Can Texas cities ban data centers? According to San Marcos City Councilwoman Amanda Rodriguez, the answer is yes — and her city just proved it. San Marcos has become the first Texas city to officially ban data centers, setting off a political firestorm that is now drawing in state lawmakers, fellow Republicans, and municipalities across the state who are watching closely to see if the ban holds up. The fight over data centers in Texas is no longer just a local zoning dispute. It has become one of the most heated political issues in the state heading into a critical election year.
Can Texas Cities Actually Ban Data Centers?
San Marcos, located south of Austin, made history by passing a ban on data centers within city limits — a move its council members argue falls squarely within the city's authority as a home rule municipality. Councilwoman Amanda Rodriguez, who spearheaded the effort, says the legal footing is sound despite significant risks.
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San Marcos Councilwoman Amanda Rodriguez explains why she believes the city ban on data centers is legally defensible
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"I can't see why this is not within our authority," Rodriguez told Inside Texas Politics. "And so if we need to be the precedent-setting case, for me personally, if it was up to me, I'm ready for it."
That confidence is notable because the legal landscape is genuinely treacherous. Texas is home to over 466 operational or planned data centers, making it second only to Virginia in total count. Multiple Texas counties have tried to block data center developments, only to reverse course when faced with legal threats. What makes San Marcos different is its status as a city — a distinction that matters enormously under Texas law.
Political reporter Natalie Haddad of WFAA in Dallas explained why: "If you don't have a city where you live right now, you need to start one before a data center wants to come into your land. If you don't live in a city, you live in the wild west. Anybody can do anything they want in the state of Texas. A city can regulate the location, the traffic — a city at least has some control over the development of an industrial property like this."
Since the vote, Rodriguez says she has been contacted by lawmakers and municipal officials from across central Texas and beyond, all eager to see whether the ban survives. "They want to know, they're watching it closely. They want to see how long and whether this sticks," she said. "It is showing lawmakers the authority in which and the ways in which we can accomplish what our people want."
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Agriculture Commissioner Sid Miller delivers his public rebuke of Governor Abbott from his ranch, calling for a special session
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Why Are Data Centers So Controversial in Texas?
These massive facilities require enormous amounts of land, water, and electricity — resources that are already under pressure in Texas. The concern is not abstract. Agriculture Commissioner Sid Miller pointed out a striking figure: Texas hit a peak electricity load of 85 gigawatts in the summer of 2023. If all currently planned data centers come online, the demand would balloon to nearly 500 gigawatts — more than five times the state's current capacity.
Beyond electricity, residents and community leaders cite water consumption, air pollution, noise, and the industrialization of rural landscapes as major grievances. And perhaps most notably, the opposition is not partisan. Rodriguez was emphatic on this point: "This is not a partisan issue. This is very much a human issue. They want the infrastructure to be able to survive — and that's water, that's clean air, that's a safe place to live. They want that prioritized over the profits for corporations."
Commissioner Miller echoed that sentiment from a different angle, warning that Republicans risk losing elections by failing to act: "The Republicans should own this issue, not the Democrats. The Democrats are on this issue. They're right on this issue. They want to stop the data centers. Republicans need to lead on this. We need to protect our consumers. We need to protect our rural Texans."
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Roundtable panel discusses the political fallout and whether other Texas cities will follow San Marcos's lead
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Miller noted that when he travels rural Texas, two topics dominate every conversation: screwworms and data centers — and data centers come first.
What Is the Texas Death Star Bill and Why Does It Matter?
The single biggest legal threat hanging over San Marcos's ban is HB 2127, passed by the Texas Legislature in 2023 and nicknamed the "Death Star Bill" by its opponents. The law was designed to prevent Texas cities from enacting ordinances that go beyond what state law already allows. Crucially, it empowers any citizen to sue a city they believe has overstepped — and it has not yet been successfully challenged in court.
Rodriguez acknowledged the threat directly: "When we were staffing that bill, I don't think any of us at that time truly understood the devastation that that bill would carry. And so seeing it from a municipal side, it is in the back of our mind a concern, yes."
There is also speculation that the next legislative session could bring new efforts to explicitly strip cities of the power to regulate data centers. Rodriguez's response to that prospect was defiant: "Do we want to sit here and utilize the tools that we still have, or do we want to sit here and govern in fear? And I refuse to govern in fear."
Notably, State Senator Betancourt — known for his hardline stance on city authority — was reported by the Texas Tribune to be planning outreach to San Marcos. As of the time of this report, Rodriguez says that contact has not yet occurred, which she finds telling: "Normally when there is concern, the state is pretty swift. So the timing and the delay is making this a whole lot more interesting."
Why Is Sid Miller Calling Out Greg Abbott on Data Centers?
In one of the more remarkable public moments in recent Texas Republican politics, Agriculture Commissioner Sid Miller went on record with a blistering critique of Governor Greg Abbott's handling of the data center issue. Just last November, Abbott was cheerleading for data centers, positioning Texas as the "epicenter of AI development." Now, amid mounting public backlash, Abbott is calling on the legislature to regulate data center water and electricity use and eliminate their tax breaks — but not until the regular session convenes in January.
Miller is not buying it. "He's just kicking the can down the road hoping he can get reelected," Miller said. "He's passing the buck. He doesn't really want to do it, or he'd do it now. He'd do it today."
Miller is calling on Abbott to convene a special legislative session to address data centers immediately, arguing that waiting until the regular session means any resulting laws won't take effect until September 2027 — far too late given the pace of development. He also accused Abbott of effectively signaling to data center investors and campaign donors that they have a window to break ground on new projects before regulations kick in, allowing them to be grandfathered in.
"It's a wink and a nod to his campaign supporters," Miller said bluntly. "He's talking out of both sides. He's actually burning the candle at both ends, and his fingers are gonna get burnt in the middle."
When asked if he had tried to reach Abbott privately before going public, Miller was candid: "I've never even got a meeting in 12 years with the man. He won't meet with me. He won't reply to my emails, never returns a phone call. Crickets." Abbott's office, for its part, referred all questions back to the governor's earlier statement calling for legislative action next year.
What Is the Texas Stock Exchange and Is It Real?
Amid all the political turbulence, Texas also hit a significant economic milestone this week. The Texas Stock Exchange (TXSE), announced in 2024 as a startup challenger to NASDAQ and the NYSE, began test trading this week and is scheduled to go fully live with thousands of stocks in the coming weeks.
Even more remarkable: NASDAQ and NYSE have both opened their own Texas-based offshoot exchanges in response — a move that Daniel Hoverman, head of corporate and investment banking at Texas Capital Bank, called a direct result of TXSE's boldness. "It's a real credit to the Texas Stock Exchange for being the first mover and really being the catalyst that moved the market from New York to Texas in a meaningful way," Hoverman said.
Hoverman believes this is part of a longer-term trend toward Texas becoming a dominant financial hub, pointing to the state's university system, labor force, and business-friendly government. He predicted that within a decade, more S&P 500 companies could be headquartered in Texas than in New York.
Does Tallarico's $30M Fundraising Lead Actually Matter?
In the 2026 Texas U.S. Senate race, Democrat James Tallarico posted a $30 million fundraising haul in Q2 — more than three times what Republican incumbent Ken Paxton raised in the same period. Political analysts were divided on what it means.
Bud Kennedy of the Fort Worth Star-Telegram argued the money will have downstream benefits for Texas Democrats even if Tallarico doesn't win, helping lift other candidates on the ballot. But Natalie Haddad cautioned that Paxton benefits from a well-organized base of MAGA-aligned donors and PACs who can rapidly close financial gaps, and that grassroots Republican enthusiasm heading into a midterm year should not be underestimated.
What Would Closed Primaries Mean for Texas Voters?
Finally, Lieutenant Governor Dan Patrick has signaled that closed primaries — which would require voters to register with a party before participating in that party's primary — could pass in the next Texas legislative session. Currently, Texas voters can choose which primary to vote in without declaring a party affiliation.
Jessica Husman of VoteBeat noted the practical hurdles: Texas does not currently have the registration infrastructure to support closed primaries, meaning implementation would take significant time and money. She also raised a broader political risk for Republicans: "People generally like the open primary system in Texas. It's easy. People can choose which party they want to vote for." Whether the push for ideological purity outweighs those concerns remains one of the more interesting questions heading into the next legislative session.
