2027 Legislative Session Dates
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Key Takeaways:

  • Texas has become a focal point for data center regulation, with at least 100 local ordinances considered by municipalities since July 2025 addressing development, moratoriums, and community concerns.
  • Local governments in Texas have adopted varied approaches to managing data center growth, including moratoriums like Austin County's pause on new AI data center developments and regulatory frameworks like El Paso's 300-foot buffer requirements from residential areas.
  • A lawsuit filed against Hill County over its data center moratorium led the county to rescind the policy and caused other Texas counties to abandon similar plans, demonstrating the legal risks facing local regulation efforts.
  • Gov. Greg Abbott ordered a comprehensive audit of all data centers connecting to the Texas electricity grid in August 2026, effectively creating a statewide pause on new projects until the review is complete.
  • The tension between state and local authority over data center development in Texas reflects broader national debates about balancing economic growth with community concerns over energy consumption and infrastructure costs.

Legislation around data center regulation has exploded across the country at both the state and local levels, and perhaps no more so than in Texas. The Lone Star State is second only to Virginia in terms of data center development, with at least 248 data center projects planned throughout the state. This high level of rapid data center expansion has led to a flurry of local ordinances regulating data center developments and even outright banning new developments from operating. The quantity of the local legislation reached such a volume that the state stepped in to issue a temporary moratorium to assuage local concerns about data center developments.

Since July 1, 2025, at least 100 local ordinances have been considered by Texas municipalities regarding data center developments. Most of these either regulate general data center development or are resolutions of disapproval of the scope and pace of data center proliferation (with some exceptions that concern individual data center developments).

Home Rule and Local Authority in Texas Data Center Regulation

As a Dillon’s Rule state, Texas grants limited home rule powers to cities above 5,000 in population to govern themselves, but their laws must not conflict with the Texas Constitution or the general laws of the state. Counties in Texas have even further restrictions on their home rule powers; for example, they generally lack the zoning authority that home-rule cities possess.

Defining Key Terms

Home Rule Powers

Home rule powers refer to the authority granted to certain cities or municipalities to govern themselves and enact local ordinances, as long as they do not conflict with state constitutions or general laws. In Texas, cities with populations over 5,000 may adopt home rule charters, giving them broader self-governing powers than counties, which generally lack such authority.

Types of Local Data Center Ordinances in Texas

We’ve seen some general trends regarding the types of local ordinances addressing data centers, and we can use Texas as an interesting case study.

Moratoriums and Temporary Bans

The first is a moratorium on data center developments. For example, Austin County, a county of about 30,000 people west of Houston, passed an ordinance in July adopting a countywide moratorium on new artificial intelligence data center and battery energy storage system (BESS) developments. This moratorium is not a permanent ban on such developments, but rather a pause so that the county can evaluate the overall impact of such facilities on life in the county.

For context, in Texas, BESS developments, cryptocurrency mining facilities, and new solar farms are often covered under ordinances regulating data centers. For example, the Dallas suburb of Mesquite established a dedicated regulatory framework for both data centers and BESS developments in July, while Milam County, a rural county of about 25,000 people northeast of Austin, included solar plants in its resolution calling for stricter statewide standards on data center developments.

Regulatory Frameworks and Zoning Restrictions

The second type is the adoption of frameworks for future data center developments, like what is occurring in Mesquite and El Paso. El Paso’s regulations, adopted in July, require all new data center developments to maintain a minimum distance of at least 300 feet from residential neighborhoods or ecological sites, plus includes noise mitigation requirements. It also requires all new data center developments to obtain a special use permit subject to approval and oversight by the El Paso City Council. Other localities in Texas regulating data centers in this manner include Forney, an exurb of Dallas that in April passed an ordinance limiting data center developments to the city’s light industrial zoning districts with a conditional use permit and with a 1,000-foot buffer from any residential property. Another Dallas suburb, Lewisville, passed an ordinance in June requiring a special use permit for all future data center developments, with two public hearings required for approval.

Legal Challenges to Local Data Center Regulations

Legal action against one Texas county may threaten this proliferation of local regulation of data center developments. In May, Hill County, a county of about 35,000 people north of Waco, passed a one-year moratorium on data center construction in unincorporated areas of the county, the first county to take such action against data centers in the state. A few weeks later, the county rescinded the moratorium in favor of a checklist of requirements for developers after a local data center developer filed a lawsuit against the county for over $100 million in damages, claiming that the moratorium would interfere with a data center project it had planned for land it had purchased in the county. As a result of this lawsuit, Tom Green County in West Texas dropped its own plans for a data center moratorium.

Statewide Response and Future Outlook

Governor’s Directives and State Moratorium

In early August, Texas Gov. Greg Abbott (R) directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to conduct a comprehensive audit of all data centers connecting to the Texas electricity grid. Until this audit is completed, no data center project will move forward in the state, and no data center will be allowed to connect to the state grid if it does not meet PUCT and ERCOT requirements. This action follows up on Gov. Abbott’s June 10 directive ordering PUCT and ERCOT to take action to protect the state’s residents from increased energy costs resulting from the rapid expansion of data centers in the state.

Political and Legislative Developments

Abbott is locked in a closer-than-expected race for reelection with Democratic state Rep. Gina Hinojosa, who has called for Abbott to issue a full moratorium on new data center developments until the Legislature can meet to enact statewide regulations.

National Trends and Ongoing Monitoring

Data center development regulation is not just a hot-button issue in Texas but in all states. Hundreds of pieces of legislation have been introduced this year regarding data centers at the state and local levels. MultiState’s Issue Management team remains committed to tracking this issue and its impact across the country. Learn more about our data center coverage here.

Track State Data Center Policy

Last year, states considered hundreds of data center bills, and we expect activity to continue growing in 2026. To stay on top of this rapidly evolving landscape, we've launched MultiState Policy Watch: Data Centers – a subscription featuring legislative analysis, trend summaries, and expert insights across energy, tax, water, zoning, and other policy areas impacting data centers. Sign up here.

Frequently Asked Questions

What types of local ordinances are Texas cities and counties passing to regulate data centers?

Texas localities are primarily passing three types of ordinances: moratoriums that temporarily pause new data center developments, regulatory frameworks that establish zoning restrictions and permitting requirements, and resolutions expressing disapproval of data center proliferation. These ordinances often include buffer requirements from residential areas (ranging from 300 to 1,000 feet), special use permit mandates, and noise mitigation standards.

Why did Hill County rescind its data center moratorium in Texas?

Hill County rescinded its one-year moratorium on data center construction after a local data center developer filed a lawsuit against the county for over $100 million in damages. The developer claimed the moratorium would interfere with a planned data center project on land it had already purchased, prompting the county to replace the moratorium with a checklist of requirements for developers instead.

What is Governor Abbott's current policy on new data center projects in Texas?

Governor Abbott directed the Public Utility Commission of Texas and ERCOT to conduct a comprehensive audit of all data centers connecting to the Texas electricity grid, and no data center project will move forward until this audit is completed. Additionally, no data center will be allowed to connect to the state grid if it does not meet PUCT and ERCOT requirements.

Do Texas counties have the same authority as cities to regulate data center development?

No, Texas counties have more limited home rule powers than cities when it comes to regulating data centers. While Texas grants home rule powers to cities above 5,000 in population, counties generally lack the zoning authority that home-rule cities possess, restricting their ability to regulate land use and development.

Are cryptocurrency mining facilities regulated under the same ordinances as data centers in Texas?

Yes, in Texas, cryptocurrency mining facilities are often covered under the same ordinances that regulate data centers. Battery energy storage system (BESS) developments and new solar farms are also frequently included in these data center regulatory frameworks at the local level.