Last week, a rural Texas county enacted a one-year moratorium on data center construction, potentially imperiling as many as eight planned projects in the county. The action in Texas adds to a growing number of examples across the United States in which public opposition has the potential to materially affect data center projects. Given current public sentiment, stakeholders should continually and proactively recalibrate their mitigation strategies and deploy multidisciplinary, geographically fluent teams to anticipate and manage project risk.
Hill County Moratorium
With an estimated 400 data center projects either in development or operating statewide, Texas has been seen as an ideal location for developers. Texas aligns well with core siting criteria for hyperscale data centers—power, land, cost, and a friendly regulatory environment. Given the state’s preeminence in data center development, a recent decision in Hill County, Texas, is garnering particular attention. There, by a 3–2 margin, county officials enacted a one-year moratorium on new data center construction in unincorporated areas. The measure followed substantial public opposition to the rapid influx of proposed projects.
Residents in Hill County expressed concern about the potential impacts on water use, electricity demand, infrastructure, and quality of life. County leadership has characterized the moratorium as a temporary pause intended to provide time to study the effects of large-scale data center development and to assess how best to regulate the industry within the county’s limited authority. Even if temporary, the moratorium may materially affect early-stage projects that are not yet under active construction and therefore are subject to the moratorium. Significant questions concerning the authority of Texas counties to enact such moratoria remain, and legal challenges are likely to follow.
Public Opposition Is National
Hill County’s moratorium is part of a broader emerging pattern. Several other Texas counties—including Hays and Hood counties—have considered similar pauses on data center development, while others, such as Somervell and Ellis counties, have formally requested state-level intervention. On Monday, 18 May Texas Agriculture Commissioner Sid Miller called for a moratorium on new hyperscale data center development in the state, pointing to costs to farmers and strains to the power grid. Although most of these efforts have not resulted in adopted moratoria—often because of legal uncertainty regarding county authority—the volume of proposals and public opposition demonstrates a growing trend in Texas of jurisdictions seeking to slow or condition data center buildout.
The trend is not confined to Texas, however. Projects across the United States are facing pronounced challenges because of public opposition. Public backlash has manifested in several consequential ways across jurisdictions, including the following:
- Voters have removed elected officials who supported data center projects, reflecting direct electoral backlash against approving authorities (Festus, Missouri).
- Voters have adopted ballot initiatives requiring approval of tax incentives for data centers, effectively restricting development support (Port Washington, Wisconsin).
- Courts have invalidated project approvals for failure to comply with statutory notice and procedural requirements, halting development (Prince William County, Virginia).
- Local governments and developers have abandoned projects in response to organized community opposition and sustained public protest (New Brunswick, New Jersey).
- Residents have filed lawsuits challenging rezonings and approvals on environmental and procedural grounds, seeking to block projects (Coweta County, Georgia).
- State legislatures have reconsidered and proposed changes to tax incentives and cost-allocation frameworks, affecting project economics (North Carolina—statewide).
- Communities have opposed the energy infrastructure needed to support data center campuses, including dedicated or co-located generation facilities (Hilliard, Ohio).
Navigating Risk in a Dynamic Environment
Developers, purchasers, investors, and other project participants must anticipate that community opposition to data center development will persist. To manage project impacts and mitigate investment risk, heightened diligence, early local engagement, and bespoke legal assessments are necessary. Boilerplate force majeure and material adverse change clauses may be ill-suited to this dynamic risk environment, and a lack of familiarity with state and local laws and stakeholders could prove costly.
For project execution, transparent communication regarding project impacts, meaningful participation in public processes, and early retention of counsel familiar with local zoning, land use, and administrative procedures are recommended. Equally important is ensuring strict compliance with procedural requirements governing notice, hearings, and approvals, as technical defects can provide a basis for unwinding even fully approved projects.
In addition, the convergence of land use, environmental, energy, and political considerations requires a multidisciplinary legal strategy from the outset. Data center projects now routinely implicate overlapping regulatory regimes, including zoning and permitting, environmental review, energy infrastructure siting, and public utility regulation. Successfully navigating these issues requires coordinated engagement across these disciplines rather than a sequential or siloed approach, particularly in jurisdictions where public opposition is actively shaping the regulatory landscape.
Fielding a Multidisciplinary Team
The firm is positioned to assist clients in navigating data center development risks and resolving disputes if those risks materialize. The firm is also deeply engaged in key jurisdictions for data center development. In Texas, for example, our multidisciplinary legal team works seamlessly with our Texas-based state lobby team, which is presently engaged with the committees of jurisdiction holding public hearings regarding data center land use, water and energy consumption and efficiency standards, and tax abatement eligibility requirements.
Our Texas capabilities are illustrative of our broad geographic and subject-matter reach. In an environment where public opposition increasingly shapes project feasibility, an integrated legal and policy strategy—grounded in local knowledge and national experience—is essential to advancing data center development successfully.
