Hays County Backs off Data Center Pause

Hays County flirted with slamming the brakes on thirsty industrial projects this week, then backed down.

The five-member Commissioners Court on Tuesday tabled a proposed 30-day “pause” on development permits for large water users, including data centers, after county attorneys warned the move would almost certainly trigger a lawsuit the county would lose. The Austin Business Journal reported that the retreat lines up another skirmish in Texas’ long-running tug-of-war between local governments and a statehouse that has steadily clipped their regulatory wings.

County Judge Ruben Becerra drafted a resolution that would temporarily halt the finalizing of permits for industrial developments projecting more than 20,000 gallons per day in water use. The measure wasn’t framed as a moratorium — a word that carries legal baggage in Texas — but as a short-term pause to assess impacts.

“This is something that is not necessarily pro-business to me,” Becerra said during the meeting. “This is pro the industrial blowup of consumption of resources.” He cited six projects that would fall under the proposed threshold, and later called the moment a crisis, warning of a future where fire trucks could run dry.

Hays County sits within the Austin-San Antonio corridor and has a population nearing 300,000. It has become a magnet for data center proposals as the Austin metro expands, even as the region grapples with extreme drought, according to the outlet. The tension has made the county a flashpoint for anti–data center activism. The city of San Marcos recently rejected a data center proposal outright, while others in the region continue to advance.

But counties in Texas don’t wield the same tools as cities. They lack zoning authority and generally don’t control water and wastewater systems, which are regulated by utilities and the Texas Commission on Environmental Quality, according to county staff. That leaves commissioners with limited leverage.

Assistant District Attorney Chase Young told the court he had spent an “inordinate amount of time” exploring options to block data centers, to little avail.

“If we closed at 3 [p.m.], we would be sued by 4 [p.m.],” Young said, warning of “significant legal liability.”

Commissioner Walt Smith was more blunt about the possible outcome.

“If we pass this as written, we’re going to get sued, and we’re going to lose,” Smith said.

The threat isn’t abstract, as state lawmakers recently tightened limits on local development controls, most notably with SB 2038, which allows landowners to remove property from city jurisdiction and into counties, where oversight is typically lighter.

State Sen. Paul Bettencourt, a chief backer of that law and chair of the Senate’s Local Government Committee, recently asked Attorney General Ken Paxton to scrutinize county-level moratorium efforts statewide. Bettencourt has argued counties can’t impose broad development bans without statutory authority.

Hays County commissioners signaled they may instead push for state-level reforms, possibly during the next legislative session. Commissioner Morgan Hammer floated the idea of building a coalition of counties to demand clearer authority to regulate large water users.

Officials admit they’re boxed in for the time being. Commissioner Debbie Gonzales Ingalsbe said she opposes data centers “literally in my backyard,” but legal counsel advised that calling the measure a pause rather than a moratorium likely wouldn’t matter in court.

— Eric Weilbacher