San Marcos becomes the first Texas city to ban data centers, testing its local control
San Marcos, Texas, has become the first city in the state to ban data centers within its limits through a zoning law amendment, citing concerns over water and energy resources. This move tests the city's home rule powers and is expected to face legal challenges from state lawmakers who argue it violates state laws restricting local bans. Other Texas cities are closely watching San Marcos's approach as they also seek to regulate the rapidly growing data center industry.
San Marcos has become the first city in Texas to implement an outright ban on data centers within its city limits, a decision made by the San Marcos City Council on June 16 with a 4-3 vote. The ban redefines data centers in the city's zoning laws, making them ineligible for development anywhere in San Marcos. This action was prompted by concerns that data centers would strain local water and energy resources, a sentiment echoed by many Texans who oppose such developments in their communities.
The city's approach leverages its 'home rule' powers, which grant larger cities the authority to create their own zoning codes and control development. This strategy is seen by land law experts as a more legally robust way to restrict data centers compared to the struggles faced by counties. For instance, Hill County recently rescinded a data center moratorium after being sued by a developer for $100 million, and Hood County abandoned its moratorium efforts following scrutiny from State Senator Paul Bettencourt.
Senator Bettencourt, a Houston Republican, has publicly stated his intention to challenge San Marcos's ban, arguing it violates state laws, specifically the 2025 House Bill 2559, which limits indefinite moratoriums on property development, and the 2023 'Death Star Law,' which restricts local laws that contradict state statutes. However, San Marcos city council members and land experts believe their ban, implemented through zoning changes rather than a moratorium, may not be subject to HB 2559. City Council members Amanda Rodriguez and Lorenzo Gonzalez defended the decision, with Gonzalez noting that the promised benefits of data centers remained speculative while resident concerns were unresolved.
While San Marcos faces potential legal battles, other Texas cities and counties are also exploring ways to regulate data centers. Some 'home-rule' cities like Lockhart and Kerrville are amending their land development codes to impose strict zoning rules or special use permits to restrict data center locations and resource consumption, aiming for a de facto ban without triggering direct state opposition. Non-home-rule cities like Alvin have passed symbolic resolutions to express their disinterest in data center development, hoping to influence state legislators to grant more local control. The outcome of San Marcos's ban is highly anticipated as it will likely set a precedent for future data center regulation across the state.