State Sen. Roland Gutierrez, D-San Antonio, has filed Senate Bill 296 (90th Legislature), which would bar state agencies, cities and counties from approving new or expanded data centers of 20 megawatts or more for two years and bar utilities from switching on their power. After the pause, each project would need a majority vote of local residents, a new state permit and a yearly payment split among every resident of the host county, according to the bill text filed Nov. 9.
The bill goes further than any data-center measure filed so far for the 2027 session. Gov. Greg Abbott’s Sept. 21 letter told the Texas Commission on Environmental Quality, the state’s environmental regulator, to pause data-center permits until ERCOT, the nonprofit that runs the grid for most of the state, finishes its review. SB 296 would write a pause into law and extend it to the utility hookup itself.
The bill defines a covered data center as one designed to draw 20 megawatts or more, or one with at least 50,000 square feet of computing space. Twenty megawatts is roughly the demand of several thousand homes on a hot afternoon. Expansions that add 10 megawatts or 25,000 square feet count as new projects. Facilities within two miles of each other that share a developer, financing, power hookup or water supply would be treated as one project, and splitting a project to dodge the law would be prohibited.
During the two-year moratorium, “a utility may not energize a new or expanded electric service connection for a project,” the bill says. Applications could still be filed and reviewed, but “no vested right to approval arises.” Data centers already running could keep operating at their authorized size.
After the pause, the environmental commission could issue a permit only if voters approve the project. In an unincorporated area, the county would hold the election. Inside a city, both the city and the county would have to vote yes. The developer would pay for the election, mail a plain-language impact statement to county residents 60 days ahead and could not return to the ballot for two years after a loss.
The permit itself would require independently verified studies of power demand, effects on residential rates, water withdrawals, emergency-generator emissions and noise. The commission would need written findings from the Public Utility Commission of Texas (PUC) and the Texas Water Development Board, the agency that plans and finances state water supply. The developer would have to prove the project will not “materially impair the ability of local residents to obtain affordable, reliable electricity or drinking water” and will cover its own grid-connection costs “without shifting those costs to residential ratepayers.” Any county resident could request a contested case hearing, a trial-like proceeding before administrative judges.
The yearly payment is the bill’s most unusual feature. Each data center would owe the greater of 2% of gross receipts from computing, AI training and storage services at the site, or $10,000 for every megawatt of authorized demand. For a 300-megawatt campus, the floor would be $3 million a year. A trust fund would distribute the money each June in equal per-person amounts to everyone who lives in the host county at least 183 days a year, regardless of property ownership, income or citizenship status.
Violations would carry civil penalties of up to $25,000 a day. SB 296 would also repeal the state sales-tax exemptions for qualifying data centers, the same repeal carried by Senate Bill 293 and several House bills.
The Dispatch noted SB 296 by caption when county data-center bills were filed; its text had not posted at the time. Other filed bills take narrower routes: House Bill 928 would require a commissioners court vote, and Sen. Judith Zaffirini’s Senate Bills 32 through 36 would let counties set data-center districts and require a PUC permit.
The state is already acting through regulators. The PUC adopted rules for connecting very large loads to the grid on Sept. 18, and ERCOT asked utilities on Nov. 10 to list large customers with backup generators. No public response from data-center developers or industry groups to SB 296 had been posted as of Nov. 12.
The bill would take effect immediately with a two-thirds vote of each chamber, or Sept. 1, 2027, otherwise. It awaits referral to a Senate committee after the Legislature convenes Jan. 12, 2027.
Key facts
- SB 296 by Sen. Roland Gutierrez was filed Nov. 9, 2026 (Texas Legislature Online).
- Two-year ban on permits and new utility hookups for data centers of 20 MW or more (proposed Health and Safety Code 398.051).
- After the pause: local voter approval plus a TCEQ data-center permit (398.101, 398.151).
- Yearly payment to host-county residents: greater of 2% of gross receipts or $10,000 per MW (398.202).
- Civil penalty up to $25,000 a day; effective Sept. 1, 2027, unless passed by two-thirds (Sections 9, 398.251).