ending the controversial META 380 Agreement that the city council agreed to in 2023. Ongoing community concerns about water usage and pressure on the electrical grid led the city council to vote on developing a policy to limit giving incentives to future datacenter developments in the city last month.
Water concerns around datacenters have not stopped datacenter developers from building in drought-stricken communities. About two-thirds of the datacenters currently under construction are being developed in the country’s driest areas. In Texas, two of the largest new datacenters under development could account for around 9% of the total water usage in the state by 2040.
Today, the city council will discuss whether to begin discussions with META to terminate the Northeast datacenter project by ending the tax incentive 380 Agreement. The agenda item, proposed by city representatives Josh Acevedo and Lily Limón was put on the agenda because of “significant public concern regarding utility affordability, water resources,” and other concerns, including “contractual enforceability and governmental immunity.”
Governmental Immunity
Governmental immunity refers to the legal doctrine that protects federal, state and local governments from being sued for civil damages. This is sometimes referred to as sovereign immunity. Generally, META would not be allowed to sue the City of El Paso should the city council choose to end the 380 Agreement under the doctrine of sovereign immunity.
However, the 380 Agreement that the City signed with META (Wurldwide) in 2023 includes clause 13, Limited Waiver of Immunity. The clause states that “City unconditionally and irrevocably waives all claims of sovereign and governmental immunity which it may have (including, but not limited to, immunity from suit and immunity to liability).”
To understand the waiver clause in the agreement, El Paso Herald Post reviewed select 380 Agreements and looked at Texas case law.
Immunity Clause Missing in Other 380 Incentive Agreements
According to information from the Texas Comptroller of Public Accounts, the City of El Paso has 133 active 380 and 381 agreements, including the META agreement. The oldest 380 agreement that is still active is between the City and Hawkins Regency dated September 18, 2008. The agreement does not have an expiration date, and it is valued at $8 million to remove the blight left from the shuttered Farah Manufacturing plant and build the $100 million Fountains at Farah shopping center. Farah Manufacturing had shuttered its garment production facilities in 1998 and the area had become blighted. Paul Foster partnered with a Florida-based company and secured $12 million in tax incentives, $8 million from the city and another $4 million from the county.
However, although construction for the mall was expected to begin in 2007, the city and county governments were forced to extend the agreement’s deadlines after construction failed to begin on time. The mall opened in 2013.
Unlike the META agreement, Foster’s 2008 agreement with the city does not contain the waiver of sovereign immunity.
El Paso Herald Post reviewed two recent agreements to see if they contain the sovereign immunity waiver that the META agreement has. An agreement signed in January for an apartment complex on Yandell does not have the sovereign immunity waiver clause. We also reviewed an April 30, 2024, agreement valued at $11 million to build The Cotton Exchange, a multi-use commercial property on Doniphan. This agreement, which waives $623,000 in city property taxes is one of the newest agreements that the city has signed. It also does not have the sovereign immunity waiver in it that the META agreement contains. Both agreements were signed by Renard Johnson in his capacity as mayor.
We also reviewed the 380 Agreement that Johnson signed with the city on July 21st, 2015, for his $1.2 million apartment development near the baseball stadium. The City waived the property taxes on Johnson’s apartment complex for ten years, as well as waiving the planning and building fees, and $50,000 in property taxes. Like the other agreements we reviewed, Johnson’s 380 agreement does not include the sovereign immunity waiver.
Today, in addition to the discussion about potentially cancelling the META 380 agreement, the city council will also be discussing and voting on a 380 Agreement with the Better Business Bureau for city incentives of $200,000 for the Buy El Paso Program. This agreement is to fund shortfalls in the program from the original incentive agreement from 2023. $140,000 in 2024. It also does not contain the limit to sovereign immunity clause.
Texas Supreme Court Rules on City Immunity
Notwithstanding the sovereign immunity waiver in META’s 380 Agreement, the Texas Supreme Court ruled seven to two in 2023 that a city government cannot use governmental immunity to breach a 380 Agreement in City of League City v. Jimmy Changas, Inc. When the city refused to pay for the restaurant development, Jimmy Changas sued. The city responded by arguing it had immunity, which the Texas Court of Appeals rejected with the Texas Supreme Court reaffirming that the city could not shield itself from a lawsuit for a 380 Agreement.
Generally, the Court ruled that cities act as companies when they enter 380 Agreements thereby waiving governmental immunity.
The City of League City 380 Agreement with Jimmy Changas signed in 2012 also did not include a waiver of sovereign immunity clause.
The Sulphur Springs Data Center Lawsuit
Last week, the Sulphur Springs city council voted to transfer the original 380 Agreement to another unnamed datacenter developer to address allegations that the original agreement violated the Texas Open Meetings laws. The city council took several votes to amend the 380 Agreement hoping to end the litigation over the alleged violations of the open meetings laws. The Matrix Data Center Campus is an $18 billion artificial intelligence (AI) data center 90 miles outside of Dallas. The project is stalled because of litigation involving restrictions over building electrical generating plants on the land’s deed.
The action by the Sulphur city council only addressed the lawsuit over whether Texas open meetings laws were violated in the original deal but do not address the ongoing litigation over whether power generating plants are allowed on the land for the datacenter.
Should the El Paso city council vote today to begin negotiating with META to end the agreement, it would necessarily lead to META suing the city. META is unlikely to sue based on today’s city council vote unless the city council votes to end the agreement without META’s cooperation.
This is a developing story that will be updated as more information becomes available.
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Cover photograph: Photographic illustration of a server room with the META logo on the wall. Used for illustrative purposes only.