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Spotlight

An Energy Developer Is Fighting a Data Center in Texas

Things in Sulphur Springs are getting weird.

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Energy production and a data center.
Heatmap Illustration/Library of Congress, MSB Global, Luminant

Texas Attorney General Ken Paxton is trying to pressure a company into breaking a legal agreement for land conservation so a giant data center can be built on the property.

The Lone Star town of Sulphur Springs really wants to welcome data center developer MSB Global, striking a deal this year to bring several data centers with on-site power to the community. The influx of money to the community would be massive: the town would get at least $100 million in annual tax revenue, nearly three times its annual budget. Except there’s a big problem: The project site is on land gifted by a former coal mining company to Sulphur Springs expressly on the condition that it not be used for future energy generation. Part of the reason for this was that the lands were contaminated as a former mine site, and it was expected this property would turn into something like a housing development or public works project.

The mining company, Luminant, went bankrupt, resurfaced as a diversified energy company, and was acquired by power giant Vistra, which is refusing to budge on the terms of the land agreement. After sitting on Luminant’s land for years expecting it to be used for its intended purposes, the data center project’s sudden arrival appears to have really bothered Vistra, and with construction already underway, the company has gone as far as to send the town and the company a cease and desist.

This led Sulphur Springs to sue Vistra. According to a bevy of legal documents posted online by Jamie Mitchell, an activist fighting the data center, Sulphur Springs alleges that the terms of the agreement are void “for public policy,” claiming that land restrictions interfering with a municipality’s ability to provide “essential services” are invalid under prior court precedent in Texas. The lawsuit also claims that by holding the land for its own use, Vistra is violating state antitrust law by creating an “energy monopoly.” The energy company filed its own counterclaims, explicitly saying in a filing that Sulphur Springs was part of crafting this agreement and that “a deal is a deal.”

That’s where things get weird, because now Texas is investigating Luminant over the “energy monopoly” claim raised by the town. It’s hard not to see this as a pressure tactic to get the data center constructed.

In an amicus brief filed to the state court and posted online, Paxton’s office backs up the town’s claim that the land agreement against energy development violates the state’s antitrust law, the Texas Free Enterprise and Antitrust Act, contesting that the “at-issue restriction appears to be perpetual” and therefore illegally anti-competitive. The brief also urges the court not to dismiss the case before the state completes its investigation, which will undoubtedly lead to the release of numerous internal corporate documents.

“Sulphur Springs has alleged a pattern of restricting land with the potential for energy generation, with the effect of harming competition for energy generation generally, which would necessarily have the impact of increasing costs for both Sulphur Springs and Texas consumers generally,” the filing states. “Evaluating the competitive effects of Luminant’s deed restrictions as well as the harm to Texans generally is a fact-intensive matter that will require extensive discovery.”

The Texas attorney general’s office did not respond to multiple requests for comment on the matter. It’s worth noting that Paxton has officially entered the Republican Senate primary, challenging sitting U.S. Senator John Cornyn. Contrary to his position in this case, Paxton has positioned himself as a Big Tech antagonist and fought the state public utilities commission in pursuit of releasing data on the crypto mining industry’s energy use.

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Q&A

Why the Wilderness Society Backs a Data Center Moratorium

Talking with Dan Hartinger, the land conservation group’s senior policy director.

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The Q&A subject.
Heatmap Illustration

This week’s Q&A is with Dan Hartinger, senior policy director for The Wilderness Society, a prominent land conservation organization in D.C. that this week called for a moratorium on data center development on public land. The public statement was relatively scant on details about the group’s stance, and a decade of reporting on policy in Washington has taught me that its positions are quite influential, especially in more traditional outdoor recreation and conservationist circles that are also often bipartisan. So I reached out and asked if someone could further explain the society’s position, and Dan obliged.

The following chat was lightly edited for clarity.

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Hotspots

Data Center Outrage Catches Up to Renewables Outrage in Michigan

Plus more of the week’s biggest development fights.

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The United States.
Heatmap Illustration/Getty Images

1. Central Michigan – I regret to inform you of this back-and-forth between candidates running for Congress and a would-be constituent because it’s a warning sign for the renewable energy sector (and sort of broke my brain).

  • This week brought the first and likely only debate between Rep. Tom Barrett and Sunrise Movement cofounder Will Lawrence, who are locked in a tight contest over the Michigan 7th congressional district. As I’ve written, their race is a must-watch not only for control of the U.S. House but also the political fortunes of the data center sector.
  • The debate contained a remarkable exchange: Moderators played taped remarks from Paula Caltrider, identified as “a local resident” in the city of Mason to ask the candidates a question about data centers. Instead, she offered a comment. “You know, you can’t be a part of this no data center movement without renouncing the large solar farms and dangerous battery storage facilities that power these data centers.” (Quick TL;DR on Caltrider: She’s been quoted in national media coverage of the data center backlash and last year won a legal settlement after allegedly being fired for refusing a vaccine mandate.)
  • Barrett then ran with Caltrider’s baton. “I appreciate Paula linking these together, the stripping away of local control that took place in pursuit of this Green New Deal agenda in Lansing that took away control from communities” – a reference to the state’s primacy law that other Michigan Republican candidates have opposed.
  • Lawrence, whose support for a federal data center moratorium made him a national political test case, did not take the bait, nor did he criticize renewable energy. Instead, this part of the debate became a tit-for-tat about whether the sitting congressman once backed tax breaks for data centers. “He stuck his finger up into the wind, saw which way it was blowing, did a complete 180 on this issue,” Lawrence said. Then Barrett and Lawrence got into a confusing back-and-forth about whether the Inflation Reduction Act was a giveaway to data centers.
  • To the best of my knowledge, this is the first time the Data Center Trojan Horse has reared its ugly head on any kind of prominent debate stage, but it won’t be the last. For example: The Wisconsin gubernatorial debate is Oct. 21, and we’ve warned you about that one.

2. Doña Ana County, New Mexico – I suggest you pay closer attention to the federal permitting fight playing out over Oracle’s Project Jupiter.

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Spotlight

The Data Center Backlash Is Coming for Permitting Reform

The Senate’s compromise bill enters the chat at a moment when federal land and anti-pipeline advocates are already quite activated.

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The Capitol and a data center.
Heatmap Illustration/Getty Images

The AI data center backlash is getting louder in D.C. ahead of the midterms – and it’s poised to collide head-on with the new permitting reform deal being negotiated in Congress.

This week, major environmental advocacy organizations are taking large public steps to lean in on the data center fight. The League of Conservation Voters and Natural Resources Defense Council, I’ve been told, are imminently announcing a $250,000 ad buy in the Washington, D.C. market focused entirely on decrying fossil fuel-powered data centers and Trump administration policies to speed up their construction. The Wilderness Society, a prominent land conservation organization, announced it now supports a moratorium against data centers on “public lands” focused on the roughly half billion acres under the Interior Department’s stewardship. And Earthjustice on Thursday did a detailed report claiming that 80% of the data centers under development “bringing their own power” are going to rely on gas generation.

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