Texas governor-elect Gina Hinojosa pledges a data center moratorium: what she can do alone

Democrat Gina Hinojosa defeated Governor Greg Abbott on November 3, becoming the first Democrat elected governor of Texas since 1990, according to Yahoo Finance. Data centers were central to her campaign, and her win raises questions for the state that, by a Jefferies estimate cited by Fast Company, accounts for about 26% of planned US data center capacity.

The pledge

In an October 22 video, Hinojosa said that as governor she would issue a moratorium on all data center approvals, the Texas Tribune reports. The pause would last until the Legislature, which meets in January, passes protections for residents. Her wider agenda includes protecting local water supplies, banning the nondisclosure agreements developers sign with communities, requiring union labor, keeping data centers from raising household electricity bills and ending tax subsidies. She takes office on January 19.

Jefferies estimated that a moratorium could put 13.3 gigawatts of announced Texas projects at risk, according to Fast Company.

Executive power versus the Legislature

Abbott, who had courted the industry, began pausing data center approvals at the state grid in August and later at the Texas Commission on Environmental Quality, to audit projects' water use, power needs and incentives. In October, advocates found data center permits approved despite the pause, and the agency shut its online filing system, the Tribune reports.

Fast Company notes that a governor can set priorities and direct state agencies within existing law, but permanently changing tax exemptions or expanding counties' zoning powers needs legislation, and a statewide moratorium could face legal challenges. Qualifying data centers can avoid the 6.25% state sales tax on equipment for up to 20 years, an exemption the comptroller projected would cost $3.2 billion over two years. MIT Technology Review adds that no single state office decides whether a project goes ahead, since cities and counties also have a say, and that Democrats are set to control the Texas House for the first time in 24 years.

Reactions

The Data Center Coalition said it wants to work with state leaders on responsible growth, citing jobs and tax revenue. MIT Technology Review reports that construction unions that backed some Democratic campaigns may resist a moratorium. The coverage reviewed does not say how the pause would treat projects already approved, or whether Abbott's own pauses will still be in force in January.