On June 30, 2026, the San Marcos City Council approved a zoning code amendment prohibiting data centers citywide, making San Marcos the first Texas city to enact a blanket ban on data center development. The decision was driven by concerns about water availability and energy infrastructure capacity.
Unlike a moratorium, which is temporary, the San Marcos action is a permanent zoning change. However, the legal durability of the ban may be tested. Texas State Senator Paul Bettencourt has threatened to challenge the ban under HB 2559 and the state's 2023 "Death Star" law, which limits municipal regulatory authority. Some legal experts have suggested that a zoning change, rather than a moratorium, may be more likely to survive legal challenge.
Water and Energy Concerns
San Marcos, located between Austin and San Antonio in the rapidly growing Interstate 35 corridor, has seen significant population growth and increasing pressure on water resources. The city's decision reflects growing concern in Texas about the water and energy demands of data center development, particularly in areas where water availability is already constrained.
Texas has generally been one of the most welcoming states for data center development, with major hubs in Dallas-Fort Worth, Austin, and other regions. The San Marcos ban represents a notable departure from that pattern and signals that even in pro-development states, community concerns about resources can drive significant restrictions.
Texas Policy Dynamics
The San Marcos ban exists alongside broader Texas policy debates about data center development. While the state has welcomed gigawatt-scale campuses in many areas, the PUCT has created a new large-load evaluation process, and cities like Denton have begun moving toward moratoriums to study water and grid impacts.
The tension between state-level support for development and local concerns about resources reflects a dynamic playing out across the country. ADIC supports balanced approaches that allow responsible development to proceed while addressing legitimate community concerns about water, energy, and infrastructure.
