13 Gigawatts of Texas Data Center Capacity Now Face Regulatory Uncertainty

The expansion of artificial intelligence infrastructure in the United States faced a sharp policy shift following the general elections held on November 3. Voters across the nation approved regulations designed to limit the construction and operation of new data facilities. These results create immediate obstacles for companies planning major capacity increases in the coming years.

Rebud Consulting, a polling firm that tracks these initiatives, reported that 38 out of 44 measures across ten states passed. The successful proposals included various moratoriums and outright bans on new development. Only one measure allowed a project to proceed without major procedural hurdles. Even that victory required developers in a North Dakota city to fund independent reviews and hold public hearings for any new or expanded projects.

Analysts indicate that these new rules will not immediately disrupt sites that are already approved or under construction through 2027. The primary impact is expected to fall on projects planned for 2028. This timing creates a potential gap in the industry's growth trajectory as companies adjust to the new legal environment.

Voters also elected officials with anti-AI platforms in states currently building the most data center capacity. The election of these leaders adds a political layer to the regulatory changes, giving new state authorities the power to influence how projects move forward. The most consequential result occurred in Texas, where Democratic challenger Gina Hinojosa won the governor’s race. Axios reported that her victory could alter the calculations behind the national AI buildout.

Bloomberg noted that Hinojosa’s election has left developers facing a difficult scenario, as Texas is considered the center of the current AI boom. The state was expected to account for more than 41 percent of added data center capacity in 2028. With Hinojosa in office, approximately 13 gigawatts of data center capacity is now exposed to new regulatory risks. She has stated that she plans to delay projects as long as necessary to pass laws that address impacts on water, electricity, air, and property rights.

Gordon Johnson of GLJ Research noted that projects in Texas that already have power, permits, and steel in place will continue to move forward. However, those with power but lacking state environmental permits may slip by 12 to 18 months. Johnson warned that Hinojosa would impose a moratorium until legislation is passed that gives communities a voice, protects household utility bills, and ends tax incentives for data centers.

Libby Cantrill, head of public policy at PIMCO, warned that even if statewide moratoria do not result, the AI buildout will likely face more friction. She said developers will likely have to make more concessions to proceed. Some projects may leave the state entirely, potentially moving to Louisiana or Georgia, or perhaps going nowhere at all.