- Texas has overtaken Virginia as the country’s top data center market, with more than 335 operating facilities and 247 more proposed, even as local backlash intensifies.
- Gov. Greg Abbott ordered a statewide moratorium requiring energy and water audits of new projects, while cities from Fort Worth to Austin weigh their own bans and permit rules.
- A 2023 state law blocking local governments from regulating beyond state limits sets up a looming legal clash between cities defending water and land use and a fast-growing industry.
Texas cities and counties are racing to pass data center moratoriums just as the state overtakes Virginia as the nation’s top data center market, according to The Real Deal. More than 335 facilities are already operating statewide, with another 247 proposed, per the Environmental Defense Fund, and mounting resident concerns over water use, noise, and tax incentives are fueling a patchwork of new zoning rules.
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A Preemption Law Meets a Backlash
The pushback comes despite a legal headwind: Texas’ 2023 House Bill 2127 blocks local governments from enacting policy that goes beyond state law, a provision aimed at curbing exactly this kind of municipal patchwork. Cities have pressed ahead regardless, layering on zoning restrictions, special-use permit requirements, and outright bans, betting the fight is worth having as data centers strain local water and power systems.
The Details
The clearest test case so far is in Hill County, where commissioners passed a one-year construction ban in May only to face a $100 million lawsuit from developer RCM Hill LLC over its stalled Project Aquila. The county rescinded the ban after 43 days, replacing it with a disclosures checklist instead. Nearby, Lewisville banned data centers from residential areas and now requires a special-use permit plus two public hearings for new applications, while Mesquite added technical, noise, and water-impact studies to its approval process in June. Other cities have gone further: Athens voted 3-2 in August to ban data centers outright, and San Marcos became the first Texas city to prohibit them within its zoning districts entirely. In El Paso County, new rules now require special permits, detailed water and emissions disclosures, and a 300-foot buffer between facilities and residential neighborhoods.
The Pushback Spans the State
The regulatory push now spans the state. Austin City Council members are pursuing a potential ban on large-scale data centers altogether, while San Antonio has discussed a construction moratorium of 90 to 180 days. Kerrville’s zoning code now keeps new facilities 500 feet from parks, schools, and churches, with an additional 300-foot setback from arterial roads. In Southeast Texas, Brazoria County commissioners rejected a tax abatement for Nightpeak Energy’s proposed $3.5 billion Old Ocean Data Center campus in March, though the project is still expected to move forward regardless. Hays County, home to San Marcos, tabled its own moratorium proposal in February over lawsuit fears before settling on a review board and a freeze on discretionary approvals through year-end. The trend lines up with CRE Daily’s coverage of state moratoriums emerging elsewhere as data center development collides with local infrastructure limits.
Why It Matters
The scramble reflects just how fast the industry has grown: Texas’ data center footprint has swelled even as Gov. Greg Abbott issued his own statewide moratorium, directing regulators to audit the energy and water use of proposed developments before they can proceed. Abbott, historically pro-business, has also asked state legislators to weigh formal regulations when the legislature reconvenes in January.
Fort Worth’s decision to greenlight the Black Mountain deal right after floating its own 90-day moratorium shows how much leverage large-scale projects still carry, even in cities actively trying to slow them down. For developers eyeing sites near these projects, the message is clear: local opposition is real, but it hasn’t stopped the biggest deals from closing.
What’s Next
The next flashpoint is Austin, where council members are weighing whether to ban large-scale data centers entirely, and the Texas Legislature, which reconvenes in January and could pass statewide rules that override the current patchwork. A handful of cities are still deciding which way to go: Corpus Christi is pursuing a full prohibition across its zoning districts, Laredo weighed and then dropped a moratorium in August, and Brownsville just approved a 90-day pause on rezoning permits for new facilities. Until state lawmakers settle the preemption question, expect more counties to follow Hill County’s playbook: pass a moratorium, face a lawsuit threat, and settle for a disclosure checklist instead.
