Can San Marcos Data Center ban Survive Legal Challenges?

The San Marcos City Council voted 4-3 to define data centers and ban them from city limits on June 16. They’re the first Texas city to test the waters of municipal power in the wake of mass local backlash against the controversial developments across the nation.

Currently, there are no pending data center proposals in San Marcos city limits, but there have been multiple proposals — and construction on approved data centers — surrounding the city. Only two reside in Hays County, according to the Texas Tribune, but there are dozens across Central Texas in other unincorporated areas. In February, San Marcos rejected an annexation request from the developers of a proposed 200-acre data center project.

San Marcos’s approach differs from the various Texas counties that have tried to ban data center developments before ultimately balking under legal challenges. The municipality has “home-rule” powers to create their own zoning codes due to their larger size.

The city’s efforts will come under legal scrutiny soon, according to the outlet: Houston-area Republican State Sen. Paul Bettencourt told the publication he plans to challenge the city under House Bill 2559, which reins in local governments’ power to issue indefinite moratoriums on specific types of property developments, and the “Death Star” Law, which can stop municipal leaders from contradicting Texas state law. Previous attempts to blanket ban data center developments at the county level by Hood and Hill counties have failed.

San Marcos’s move, and its challenges, could define the future of Texas municipal power over developments. Lockhart City Council member Taylor Burdge told the outlet that cities across the state are watching San Marcos keenly to see if the ban survives seemingly-imminent legal action.

Despite intense local resident pushback across the state from virtually every political aisle, Texas is on track to become the biggest state-level data center market in the country. The bipartisan local-level furor has become so intense that notoriously anti-regulation, pro-business Gov. Greg Abbott wrote a letter to regulators targeting data center developments.

Abbott recommended measures like requiring data center developments to fund their own power grid interconnection, recycle water used and eliminating sales tax exemptions.

— Hunter Cooke