Sulphur Springs suing former landowners blocking AI datacenter project
- LoriDawn Messuri
- Nov 1, 2025
- 3 min read
Image courtesy of MSB Global.
SULPHUR SPRINGS, Texas (KETK) – The former owners of the land where a massive AI datacenter campus is planned to built in Sulphur Springs are being sued by the city for trying to stop part of the datacenter project.
The lawsuit comes after the Vistra Corporation, parent company of Luminant Mining Company, issued a cease and desist letter to the city on Sept. 30. They sent the letter after learning about Sulphur Springs’ deal with MSB Global to build 30 AI data centers on the land that Luminant had gifted to the city.
According to court documents, when Luminant transferred the mine land to the city they included a restrictive covenant in the deed that would prevent the land for being used for power generation or power storage of any kind. Since the datacenters are planned to include onsite power generation or storage, Vistra claims the covenant would prevent construction that equipment.
Vistra’s cease and desist letter says they brought up how this restrictive covenant could block the construction of a datacenter on the land to the city several times since they granted them the property in 2019.
“You can imagine Vistra’s surprise, then, when the Data Center Project was announced for theProperty without resolution of Vistra’s concerns,” Vistra’s letter said. “Indeed, upon review of the site plan publicly available on MSB Global’s website, the Data Center Project includes a ‘1.6 GW POWER PLANT (UNDER CONSTRUCTION)’.”
The city’s lawsuit claims this restrictive covenant was only added to the proposed deed on the day that it was signed, after years of discussion about transferring the land. The city claims that Luminant signed a letter of intent for the exchange in 2017 that supported “reclamation activities and changes of land use that result in beneficial land use by the general public.”
They also claim that Luminant directly benefited from the gift by giving the land to the city before declaring bankruptcy and claiming the gift as a tax right off. They also claim that Luminant was able to post a large monetary bond to lay off $43 million in obligations to the Texas Railroad Commission and other obligations, by gifting the land to the city.
“In actuality, it has now become clear that Defendants intended to reap all the benefits using the ‘gift’ deed to City of undisclosed bankruptcy relief, obligations of reclamation relief and savings from City’s involvement, as well as the resulting monetary gains from Defendants’ bond, obligations of waterway restoration relief and savings from City’s involvement, obligations to TCEQ relief and savings from City’s involvement, obligations of rebuilding a bridge and portion of highway entirely from City’s involvement, and the forgiveness of tens of thousands of dollars in tax debts from City’s involvement,” the lawsuit claimed.
Sulphur Springs’ lawsuit goes on to accuse Luminant and Vistra of attempting to create a monopoly in the electricity market and asking the city for more $100 million to remove the restrictive covenant.
“However, despite their windfall of benefits from the transfer and from City’s involvement, as soon as City’s hard work resulted in a significant and transformative contract for development that would greatly benefit City, all of East Texas, as well as the entire state of Texas, Defendants finally showed their ultimate intention of creating a monopoly for electricity on the land and then gouging City and City’s developer for an obscene amount of compensation ($100+ million) to release a restriction on land in which Defendants didn’t even want to conduct business,” the lawsuit alleged.
The Texas Attorney General Ken Paxton’s office filled an amicus brief in Sulphur Springs lawsuit asking for the case to not be dismissed early because their Antitrust Division has launched an investigation into Luminant for allegedly including this restrictive covenant into more than 100 other deeds across the state.
“After looking into this deception further, the City found out that the Luminant Defendantsincluded this clause into almost 150 deeds across eighteen different counties,” the brief claimed. “Several other deeds transferred property to other government entities, including McLennan County, the Town of Sunnyvale, Rusk County, the Texas Parks & Wildlife Department and Titus County.”
Paxton’s office is supporting the city’s claims and estimates that Luminant may have used this restrictive covenant to enrich their company by nearly $15 billion.
“The State files this brief to support the City’s claims that the restrictions are against public policy, are designed to govern state action and seek to impermissibly enrich the Luminant Defendants to the tune of almost fifteen billion dollars,” the brief stated.
The city’s lawsuit is asking 62nd Judicial District Judge Gary D. Young to find whether the deed restriction should be struck down as void and accuses the companies of fraudulent concealment, common law fraud and civil conspiracy.
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