Rural Texas counties trying to regulate data centers face legal threats

From KERA News:

Tensions flared at a recent public meeting in Hood County that devolved into a shouting match between county attorney Matthew Mills and residents who oppose data centers.

“How much did y’all get paid?” asked a resident.

“Not a dime,” Mills said. “You’re accusing people of being crooks!”

That day commissioners were voting to approve another data center project called Comanche Circle without conditions after the developer threatened to sue. Mills told KERA many residents want to stop the industry from moving in — but commissioners are only upholding the law to avoid legal action.

“There is a sense, I think, of ‘we can’t keep doing this, and we got to pick our battles here,’” Mills said.

There are at least nine proposed projects in Hood and nearby Somervell counties, which have a combined population of about 80,000 people. Concerned residents say the projects could raise their electricity bills, use up water resources and ruin tourism for nearby Dinosaur Valley State Park.

“I would be able to see the entire Comanche Circle project from my backyard,” said Joanne Carcamo, who lives in Somervell County and spoke at the meeting.

Carcamo co-founded the advocacy group Protect the Paluxy, which opposes data center construction in the region.

“There really are no studies on these impacts and [I hope] that they set some parameters to limit these developers from building these things in rural areas and next to state parks,” Carcamo said. “We spend so much money as a state on our parks and they bring in so much money, you know, and tourism, it would just be devastating.”

Lack of local control

As rural leaders try to slow or regulate the influx of new data centers, some companies are using lawsuits to push developments forward in Texas and across the nation.

In Michigan, a town faced legal pressure from a developer after leaders voted to limit data center construction. The town settled, allowing the facility to be built.

In Hill County, south of Fort Worth, commissioners rescinded a moratorium on data center construction after a company sued for $100 million dollars, arguing the county didn’t have the legal authority to impose the ban.

“You’re not going to see anybody else trying a moratorium at this point because they’ve seen what happens when you do it,” said Robert Paterson, a professor at the University of Texas at Austin who specializes in land use law. “You basically just get clubbed with a ridiculous amount of money.”

Paterson said counties have few options for regulating development because local control is limited.

“The whole reason why we’re seeing this boom in Texas is I think, kind of referred to as kind of the yee-haw, you know, regulatory environment,” Paterson said. “Like, anything goes.”

Industry response

Dan Diorio is with the Data Center Coalition, a national group that lobbies for the industry. He told KERA data facilities are a crucial part of the state’s digital infrastructure.

“It’s every telehealth appointment, every electronic health care record, every online classroom, every online purchase or banking and financial transaction, state and local governments, national security, military purposes, you name it,” Diorio said.

When counties try to pass moratoriums, he said it hinders the industry’s growth.

“These are billions of dollars of investments,” Diorio said. “Any uncertainty or unpredictability is going to significantly impact that investment and the viability of that project.”

Still, residents in rural counties want to see some regulations. In Somervell County, leaders approved a resolution opposing new data centers until the state offers more guidance. County Commissioner Chip Joslin said while nearby Hill County had to walk back its pause, the outcome was still productive.

“What it did is it drove several other data center developers to the table to talk to them because, you know, we don’t get that a lot of times,” Joslin told KERA.

Hill County now has a list of development rules for data centers — something Rita Beving, with the advocacy group Public Citizen, said is a step in the right direction. Now, she said it’s up to lawmakers to take up the issue.

“Our legislators need to wake up down in Austin and see what is really going on on the ground in these communities,” Beving said.

As public pressure builds, state officials are starting to take action. Earlier this month, Gov. Greg Abbott directed public utilities to ensure electricity costs tied to data centers aren’t passed on to residents, and pledged to work with legislators to codify protections.

Meanwhile, the Republican Party of Texas also announced that regulating large-scale data centers is one of its priorities in next year’s legislative session.

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