Texas AI data center construction faces potential pause under new governor

Governor-elect Gina Hinojosa wants to stop the construction of massive artificial intelligence data centers in Texas. Her goal is to pause building until the state legislature passes new laws. These laws would give local communities more control over where and how these facilities are built.

The proposal creates immediate uncertainty for North Texas. The region is positioned to become the largest data center market in the United States. Dallas and Fort Worth sit at the center of this projected growth. A temporary halt could change the timeline for these projects.

Michael Webber, an energy policy researcher at the University of Texas at Austin, said the threat of a pause is enough to make developers look elsewhere. He noted that companies are in a race for speed to power. Texas has been attractive because it allows for quick movement. If that speed slows, other states might become more appealing to investors.

Webber believes a short pause could help different groups find common ground. He said a brief stop might allow communities, companies, and lawmakers to negotiate effectively. However, he worries a longer halt could hurt the nation's ability to compete with China in the AI race. Texas is slated to be the top state for future data center construction.

"I think that a moratorium or the threat of a moratorium is enough to get the developers to consider other states," Webber said. "They are in a race and they want speed to power and one of the reasons why they like Texas is because they can move quickly here."

He argued that a conversation is more important than just a stop. "That's the concern I have," he said. "And that's why I think it's important not to just have a moratorium, but instead to have a conversation and a negotiation."

Webber expects the Texas data center market to slow down in the short term. He predicts it will accelerate again once new rules are in place. He believes Texas will remain number one in the sector, similar to its rankings in wind, batteries, and solar power.

Mohammed Islam, a researcher at UT Arlington who advises the City of Fort Worth's Data Center Commission, sees a different opportunity. He told NBC 5 Investigates that many operators want to collaborate with regulators. He believes working together will help clarify the impacts of these projects.

"I believe if everyone works together, we'll be able to clarify these things, really understand what are the impacts," Islam said.

The Data Center Coalition, which represents the industry, issued a statement on Tuesday. Jess Heck, the Texas Director of Government Affairs for the group, said the organization looks forward to working with state leadership and local officials. The goal is to build trust and support responsible growth in the state.

Governor Greg Abbott had already paused state permits for new data centers before the election. This earlier pause gave state agencies time to audit projects in the pipeline. The agencies were also analyzing how these projects would impact the electric grid. Many analysts expected the permitting process to restart in December once that review was complete.

Now that a new governor will take office in January, the timeline has shifted. The previous review was set to finish in December. The change in leadership introduces new questions about what will happen to the projects currently in the pipeline.