Texas Data Center Regulations: What Landowners Should Watch

Texas data center regulations are being rewritten from three directions at once: the Capitol, the capital markets, and city halls. Voters elected Gina Hinojosa governor on November 3. Lubbock's planning commission sent 12 proposed rules to its City Council on November 5. Bill prefiling for the 2027 session opened November 9, and data centers were a headline category.

A tract that pencils as a data center site today may not pencil the same way after the Legislature convenes January 12, 2027. This analysis separates the Texas data center regulations that have changed from those only proposed. It also lists what a landowner should check on a specific tract.

Three Fronts Opened in One Week

Hinojosa campaigned on a moratorium on new data centers until the Legislature passes protections for ratepayers and local communities. Election results remain unofficial until the state canvass. Her inauguration is set for January 19, one week after the 90th Legislature convenes.

Lawmakers filed more than 1,000 bills on the first day of prefiling, according to Houston Public Media. Democrats flipped the Texas House on November 3. Republicans still hold the Senate. Any bill that reaches the governor's desk needs both chambers.

That split decides which Texas data center regulations can pass, and it matters for underwriting. A proposal with support in only one party is a long shot. A proposal filed by both parties, such as repeal of the sales tax exemption, deserves a place in the pro forma now.

The Texas Data Center Regulations Filed So Far

Every bill below is filed, not passed. Each of these proposed Texas data center regulations would have to clear both chambers.

Bill	Author	What it would do
SB 293	Sen. Joan Huffman, R-Houston, Senate Finance chair	Repeal the state sales and use tax exemption for data centers. Existing exemptions would end on the effective date. Pending applications would be denied.
SB 36	Sen. Judith Zaffirini, D-Laredo	Bar data centers from Chapter 380, 381 and 312 local incentive agreements. No renewals of existing agreements.
SB 35	Sen. Judith Zaffirini, D-Laredo	Require large data centers to report water use to the Texas Water Development Board.
SB 32	Sen. Judith Zaffirini, D-Laredo	Require a Public Utility Commission permit before construction begins.
HB 529	Rep. Salman Bhojani, D-Euless	Water use reporting and water conservation plans for data centers.
HB 928	Rep.-elect Armin Mizani, R-Keller	Require a city council vote inside city limits, or a commissioners court vote in unincorporated areas, to build a data center.

The sales tax exemption dates to 2013 and was expanded in 2015. It now costs the state more than $1 billion a year, the Texas Tribune reported. A Senate interim charge projects more than $3 billion in lost revenue in the 2028-2029 biennium, according to the Fort Worth Star-Telegram.

Huffman, who chairs the Senate Finance Committee, framed the repeal as a budget question. "It should not write a blank check," she said of the state.

Repeal is the piece of the proposed Texas data center regulations with bipartisan momentum. Lawmakers from both parties filed three separate repeal bills by noon Monday. Community Impact reported that a bipartisan Senate proposal to revoke the incentive had support from 23 of the chamber's 31 senators and senators-elect.

The versions differ on one point that matters to project finance. Two House repeal bills, HB 167 and HB 408, would let facilities already receiving the exemption keep it until it expires. SB 293 would not.

HB 928 matters most outside city limits, where counties have had little authority over siting. Hood County commissioners voted down a moratorium in February. Hill County adopted a one-year moratorium in May, then rescinded it after a developer sued.

Capital Is Already Repricing Risk

Jefferies Equity Research estimates about 13 gigawatts of announced Texas projects are immediately at risk under a moratorium, Bisnow reported November 4. Texas accounts for roughly 26% of planned U.S. data center capacity, according to the same Jefferies analysis.

The queue behind those projects is larger. ERCOT said in June that data center projects had requested more than 400 gigawatts of power. Gov. Greg Abbott had already halted new grid connections for large projects, those requesting 75 megawatts or more, while state agencies complete an audit.

Warren Hitchcock, a managing director at Northmarq, told Bisnow the election may make data center financing harder to secure. Capital is expected to stay in Texas, but lenders are not waiting for final Texas data center regulations. They will favor projects that already hold power and approvals, and deals under the 75-megawatt threshold continue to draw interest.

Jefferies analysts also noted that the governor-elect's framework overlaps with existing Public Utility Commission large-load rules and last year's Senate Bill 6. The governor appoints PUC commissioners. The longer-term lever on Texas data center regulations may be the commission, not a single bill.

Cities Are Not Waiting for Austin

Lubbock's Planning and Zoning Commission voted unanimously November 5 to send 12 proposed data center rules to the City Council. The council expects to take them up December 1. The rules include:

A noise cap of 57 decibels
Engineer studies of water consumption and power generation
A detailed site plan and a decommissioning plan
A perimeter berm or solid screening fence

The Lubbock council resolved in September not to consider large-scale data centers until standards are adopted.

San Antonio moved first. Its City Council voted 9-2 on October 29 to require case-by-case council approval for every new data center. The vote also limits them to heavy commercial and industrial zones.

The result is a local patchwork ahead of any statewide Texas data center regulations. A site inside one city limit now carries a different entitlement path than a site ten miles away in the county.

A Live Example: Project Matter in Cottle County

Developer Aetheris has proposed Project Matter about 15 miles east of Paducah, a town of roughly 1,000 residents. The landowner is Farmland Reserve, a nonprofit owned by The Church of Jesus Christ of Latter-day Saints. It owns an estimated 100,000 acres of the historic Triangle Ranch, the Salt Lake Tribune reported.

The structure is a lease, not a sale. Phase one covers 729 acres. Full buildout could reach 4,252 acres: 3,710 from Farmland Reserve and 542 from a second county landowner. Plans call for a 96-megawatt data center and a 180-megawatt natural gas plant on the leased land. The rest of the ranch would continue as a working cattle operation.

Aetheris says it will source its water from outside Cottle County and operate independently of the local grid. The company is also seeking a county property tax abatement. A public hearing was scheduled for November 9 at the courthouse in Paducah. No outcome had been reported at publication. Cottle County Judge Karl Holloway told the Tribune residents are split.

This is the kind of deal the proposed Texas data center regulations would touch. SB 36 would close off the local abatement. HB 928 would put the project to a commissioners court vote.

What Texas Data Center Regulations Mean for Landowners

This section is analysis, not reporting.

Proposed Texas data center regulations change the risk on a tract before any of them pass. Six checks apply now.

Land under option or contract: Check for regulatory-change, moratorium, or entitlement contingencies. A buyer's ability to walk may hinge on them.
Sites not yet entitled: Expect longer due diligence periods and more extension requests. Power commitments and approvals now drive value more than acreage.
Unincorporated tracts: If HB 928 passes, the commissioners court becomes a gatekeeper it has not been before.
Leases versus sales: The Triangle Ranch structure keeps title with the owner and the ranch operating. It also keeps the owner exposed to the tenant's regulatory risk for the life of the lease.
Incentive-dependent deals: If the sales tax exemption or local abatements go away, some projects will reprice or relocate. That flows back to land offers.
State land: Land Commissioner-elect Benjamin Flores campaigned on steering data centers to leased state-owned land. If that becomes policy, it competes with private sites.

This is general information, not legal advice. Landowners should consult a Texas real estate attorney about a specific contract.

What to Watch

Six dates and decisions will shape Texas data center regulations over the next four months.

December 1: Lubbock City Council takes up its data center rules
January 12: The Legislature convenes
January 19: Inauguration, and whether a moratorium order follows
March 12: Bill filing deadline
SB 293 bill text: Details so far come from Huffman's news release
PUC appointments

Texas data center regulations will not be settled before the session ends May 31. Until then, the gap widens between sites with power and approvals in hand and sites that depend on rules not yet written.

Own land with a data center option, lease offer, or letter of intent? Request a Data Center Site Risk Review from North 40 Land Group. The review covers jurisdiction, power status, and incentive exposure against the Texas data center regulations filed so far.

Frequently Asked Questions

Is there a statewide data center moratorium in Texas right now?

No. As of November 10, 2026, there is no statewide construction ban. New grid connections for projects of 75 megawatts or more are paused during a state audit. The governor-elect has pledged a moratorium until the Legislature acts.

What is the Texas data center sales tax exemption?

It is a state sales and use tax break created in 2013 and expanded in 2015. It now costs the state more than $1 billion a year. SB 293 would repeal it.

Can a Texas county block a data center?

Counties currently have limited authority over siting. HB 928 would require commissioners court approval in unincorporated areas.

Do Texas data center regulations affect land value?

They can. Sites with secured power and approvals hold value best. Sites that depend on future entitlements or incentives carry more risk until the session ends.

When could new Texas data center regulations take effect?

The session runs January 12 through May 31, 2027. Most bills that pass take effect later in 2027.

References

Texas Tribune, Nov. 9, 2026: bill filing opens for a divided Texas Legislature. Cited for: session dates, repeal bills filed by noon, SB 35 and SB 36, cost of the exemption.
Fort Worth Star-Telegram via Yahoo, Nov. 9, 2026: GOP senator wants to end data center tax break. Cited for: SB 293, HB 529, HB 928, interim charge projection.
Community Impact, Nov. 9, 2026: Texas lawmakers begin filing bills for 2027. Cited for: PUC permit proposal, 23 of 31 senators supporting repeal.
Houston Public Media, Nov. 9, 2026: bill filing begins. Cited for: first-day bill count, House control, HB 167 and HB 408.
Bisnow, Nov. 4, 2026: 13 GW at immediate risk. Cited for: Jefferies estimate, ERCOT requests, grid connection pause, Northmarq comments.
Fast Company, Nov. 2026: Texas and the AI buildout. Cited for: Texas share of planned U.S. capacity.
Texas Scorecard, Nov. 6, 2026: Lubbock commission sends data center rules to council. Cited for: Lubbock vote, proposed standards, December 1 date.
KTTZ, Sept. 9, 2026: daily newscast. Cited for: Lubbock council resolution.
Texas Public Radio, Oct. 29, 2026: San Antonio leaders must OK every new data center. Cited for: 9-2 vote and case-by-case approval.
Salt Lake Tribune, Nov. 6, 2026: LDS Church leases ranchland for a data center. Cited for: Project Matter acreage, capacity, lease structure, abatement hearing.
MultiState, Aug. 19, 2026: the local fight over data centers. Cited for: Hill County moratorium and rescission.
Texas Tribune, Sept. 18, 2026: land commissioner race. Cited for: Flores position on state-owned land.
Texas Legislature Online: HB 928, introduced text. Cited for: city council and commissioners court approval requirement.