A Texas County Rejected a Data Center Deal. It Still Can't Say No.

On Tuesday, commissioners in Hood County, Texas voted 3-1 to reject a scaled-back settlement offer from Sailfish, the developer behind the Comanche Circle data center complex outside Granbury, then voted unanimously to deny Sailfish's appeal of the county's permit decisions on the project. Read on its own, that looks like a local government standing up to a hyperscale buildout. Read against the legal structure underneath it, it is closer to the opposite: a county with no zoning authority to block the project at all, trying to extract concessions through negotiation because negotiation is the only lever it has left.

That distinction is the real story here, and it matters well beyond one Texas county. Unincorporated areas in Texas carry none of the land-use zoning power that cities hold — counties can regulate only what the legislature explicitly lets them regulate, a narrow list that covers things like floodplain rules and a handful of statutory watershed protections, not general land use. Nearly half of the roughly 248 data centers currently planned statewide are sited in exactly that regulatory gap, according to reporting compiled earlier this year. Hood County, with Comanche Circle and several related proposals stacked onto more than 7,000 acres, has become the test case for what happens when that gap meets a multi-gigawatt build.

What was actually on the table

The rejected settlement would have cut Comanche Circle's footprint in the county from about 2,523 acres to roughly 1,375, in exchange for commitments on setbacks, cooling methods, light-pollution controls, and county road repairs. Sailfish's managing partner, Ryan Hughes, framed the offer in an October 1 email to county officials as the version of the project with guardrails attached — and warned that rejecting it would not shrink the project, it would just remove the restrictions. Commissioner Kevin Andrews, the lone vote to accept the deal, captured the bind precisely: "We have been offered concessions that we can't regulate." The county has no permitting mechanism that forces setbacks or cooling specifications on its own; the only way it gets them is if a developer agrees to them voluntarily, under the threat of litigation that the county is also told, repeatedly, it would likely lose.

We have been offered concessions that we can't regulate.

That threat isn't abstract. A state senator who chairs the Senate's Local Government Committee has already written to the Texas attorney general this year arguing that counties lack constitutional or statutory authority to impose even temporary building moratoriums, let alone zoning-style restrictions — a position that helped kill an earlier Hood County proposal to pause industrial development for six months while it studied water and power impacts. Developers have sued the county twice already. Hughes's email reads less like a negotiating tactic and more like a preview of a third suit if the appeal went the way it did.

The scale behind the fight

Comanche Circle itself is not a modest project to be fighting over. Sailfish's full build-out plan covers roughly 2,600 acres across nine campuses for up to 5 gigawatts of capacity, with a first phase of five campuses totaling 3.2 GW on about 905 acres. The power strategy is a hedge: up to 600 MW of behind-the-meter natural gas generation targeted within 24 months, with the remaining phase-one capacity — roughly 2,600 MW — expected via additional gas-fired power islands and utility grid delivery by late 2027 and 2028. Around 400 acres are held in reserve for longer-lead options, including on-site small modular reactors and solar. Hughes and Sailfish are simultaneously advancing two related, similarly unnamed-scale proposals, Project Lion and Project Panther, in the same general area — meaning the county's current fight is not really about one site, but about the template for several.

That's the detail supply-chain vendors should sit with. A 3.2 GW phase one implies turbine orders, substation steel, chiller and cooling equipment, and construction labor contracts being planned or placed against a site-control picture that is still legally unsettled a year into the process. Entitlement in unincorporated Texas is comparatively easy to obtain up front — there's no zoning board to clear — but it is also comparatively easy to keep contesting after the fact, because the same absence of county authority that let the project start cuts against the county ever issuing a decision that sticks without a fight. Vendors reading site-control and permitting status as a proxy for schedule risk should treat a Texas unincorporated-county entitlement differently than a city-zoned one: faster to get, but with a longer tail of litigation and renegotiation risk attached to the same acreage.

Soft leverage, hard numbers

What leverage Hood County does have is almost entirely collateral to land use itself. A 1999 state law gives it narrow authority tied to protecting the watershed that feeds Lake Granbury and the Brazos River, and the county has asked the attorney general to clarify how far that authority extends — without an answer yet. Local groundwater district boards can deny water-supply requests, which has already forced at least one Sailfish-linked proposal back to the table. And the county can negotiate property-tax abatements, which one county official has openly described as possibly the only real bargaining chip left. None of that is zoning. All of it depends on the developer needing something from the county badly enough to trade for it — water access, a tax break, goodwill ahead of the next proposal — rather than on the county being able to simply say no and have it hold.

The pattern forming in Hood County is likely to recur anywhere a hyperscale or merchant data center developer is building in a state where county land-use authority is this thin — and Texas, with roughly 335 existing data centers and most of the 248 in the pipeline sited outside city limits, is where that pattern will show up first and most often. For vendors pricing in siting and permitting risk on Texas projects specifically, the signal from this week isn't that Comanche Circle is in trouble. It's that "permitted" and "entitled" in unincorporated Texas counties are provisional in a way they aren't in zoned jurisdictions — and that the gap tends to get resolved through private settlement leverage, lawsuits, and legislative letters, not through a planning commission vote that anyone can treat as final.