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By James Bickerton
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Texas governor-elect Gina Hinojosa pledged during her successful gubernatorial election campaign to impose an “immediate moratorium on data centers” until “real protections” for Texans are put in place by the Texas Legislature.
Texas is one of the epicenters of the American data center industry, having more operational data centers than any other state bar Virginia, as per a Pew Research Center study published in April. According to CNN, a quarter of America’s “planned AI infrastructure buildout” is due to take place in the Lone Star State.
Earlier this year, The Information reported that SpaceXAI, Elon Musk’s artificial intelligence company, was exploring a number of projects in Texas including building new data centers and converting existing warehouses into data centers.
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Newsweek contacted governor-elect Hinojosa and SpaceXAI for comment on Friday via email outside of regular office hours.
Hinojosa’s Proposals
Hinojosa campaigned heavily on data center construction for the 2026 midterm elections against incumbent Governor Greg Abbott.
In July, Hinojosa called for a ban on new data center approvals in Texas until new laws were approved by the state legislature that “puts Texans first.”
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She said: “Data centers are coming in and doing as they please – they are guzzling up all our water, guzzling up all our electricity – and the people have no say. They have no power. That is the Wild West of data centers that Greg Abbott has created in Texas.”
Specifically, Hinojosa said new legislation would require data companies to “hire skilled, licensed, union labor,” not use non-disclosure agreements (NDAs) and “prove households won’t pay more for electricity or water, including the hidden costs.”
She also said all subsidies to data center companies would be scrapped, water contracts with data center companies would “become unenforceable if it threatens a community’s water supply” and Texans must have “a seat at the table to decide if and how data centers come to their communities.”
Speaking to KTAB News before the election, Hinojosa said her “moratorium” would apply to “any new permits” for data centers until new laws have been passed to address these issues.
She added: “I would have a moratorium or ban in place until we pass those laws that protect Texans and give them a seat at the table again to decide if and how data centers come into their communities.”
Abbott’s Moratorium
In September, Governor Abbott instructed the Texas Commission on Environmental Quality (TCEQ) to stop issuing new data center permits while it compiled additional information from data center companies.
He said: “Simply put, Texans must come first. Data centers must pay their own way, protect our grid and water and complete the ERCOT [Electric Reliability Council of Texas] and TWDB [Texas Water Development Board] audits. Until they do, TCEQ will issue no permits sought by data center projects.”
This marked a noted change in rhetoric to November 2025, when during a visit by Google CEO Sundar Pichai, Abbott described Texas as “the epicenter of AI development” adding: “We must ensure that America remains at the forefront of the AI revolution, and Texas is the place where that can happen.”
Hinojosa's policy goes beyond this in insisting no new permits would be issued until a swath of legislative changes are made.
Musk's Plans
According to The Information, by July 2026, SpaceXAI had investigated a number of potential sites for a large scale data center in Texas, which could match or surpass its two existing data centers in the Memphis area that have an estimated one gigawatt of combined compute capacity.
In August, Governor Abbott announced SpaceX had agreed to spend $16.8 billion building a new vertically integrated semiconductor fabrication plant in Grimes County, which he said would “create 3,000 jobs” and “accelerate chip production in Texas at an unprecedented scale.”
An analysis published by Morgan Stanley concluded the data center developers most exposed to Texas overall included MARA Holdings, Cipher Digital, SEI and Galaxy Digital.
Texas operating power companies such as Vistra, NRG Energy, Constellation Energy and Talen Energy could also be vulnerable to changes in Texas data center policy according to the report.
Separately, a study by Baird Equity Research found cloud computing companies such as Oracle and CoreWeave could see their business hit by any moratorium on data center approvals or construction.
Data Center Popularity
A University of Texas/Texas Politics Project poll of 1,200 registered Texan voters conducted over August 5 to 13 found that 41 percent would “strongly oppose” the construction of a data center in their community, while another 16 percent would be “somewhat opposed.”
By comparison, only 10 percent would “strongly support,” 20 percent would “somewhat support” and 14 percent said they didn’t know. The survey had a margin of error of plus or minus 2.83 percentage points.
On Tuesday, 41 data center-related votes took place across ten states, with the vast majority seeing voters back some kind of restriction or bans for data centers.
An analysis of Newsweek’s AI Policy Scorecard found that data center supporting members of Congress were more likely to have been defeated in the midterms than their colleagues who were opposed.
According to CNBC, Musk spent at least $474 million at the midterm elections backing Republican candidates, including $224 million in Texas.
Contact Newsweek editors on this story: Ben Kelly and Cristina Diciu.
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