Data Centers Are Not the Problem. Bad Policy Is.

Estimated Time to Read: 24 minutes

Texas is quickly becoming one of the central battlegrounds in the national debate over artificial intelligence, cloud computing, energy demand, water infrastructure, and economic growth. Data centers are at the heart of that debate.

Across the state, activists, lawmakers, local officials, landowners, and industry representatives are asking fair questions. How much electricity will these facilities require? How much water will they use? Who pays for the transmission, generation, roads, water systems, and local infrastructure needed to support them? What happens to neighboring landowners if noise, light, traffic, drainage, or industrial impacts spill over onto surrounding property? Should data center developers receive tax abatements or special economic development deals from local governments? Should local communities have more information before major projects move forward?

Those are legitimate questions. Conservatives should not dismiss them, but legitimate concerns do not automatically justify bad policy.

As Texas prepares for the next legislative session, a growing chorus of activists and policymakers is pushing for a more restrictive approach to data center development. Some are calling for countywide votes before data centers can break ground. Others are promoting regional planning commissions, expanded local authority, annexation tools, and other new permission structures. Much of this is being framed in conservative language: local control, decentralization, property rights, and protection of taxpayers.

Those words matter. They appeal to real frustrations. Texans are tired of closed-door deals, taxpayer subsidies, government favoritism, and political insiders cutting arrangements that ordinary citizens are asked to live with but never got to approve.

Yet conservatives should be careful. Not every policy that invokes local control advances liberty. Not every new government tool that claims to protect property rights actually does so. Not every regional planning body is a victory for decentralization. Not every voter approval requirement is consistent with free enterprise.

The true conservative position on data centers is not blind boosterism. It is not corporate welfare. It is not giving developers special treatment or forcing taxpayers and ratepayers to absorb the costs of private projects. But neither is the true conservative position anti-growth obstruction. It is not voter vetoes over lawful private development. It is not regional planning commissions empowered to slow, condition, or pressure private investment. It is not treating rising demand for electricity, water, and digital infrastructure as a threat to be managed by government rather than a market signal to be met with more supply.

The conservative answer is simple: no subsidies, no hidden costs, no special favors, no socialized burdens, no disregard for neighboring property owners, and no new government barriers that punish growth.

Texas should build more energy, expand infrastructure, protect property rights, preserve price signals, reject corporate welfare, and keep the state open for innovation.

Texas Data Center Growth Is a Market Signal, Not a Crisis

Data centers are not random industrial projects. They are part of the infrastructure behind artificial intelligence, cloud computing, cybersecurity, financial technology, energy management, logistics, health care, manufacturing, and nearly every major sector of the modern economy.

As more businesses, consumers, and public institutions rely on digital systems, the demand for computing capacity grows. That demand requires physical infrastructure. Servers need buildings. Buildings need power. Cooling systems need water or alternative cooling technologies. Large facilities need transmission access, roads, fiber connectivity, and predictable regulatory conditions.

Texas is attracting these investments because it has historically offered what growing industries need: abundant land, a strong business climate, relatively competitive energy markets, a culture of private enterprise, and a reputation for allowing builders to build.

That is not a problem. That is a strength.

The presence of data centers does not mean Texas is being invaded by outside forces. It means Texas is positioned to participate in the next generation of economic growth. The question is not whether Texas should be hostile to that growth. The question is whether Texas will manage that growth through market discipline and infrastructure expansion, or whether it will panic and create new political barriers.

A pro-liberty approach begins by recognizing that demand is not the enemy. Rising electricity demand is not inherently a crisis. Rising water demand is not inherently a reason to stop development. Rising infrastructure needs are not inherently proof that growth has gone too far. Demand is information. It tells producers, utilities, investors, entrepreneurs, and policymakers where supply needs to increase.

If Texas responds to demand by building more energy, improving transmission, expanding water infrastructure, modernizing permitting, and allowing prices to reflect real costs, the state can remain a national leader. If Texas responds by politicizing development, discouraging investment, and empowering government bodies to ration opportunity, the state will drift away from the very model that made it successful.

Texas has grown because it has generally trusted builders, entrepreneurs, workers, families, and investors more than planners and bureaucrats. The data center debate should not become the moment when conservatives abandon that principle.

Reject Data Center Corporate Welfare

The strongest argument raised by data center critics is not about data centers themselves. It is about government favoritism.

Conservatives should be clear: data centers should not receive special taxpayer subsidies, preferential tax abatements, or politically negotiated deals that shift the cost of private development onto the public.

Texas has a long and unfortunate history of economic development programs that allow politically favored industries to receive benefits unavailable to ordinary taxpayers and small businesses. These deals are often sold as job creation, tax base expansion, or competitiveness, but at their core, they are usually government attempts to pick winners and losers.

That should concern conservatives regardless of the industry involved.

If a data center is economically viable, it should be able to stand on its own. If a company wants to build in Texas because the state offers a strong business climate, reliable infrastructure, and access to growing markets, that is a good thing, but if the project only works because local officials offer tax abatements, state agencies create special treatment, or taxpayers absorb infrastructure costs that should be borne by the developer, then the problem is not the data center. The problem is bad policy.

The correct conservative response is not to single out data centers for punishment. The correct response is to end corporate welfare across the board.

This is also why Texas Policy Research has made ending corporate welfare a central plank of the Texas Liberty Compact. The Compact argues that government should not pick winners and losers with taxpayer dollars, targeted incentive programs, dedicated funds, or preferential treatment for politically favored industries. That principle applies just as much to data centers as it does to film subsidies, economic development grants, energy incentives, or any other corporate welfare scheme. Texas should compete through low taxes, predictable rules, reliable infrastructure, and free enterprise, not through special deals negotiated for select companies.

Tax abatements and incentive deals should be scrutinized because they distort the market. They privilege large firms with lobbyists and consultants while ordinary homeowners, small businesses, and local entrepreneurs pay the standard tax burden. They also create political incentives for local officials to chase headline-grabbing projects while obscuring the true costs to taxpayers and existing residents.

On this point, many data center skeptics are right to raise alarms. Secretive economic development negotiations and preferential tax deals should not be defended simply because the industry involved is high-tech or economically important, but conservatives should not replace one distortion with another. The answer to special favors is equal treatment under the law, not a new regulatory regime aimed at discouraging a disfavored sector.

A conservative position should be clear and consistent. Data centers should receive no special subsidies, but they should also face no special punishment. They should receive no special tax abatements, but they also should not be singled out for new political vetoes. They should not be protected from accountability, but they should not be treated as guilty until proven innocent.

Free enterprise means neutral rules, not favoritism in one direction and hostility in the other.

Expand Supply, Do Not Ration Growth

The most common concerns about data centers involve electricity and water. Large data centers use significant amounts of power. Depending on the facility and cooling technology involved, some may also require substantial water resources. Those realities should be taken seriously. They should not be treated as arguments for blocking development.

Texas has historically grown by expanding supply. When people moved here, Texas built homes, roads, schools, businesses, and power infrastructure. When industry expanded, Texas did not tell manufacturers, refiners, energy producers, or technology companies to stop growing because they required electricity, water, land, or roads. The state created a climate where supply could rise to meet demand.

That same principle should guide the data center debate.

If electricity demand is growing, the conservative answer is to build more generation, improve transmission, strengthen grid reliability, and remove regulatory barriers that slow private investment. It is not to treat large-load users as villains for needing power. A market-oriented energy system should send accurate signals. If a data center requires interconnection upgrades, transmission investments, or other direct infrastructure costs, those costs should be transparent and properly assigned. Large-load users should not be allowed to socialize costs onto ordinary ratepayers. At the same time, policymakers should avoid using cost concerns as a pretext for discretionary control, political favoritism, or anti-growth regulation.

Cost causation is conservative. If a user creates a cost, that user should generally bear it. Cost socialization is not conservative. If private projects impose costs on the grid, taxpayers and ratepayers should not be forced to pay without accountability.

At the same time, demand suppression is also not conservative. If government responds to rising demand by creating barriers, veto points, or regulatory uncertainty, it risks driving investment elsewhere while leaving the underlying infrastructure problem unsolved.

The same logic applies to water. Texas already faces long-term water challenges. Population growth, agriculture, industry, drought conditions, aging infrastructure, and regional supply constraints all contribute to the problem. Data centers may add pressure in certain locations, but they did not create Texas’ water policy challenges.

A conservative water policy should focus on property rights, transparent usage, accurate pricing, infrastructure development, conservation incentives, desalination, reuse, and innovation. It should not begin with a presumption that data centers are uniquely illegitimate users of water.

More broadly, Texas should be willing to have a serious conversation about privatizing water rights and expanding market-based water solutions. When water is treated as a politically managed resource rather than a clearly owned and properly priced one, scarcity is often made worse by government planning, underinvestment, and misaligned incentives. A more property-rights-based system would encourage conservation, investment, voluntary exchange, and innovation far better than bureaucratic allocation or political rationing.

Many data centers are already moving toward more efficient cooling technologies, closed-loop systems, reduced water consumption, and alternative approaches because water costs and public scrutiny create incentives to innovate. Government should not block that innovation by assuming old models of water use will always define future development.

At the same time, developers should not be allowed to conceal water impacts or use political influence to secure privileged access unavailable to other users. Local residents deserve honest information. Existing water rights should be respected. Aquifers and groundwater districts should be governed consistently. Infrastructure costs should be allocated fairly.

Transparency around grid and water impacts can be useful. Texans should know whether public costs are being shifted, whether major infrastructure upgrades are needed, and whether government entities are making special commitments on behalf of private projects. But transparency should inform the public, not become a disguised veto. The conservative answer is not to prohibit growth. It is to protect rights, price resources honestly, improve infrastructure, and allow innovation to reduce strain over time.

Texas does not have a demand problem. Texas has an infrastructure challenge.

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Protect Property Rights, Not Veto Power

Property rights are central to the data center debate, but they cut in more than one direction.

A landowner who wants to sell or develop property has rights. A company that lawfully purchases land and complies with applicable law has rights. A neighboring property owner affected by noise, light, traffic, drainage, nuisance, or measurable harm also has rights. A serious conservative position must account for all of them.

It is not enough to say that developers should be free to build whatever they want, regardless of surrounding impacts, but it is also not enough to say that neighbors, local governments, or countywide majorities should have broad power to veto development simply because they dislike it.

The conservative framework should be rooted in actual harm, due process, and enforceable remedies.

If a data center creates excessive industrial noise that interferes with neighboring property use, that is a legitimate property rights concern. If lighting spills onto surrounding homes or land in a way that creates measurable harm, that should be addressed. If drainage, roads, or infrastructure impacts damage nearby property, affected owners should have a path to relief. But those concerns should be handled through clear standards, nuisance law, private rights of action where appropriate, and narrowly tailored remedies. They should not become excuses for open-ended government discretion or political vetoes over private land use.

There is a major difference between protecting a neighbor from actual harm and giving a political body the power to block lawful development because the project is unpopular. That distinction matters when considering proposals related to noise, light, and property values. Statewide standards for industrial noise and light trespass may be defensible if they are narrow, objective, measurable, and tied to actual impacts on neighboring property. A policy that protects landowners from measurable harm can be consistent with property rights. A policy that creates vague standards, litigation abuse, or arbitrary power to delay development is not.

The same caution applies to proposals requiring developers to post bonds for neighboring property values. The concern is understandable. If a project imposes burdens that reduce the value of nearby property, affected owners should not be left without recourse, but broad property value bonds raise difficult questions. How would losses be measured? Who determines whether a value decline was caused by the data center or broader market conditions? Would the bond apply before any actual harm occurs? Would it create incentives for speculative claims? Would it apply to other industrial projects, or only to data centers? Would it become a de facto tax on development?

The better approach is to strengthen clear private remedies for actual, measurable harms rather than presuming harm before it exists. Conservatives should defend property rights for both owners and neighbors. That means protecting people from real harm while rejecting political tools that allow opposition to a project to masquerade as a property rights claim.

Local Control Is Still Government

One of the most important philosophical distinctions in this debate is the difference between local control and liberty.

Conservatives often support local control because decisions made closer to the people are generally more accountable than decisions made by distant state or federal authorities. In a federalist and republican system of government, that instinct has merit. Power should not be unnecessarily centralized in Washington, D.C., or even in Austin. Decisions should generally be made at the lowest proper level of government, closest to the people affected.

But local government is still government.

Cities, counties, school districts, special districts, regional planning commissions, and other local jurisdictions are not the same thing as private citizens acting freely in the marketplace. They are political subdivisions and governing entities that exercise authority delegated by the state. In that sense, local governments are manifestations of government power just as surely as state and federal institutions are. Their proximity to the people may make them more accountable, but it does not automatically make their actions conservative, limited, or pro-liberty.

That distinction matters in the data center debate.

A countywide veto is not the same thing as individual liberty. A regional planning commission is not the same thing as property rights. A local permitting barrier is not the same thing as free enterprise. A city council, commissioners court, or regional body can violate property rights, distort markets, block lawful development, and empower political majorities over individual owners just as surely as a state agency or federal bureaucracy can.

That does not mean local concerns should be ignored. It does not mean state preemption is always correct. It does not mean Austin should dictate every land-use, nuisance, infrastructure, or development question. It means conservatives should apply the same liberty test to local government that they apply to state and federal government.

Does the policy protect individual liberty? Does it respect private property rights? Does it preserve free enterprise? Does it require personal responsibility? Does it limit government power? Or does it merely transfer control from one level of government to another?

Local control can be valuable when it restrains centralized authority and allows communities to address genuine public costs, infrastructure needs, or nuisance harms in a clear and limited way, but local control can also become local protectionism. It can become a tool for blocking competition, empowering organized activists, expanding permitting power, or giving political majorities a veto over lawful private investment.

This is why conservatives should be cautious about proposals requiring countywide voter approval before hyperscale data centers can break ground.

At first glance, the idea sounds appealing. It is framed as letting Texans decide. It appears democratic. It seems local. It gives ordinary citizens a direct voice, but a countywide vote is not merely transparency. It is not merely accountability. It is a majoritarian veto over the use of private property.

That should trouble conservatives.

If a project complies with the law, respects property rights, pays its own costs, avoids subsidies, and does not create legally cognizable harm to neighbors, why should it need permission from a countywide electorate before proceeding? What other lawful private investments would be subjected to the same standard? Manufacturing facilities? Warehouses? Energy projects? Farms? Subdivisions? Churches? Private schools? Small businesses that some neighbors dislike?

Once conservatives accept the premise that private development should be approved by popular vote, they create a dangerous precedent. Today, the target may be data centers. Tomorrow, it may be gun ranges, churches, homeschool co-ops, private schools, oil and gas projects, renewable energy projects, industrial facilities, or any other unpopular land use.

The protection of liberty cannot depend on whether a temporary political majority likes a particular project.

The same concern applies to Chapter 391 regional planning commissions. In limited circumstances, such commissions may help local governments share information, coordinate infrastructure planning, study regional issues, and create forums for public discussion. There is nothing inherently wrong with coordination, but conservatives should be careful not to mistake a regional planning body for limited government.

A Chapter 391 commission is still a government-created entity. It can become another layer of bureaucracy. It can create the appearance of local accountability while concentrating influence among officials, appointees, consultants, and organized interests. It can be used to coordinate information, but it can also become a vehicle for coordinated obstruction.

If a regional commission is used to gather data, improve public transparency, identify infrastructure needs, and help local governments understand regional impacts, it may be defensible as a limited coordination tool, but if it becomes a backdoor regional land-use authority, a pressure campaign against lawful development, or a quasi-permitting body in practice, conservatives should oppose it.

The same caution applies to expanded annexation authority, broad county health and safety authority, and special carveouts from statewide regulatory consistency laws.

Annexation can expand municipal power over landowners who may not have sought city regulation or services. Broad county authority can become a substitute for zoning. Special carveouts from state preemption can invite inconsistent local regulation, unpredictable rules, and new barriers to investment.

There may be narrow cases where local authority should be clarified to address actual health, safety, nuisance, or infrastructure harms, but any such reform should be specific, limited, rights-based, and tied to measurable impacts. It should not become a general permission structure for local officials to block disfavored projects.

The end goal is not local control for its own sake. The end goal is liberty.

True decentralization moves power away from centralized institutions and toward individuals, families, property owners, entrepreneurs, and voluntary associations. It does not simply move power from Austin to a county commission, a city council, or a Chapter 391 regional planning body. A policy does not become conservative merely because it is administered locally. The question is whether it advances liberty, protects property rights, preserves markets, and limits government power.

Where the 1836 Project Goes Wrong

The growing grassroots opposition to data centers should not be dismissed. Groups raising concerns about data center expansion are tapping into genuine frustrations about secrecy, subsidies, local infrastructure strain, water use, grid reliability, and the feeling that ordinary Texans are often left out of decisions that affect their communities.

The 1836 Project is one example of this sentiment. Its message is built around themes that resonate with conservatives: decentralization, local consent, property rights, protection of taxpayers, and opposition to backroom deals. It argues that Texans should have more authority over whether data centers move into their counties and that lawmakers should restore tools to local communities.

There are parts of that critique conservatives should take seriously.

The 1836 Project is right to question secretive tax abatements. It is right to object if developers receive special treatment unavailable to ordinary taxpayers. It is right to worry about cost shifting. It is right to raise concerns about grid impacts, water demand, and neighboring property owners. It is right to argue that politically connected companies should not use government to privatize gains while socializing costs.

But being right about the problem does not guarantee being right about the solution.

The danger is that the 1836 Project and similar efforts may respond to bad policy by creating more government power in a different form. Countywide voter approval, regional planning commissions, expanded annexation authority, broad local health and safety powers, and special regulatory carveouts may be framed as decentralization, but they can quickly become tools for obstruction.

A pro-liberty response to data center development should not ask whether government power is being exercised by Austin or by a county, city, or regional body. It should ask whether government power is being limited at all.

The real conservative concern should be whether data centers are receiving subsidies, shifting costs, violating property rights, hiding public impacts, or relying on political favoritism. If they are, policymakers should fix those problems directly.

End the subsidies. Require transparency. Assign infrastructure costs properly. Protect neighboring landowners from actual harm. Preserve water rights. Improve grid planning. Make developers pay their own way, but do not turn private development into a political permission slip. Do not create regional planning bodies that become gatekeepers over investment. Do not give local governments broad new tools to block projects based on political pressure. Do not treat data centers as the villain when the real villain is bad policy.

This is the distinction conservatives need to hold. It is possible to oppose corporate welfare without opposing growth. It is possible to protect property rights without giving political majorities a veto over private land use. It is possible to demand transparency without creating regulatory traps. It is possible to address water and grid concerns without embracing scarcity politics.

The pro-liberty answer is not to defend every data center project. The pro-liberty answer is to defend the principles that should govern all projects.

Texas Lawmakers Should Build a Pro-Liberty Data Center Agenda

As lawmakers prepare for the next legislative session, they should focus on a principled framework for Texas data center policy. Data centers should pay their own way. Taxpayers should not subsidize them. Ratepayers should not be forced to absorb costs that should be assigned to large-load users. Local officials should not cut sweetheart deals behind closed doors. State agencies should not create special carveouts or privileges. Neighboring property owners should have remedies for actual harm.

At the same time, lawmakers should reject policies that politicize private investment, create new veto points, expand local government control, or use data centers as a scapegoat for broader infrastructure failures.

The Legislature should not treat data centers as a problem to be stopped. It should treat them as a sign that Texas needs to continue building. The policy goal should be accountability without hostility.

That means transparency without obstruction. Cost causation without cost socialization. Property rights without mob vetoes. Local input without local protectionism. Infrastructure expansion without subsidies. Economic growth without corporate welfare.

Texas should welcome data centers that operate in the market, pay their own costs, respect neighboring property rights, and compete without special favors. Texas should oppose data centers that depend on taxpayer subsidies, special abatements, hidden infrastructure costs, or political favoritism. Texas should protect landowners from actual harms, but it should not empower political majorities to veto lawful private development. Texas should require transparency where public costs and infrastructure impacts are involved, but it should not turn transparency into a weapon against growth. Texas should allow local governments to coordinate where necessary, but it should not create new regional planning bodies that become gatekeepers over private investment. Texas should build energy and water infrastructure to meet rising demand, not suppress demand because government failed to plan for growth. Texas should preserve free enterprise, private property rights, personal responsibility, individual liberty, and limited government.

That is the conservative position.

Conclusion: Choose Growth Over Panic

The debate over data centers is really a debate over what kind of state Texas wants to be.

Will Texas remain a place that welcomes innovation, builds infrastructure, respects property rights, and trusts markets? Or will it become a state where major investments are subjected to political campaigns, regional planning commissions, local vetoes, and activist pressure?

Conservatives should not defend corporate welfare. They should not excuse secrecy. They should not ignore water concerns, grid impacts, or neighboring property owners. They should not allow private companies to shift costs onto taxpayers and ratepayers, but conservatives should also reject the growing temptation to treat data centers as the enemy. The enemy is bad policy.

Bad policy subsidizes politically connected companies. Bad policy hides costs. Bad policy socializes private burdens. Bad policy ignores property rights. Bad policy blocks growth instead of expanding supply. Bad policy replaces markets with political permission.

Texas does not need an anti-data-center agenda. Texas needs a pro-liberty data center agenda.

No subsidies. No special favors. No hidden costs. No political vetoes. No regional planning gatekeepers. No anti-growth panic.

Build energy. Build water infrastructure. Protect property rights. Preserve markets. Make developers pay their own way. Keep Texas open for growth.

That is how conservatives should lead on data centers.

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