Texas city bans data centers as opposition mounts statewide

Texas's welcome to the data center industry collided with mounting opposition in June, as new polling showed a majority of voters oppose the projects; one city banned them while counties tried and failed and the governor has signaled forthcoming regulations.

The San Marcos City Council, on Tuesday, June 16, adopted a new ordinance amending its zoning rules to effectively ban data center development in the city, citing concerns about the strain the projects would place on local water and energy resources.

The ordinance narrowly passed in a 4-3 vote, marking the first time a Texas city has banned data centers. But it isn't the first sign of Texans' opposition to the industry.

A poll from the University of Texas and the Texas Politics Project released last week found that 56% of Texas voters oppose the construction of data centers in their communities, with 42% strongly opposed.

Two Texas counties also tried to halt data center construction this year, but neither pause held up.

As the Texas Tribune reports, Hill County leaders passed a moratorium on data centers, but it was later rescinded after a developer sued the county for $100 million in June. Another moratorium was in Hood County, but county leaders pulled it after a Texas state senator asked for an attorney general's opinion on whether counties could impose such restrictions.

Texas state leaders are also eyeing regulations on data centers, as Abbott announced on June 10 that he had directed state regulators to require data centers to fully fund the costs of the electric infrastructure needed to serve their operations.

Abbott indicated that he would work with the 90th Texas Legislature, which convenes in January 2027, to do the following:

• Require data centers to reduce impacts on local communities by implementing best practices such as setbacks, noise-reduction technology and other measures.
• Codify state regulators' actions requiring data centers to pay for their own electric infrastructure costs.
• Ensure data centers add to Texas’s electric capacity — not just to its electric demand.
• Require that all new data centers be built with water-efficient technologies such as closed-loop cooling systems.
• Require large data centers to report electricity and water usage annually to state regulators.
• Repeal sales tax exemptions and other outdated or unnecessary incentives for data centers.

Mateo Rosiles is the Texas Connect reporter for USA TODAY and its regional papers in Texas. Got a news tip for him? Email him at [email protected].