Lawsuits may be slowing Project Jupiter’s progress

COURT RECORDS:
• Empowerment Congress lawsuit
• Emergency application for temporary restraining order
• Green Chile Ventures motion to intervene
• Derrick Pacheco complaint

Two lawsuits that aim to block financial incentives for Project Jupiter may have slowed plans to build the massive campus of data centers for Oracle and OpenAI in Santa Teresa.

Doña Ana County planned to close on Oct. 23 on a $165 billion industrial revenue bond agreement that would finalize a 30-year property tax exemption for Project Jupiter’s developers, the chair of the county commission, Christopher Schaljo-Hernandez, told me in mid-October. But the closing still hasn’t happened, Schaljo-Hernandez confirmed this week.

“It’s all with our bond attorneys at the moment,” he said, adding that the county doesn’t currently have a closing date.

Schaljo-Hernandez declined to comment on whether the lawsuits are the reason for the delay, saying the county doesn’t discuss pending litigation.

But what changed? The county was served with the lawsuits, which were both filed on Oct. 17.

Meanwhile, a second set of financial incentives — gross-receipts tax breaks and reductions in building permit fees — are fully executed and in effect, Schaljo-Hernandez confirmed.

But the property-tax exemption is the biggie. Green Chile Ventures, a subsidiary of Oracle, said in a response to one of the lawsuits that the tax incentives are a “pre-requisite” for the project, and halting them “could prevent any construction from continuing.”

The company is seeking to intervene in a lawsuit that the activist organization Empowerment Congress of Doña Ana County filed against county government. That lawsuit alleges that the county didn’t follow state law and its own regulations when it approved the tax breaks. It asks a judge to declare the ordinances authorizing the incentives “invalid and contrary to law.”

Forward movement

Project Jupiter is moving forward, even if the pace isn’t as quick as developers planned. The developers have hired 200 people, Green Chile Ventures stated in its motion to intervene in the Empowerment Congress case. As of publication of this article, Stack Infrastructure, another company involved in construction, has openings for 14 managerial jobs based in Las Cruces posted on its website.

Stephen Lopez, a Doña Ana County assistant manager, confirmed that the developers have obtained a grading permit. He said “site work” is underway at Project Jupiter’s location near the southeast corner of state highways 9 and 136 in Santa Teresa. The state has also issued a permit allowing the developers to extend Highway 9 to the east to provide access to the build site, Lopez said.

And the companies have submitted “some preliminary plans related to the buildings,” he said, “but not a final set yet, so no permits have been issued for them.”

The Santa Teresa data centers are part of the $500 billion Stargate initiative to build out artificial intelligence infrastructure in several locations around the United States. In its court filing, Green Chile Ventures includes the clearest statement to date on Project Jupiter’s purpose:

“…a Gigawatt-scale datacenter campus in order to serve a prominent Al company in developing, training, and ultimately utilizing cutting edge large language models with applications ranging from scientific discovery, enterprise efficiency, efficient healthcare delivery, medicine design, education, and individual customer utilization.”

The Santa Teresa campus will include four separate buildings. They will be powered by onsite microgrids that use natural gas, the filing states.

Microgrid delay

Oracle and BorderPlex Digital Assets, another company involved in Project Jupiter, are based in Austin, Texas. Another Austin-based company, Acoma, LLC, placed two notices in the Las Cruces Sun-News on Oct. 10 stating that it was filing applications for air quality permits for microgrids it plans to build in Santa Teresa. One is at Project Jupiter’s location. The second is nearby.

The facilities, which the notices call “West Microgrid” and “East Microgrid,” are likely connected.

The notices state that the company expected to file the applications with the N.M. Environment Department on Oct. 9. But as of last week, that state agency hadn’t received those applications, according to Tatiana Engelmann, NMED’s assistant general counsel.

It’s not clear whether that delay is related to the legal cases, but air pollution from the microgrid is mentioned prominently in Empowerment Congress’ lawsuit. Officials with BorderPlex Digital have not responded to questions I sent by email.

Seeking judges

The second legal case, filed by county resident Derrick Pacheco, appeals the county commission’s approval of the bonds on grounds that the process was not conducted properly. It asks the court to reverse or vacate the decision.

I’ve already written extensively about issues with the county’s handling of approval of the financial incentives, and I’ll leave the merits of the legal cases the courts. No hearings have been scheduled in either case. The county has yet to formally respond to the allegations.

Some district judges have recused themselves or been excused by the county from hearing the petitions, which is slowing the processes. Assignment to judges who are willing to hear the cases is the next step. Litigation could take some time.

In the meantime, Empowerment Congress has filed an emergency application seeking a temporary restraining order to stop implementation of the financial agreements and the release of funds, in part because, as the motion states, it’s clear that construction “has already begun.” Empowerment Congress alleges that the county didn’t meet legal requirements when it approved tax incentives for Project Jupiter.

Green Chile Ventures, in its response to that lawsuit, states that delays such as a reconsideration of its applications for tax incentives would slow construction and might lessen the financial incentives the county has approved, “thus substantially increasing the cost of project, potentially to a point where it is no longer an economically viable investment.”

New webpage

That isn’t the first time the developers have threatened to go elsewhere if they don’t get what they’re seeking. They also made substantial promises related to job creation, water use and donations to incentivize the county to quickly approve the project.

I’ve written about whether the developers’ promises would end up in legally binding documents. Schaljo-Hernandez has said he’s working to ensure that happens, and I’m looking forward to being able to review the final leases and other agreements that are part of the bond deal — assuming they are finalized at some point.

In the meantime, the county has created a webpage that shares information about Project Jupiter, including the ordinances and other agreements that have been fully executed. If and when the various agreements that are part of the bond financing are finalized, they’ll be posted on that page for the public to access, Schaljo-Hernandez told me.

Disclosure: My spouse, state Rep. Sarah Silva, is asupporter of Project Jupiter.