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Greenmail Is Holding Imperial County’s Economic Future Hostage

Hostage-taking in economic development doesn’t require masks or weapons. It requires a credible litigation threat, an organization with nothing to lose from filing it, and a developer with enough at stake to consider paying to make the threat go away. That is greenmail — and it is operating in Imperial Valley against the two largest economic development opportunities the region has seen in a generation.

The $83 million demand on Controlled Thermal Resources was not an isolated event. According to the IVCM federal lawsuit, the same model was being deployed against the data center — organized CEQA exposure designed to create settlement leverage, coordinated between city officials and a non-profit organization with a documented history of making settlement demands. The mechanism was disrupted by the February 10 Superior Court ruling, which eliminated the CUP theory that would have created the CEQA hook. But the attempt tells you something about the operating environment for large-scale investment in Imperial Valley.

The Cumulative Effect

Individual greenmail events are visible and documentable. Their cumulative effect is harder to see but more consequential: a reputation effect that makes the region a higher-risk, higher-cost location for exactly the kind of investment it needs most.

Site selectors and development finance professionals maintain institutional memory about the regulatory and political environments in regions they evaluate. A region where major projects face coordinated CEQA opposition with documented settlement demands is a region that gets a risk premium in every financial model that evaluates it. That risk premium raises the required return on investment, which raises the cost threshold that projects must clear to get financed, which reduces the number of projects that get built, which reduces the jobs and tax revenue the community receives.

The settlement payments that greenmail extracts are not born by the developers. They are ultimately born by the workers who would have been employed by projects that instead relocated to friendlier jurisdictions, and by the communities that depended on the tax revenue those projects would have generated.

What Breaking the Pattern Requires

Breaking the greenmail pattern requires making the pattern expensive for the organizations that run it. The Desert Sun investigation is part of that — public accountability for documented settlement demands. The IVCM federal lawsuit is part of that — legal accountability for the organizations and officials alleged to have coordinated the campaign. Community pressure — constituents asking their council members and non-profit boards hard questions — is part of that.

None of these mechanisms works quickly. The federal litigation will take years. The reputational consequences of the Desert Sun investigation take time to fully materialize. Community accountability depends on community awareness of facts that are not always surfaced in the same forums as the opposition’s talking points.

But the alternative — accepting greenmail as a feature of Imperial Valley’s development environment — is not sustainable. A region that taxes its own economic development through organized litigation extortion is a region that will eventually stop being a destination for the investment it needs. The time to establish different norms is before that reputation becomes entrenched, not after.

The IVDC as a Test Case

The Imperial Valley Data Center is, among other things, a test case for whether the region’s institutions can resist greenmail when the stakes are high enough. The courts have ruled for the project. The law supports the project. The economic case for the project is overwhelming. The only remaining question is whether the coordinated obstruction campaign can be sustained long enough to outlast the developer’s financing.

The community has an interest in that question’s outcome that extends far beyond this project. What happens to the IVDC tells the next developer evaluating Imperial Valley what the operating environment is. Getting this right matters for every project that comes after it.

What “Legally Insufficient” Really Means: The February 2026 Court Ruling on the IVDC

Courts use precise language for precise reasons. When an Imperial County Superior Court judge described the City of Imperial’s amended complaint against the IVDC as “legally insufficient” on February 10, 2026, that phrase was not editorial commentary. It was a legal conclusion — the product of a judge reviewing the city’s arguments and determining that they do not, as a matter of law, state a valid legal claim.

“Legally insufficient” means the complaint failed to allege facts that, even if true, would entitle the city to the relief it was seeking. It is a higher-bar finding than a procedural dismissal. The judge was not saying the city filed its papers incorrectly. The judge was saying the city’s fundamental legal theory — that the IVDC required a Conditional Use Permit rather than a ministerial permit — is wrong as a matter of law.

What the Ruling Actually Decided

The City of Imperial’s lawsuit rested on a single central argument: that the IVDC could not be approved through a ministerial permit process because it required discretionary review under CEQA. If the project required discretionary review, a Conditional Use Permit would be necessary. A CUP triggers a public hearing process in which opponents can raise objections, demand studies, and ultimately block or condition the project in ways that would have made it economically nonviable.

The court said no. The project site is zoned I-2 Heavy Industrial. Data centers are a permitted use in I-2 zoning by right. A by-right use that conforms to applicable development standards does not require a CUP and does not trigger CEQA. The ministerial approval issued by Imperial County was legally correct.

This is not a technical quibble. It is the central dispute in the entire legal battle. The city argued the approval process was wrong. The court disagreed. The approval stands.

The Significance for By-Right Development

The broader significance of this ruling extends beyond the IVDC. By-right development — the principle that a project conforming to applicable zoning and development standards is entitled to ministerial approval without additional discretionary review — is the legal foundation for regulatory predictability in California’s land use system.

If every by-right project can be challenged by neighboring jurisdictions claiming the project actually requires a CUP, the by-right system becomes meaningless. Any opponent of any project can raise the same argument, force the same litigation, and impose the same delay and cost. The investment certainty that by-right zoning is supposed to provide disappears.

The court’s ruling affirms that I-2 zoning means what it says. A project built in accordance with I-2 standards on I-2 zoned land does not require additional approval from jurisdictions that don’t like the project. That is a significant affirmation of how California’s land use system is supposed to work.

The City’s Response and What It Costs

The City of Imperial has the legal right to appeal the ruling. It is exercising that right. This is standard practice — appellate processes exist for a reason, and losing at the trial court level does not obligate a party to abandon its claims.

But the appeal extends the delay. It costs more public money. And it extends the period during which the IVDC is unable to break ground, the 1,688 union positions are not filled, and the $28.75 million annual tax revenue does not flow to the county’s schools and public services.

The city’s residents are paying for litigation that their city filed, on a project their county approved, in a jurisdiction their city does not control. Every month of appellate proceedings is another month of taxpayer-funded legal fees spent trying to override a ruling that the court already called legally insufficient.

At what point do the residents of the City of Imperial ask their council members to account for those expenditures — and for the larger economic consequences of the campaign those expenditures are funding?

CEQA Was Written to Protect Communities, Not to Extort Them

The California Environmental Quality Act was signed into law in 1970. Its purpose was straightforward: require state and local agencies to identify and disclose the environmental impacts of their decisions, and consider alternatives and mitigation measures before approving projects with significant effects. It was an accountability tool — designed to make government decision-making transparent and to give communities a meaningful voice in projects that would affect their environment.

Fifty-five years later, CEQA is something else entirely in many of its applications. It is, by documented evidence, one of the primary mechanisms through which opponents block, delay, and financially burden development projects regardless of their actual environmental impact. And in Imperial County, the effort to force the IVDC into a CEQA review process it is legally exempt from is a case study in exactly this misuse.

How the Exemption Works — and Why It Applies

CEQA applies to discretionary approvals — decisions that require a government agency to exercise judgment about whether to approve a project and under what conditions. It does not apply to ministerial approvals — decisions that are required by law when a project meets the applicable standards. This distinction is foundational to the statute.

The IVDC received a ministerial approval because it is a conforming use on I-2 Heavy Industrial land. The county was not exercising discretion when it approved the project; it was performing a ministerial act required by the zoning code. No discretion, no CEQA. The Superior Court affirmed this analysis in February 2026 when it dismissed the city’s complaint as legally insufficient.

The city’s strategy was to argue that the project should have required a CUP — transforming a ministerial approval into a discretionary one, and thereby opening the CEQA door. The court said no. But the attempt itself illustrates the tactic: use the threat of CEQA review to impose delay and cost on a project the opposition cannot defeat on the merits.

The Cost of Manufactured CEQA Exposure

CEQA litigation is not cheap or fast. An Environmental Impact Report for a project the scale of the IVDC could cost several million dollars to prepare. The process takes 18-36 months minimum. Legal challenges to the EIR add additional years and costs. During all of that time, the project cannot break ground, the financing sits idle accumulating carrying costs, and the developer faces the choice of continuing to absorb those costs or abandoning the project.

This is what manufactured CEQA exposure accomplishes even when it ultimately fails in court. It imposes real financial damage during the litigation period. The opposition understands this. The strategy is not primarily about winning the CEQA argument in court — it is about making the cost of proceeding too high for the developer to sustain.

For a $10 billion project with institutional financing, that calculation is different than it would be for a smaller developer. But the principle applies at every scale: CEQA litigation without merit is not environmentalism. It is a financial weapon being deployed against a community that needs this project.

What Legitimate Environmental Review Would Show

The irony of the effort to force CEQA review on the IVDC is that a good-faith environmental analysis would likely reach favorable conclusions for the project. The closed-loop recycled wastewater system eliminates the water consumption concerns that opponents cite. The dedicated substation means grid impacts are not socialized to other ratepayers. The battery storage system improves grid stability. The I-2 industrial site is surrounded by industrial land uses, not residential communities.

The opposition is not pursuing CEQA review because they believe the environmental analysis will validate their concerns. They are pursuing it because the process itself — regardless of the outcome — serves their interests. That is the definition of weaponization.

California needs CEQA reform precisely because this pattern is so well-established and so damaging. Projects that would benefit the communities they are built in — particularly in economically distressed regions that cannot afford to wait for investment — are being delayed and defeated by environmental review processes that have nothing to do with environmental protection. Imperial Valley is paying the price of that failure right now.

Senate Bills 886 and 887: Sacramento’s Attempt to Change the Rules After the Game Started

There is a principle in American law, grounded in the Due Process and Takings clauses of the Constitution, that government cannot change the rules of a legal game after a party has already relied on the existing rules to their detriment. It goes by several names — vested rights, detrimental reliance, regulatory taking — but the core principle is consistent: you cannot retroactively strip people of rights they have already lawfully acquired.

State Senator Steve Padilla’s Senate Bills 886 and 887 test that principle directly. The legislation would strip data centers of CEQA exemptions — the same ministerial approval pathway that the IVDC used to receive its county approval. If enacted and applied retroactively to the IVDC, it would attempt to impose on an already-approved project the environmental review process that its approval lawfully avoided.

What the Bills Would Do

Under current California law, projects that receive ministerial approvals on appropriately zoned land are exempt from CEQA review. This is not a loophole — it is the intended operation of a statutory framework that distinguishes between discretionary and ministerial government decisions. The IVDC’s approval was ministerial, and it was CEQA-exempt on that basis.

Senator Padilla’s legislation would eliminate or significantly restrict that exemption for data centers. His stated rationale is that data centers should “pay their own way” and face full environmental review given their resource consumption. The argument is facially reasonable — but it ignores the distinction between prospective rule changes (which are legitimate) and retroactive application to already-approved projects (which raises serious constitutional questions).

A developer who obtained ministerial approval under existing law, invested in site preparation and financing, and proceeded in reliance on that approval has acquired legal rights that the state cannot simply nullify by subsequent legislation without triggering compensation requirements. The vested rights doctrine in California is well-established. A project that has received a final approval and demonstrated substantial reliance may be protected from retroactive rule changes.

The Political Context

Senator Padilla represents a San Diego district. He does not represent Imperial County. His constituents are not the farmworker families in Brawley and El Centro who would benefit from the IVDC’s union construction jobs. His constituents are not the children in Imperial County school districts who would receive a share of $28.75 million in annual property tax.

The legislation he introduced was introduced after the IVDC had already received its county approval, after the lawsuit challenging that approval had been filed, and after a coalition of opposition forces had been assembled against the project. The timing is not coincidental.

This is Sacramento asserting control over a local land use decision that a local government has already made through a lawful process. It is the state legislature serving as a backstop for a local legal challenge that the courts have described as legally insufficient. Whatever its stated environmental justification, the practical effect of the legislation — if applied to the IVDC — is to give the opposition a second bite at the apple after the courts have ruled against them the first time.

What This Means for Imperial County’s Economic Sovereignty

Imperial County’s ability to make its own land use decisions — to approve the development that its own residents need and its own government has lawfully authorized — is not unlimited. State law sets a framework. But within that framework, the county has genuine authority, and that authority means something.

When the state legislature introduces bills timed specifically to override a county’s approval of a specific project, it is asserting that Sacramento’s preferences take precedence over Imperial County’s judgment about its own economic development. That is a pattern Imperial County residents have experienced before — in water rights negotiations, in agricultural policy, in environmental regulation that imposes costs disproportionately on low-income rural communities while benefiting wealthier coastal constituencies.

The IVDC fight is, in part, about whether Imperial County gets to decide what is built in Imperial County. Senator Padilla’s bills are Sacramento’s answer. Imperial County’s residents deserve to weigh in on that answer — and to hold accountable the officials, state and local, who are taking it away from them.