Data-center law in Texas

Tex. Local Gov't Code § 211.003

Effective 1987-09-01 · Applies to both

Authorizes a municipality's governing body to regulate building height, lot coverage, population density, and the location and use of buildings and land for business and industrial purposes, including data centers, through zoning districts and special-use permits. Texas counties, outside a small number of named exceptions, have no general zoning authority, so a data center sited in unincorporated county territory is not reached by this chapter.

Source: Full text of law

Tex. Util. Code § 37.051

Applies to both

An electric utility may not directly or indirectly provide service to the public under a franchise or permit unless it first obtains a certificate from the Public Utility Commission stating that public convenience and necessity requires or will require the service. A data center's interconnecting utility operates within this certificated-service-area framework.

The section predates the Public Utility Regulatory Act's 1997 codification and has been amended repeatedly since; no single commencement date for the certificate requirement itself is stated in the current codified text.

Source: Full text of law

Tex. Util. Code §§ 39.169-39.170

Effective 2025-06-20 · Applies to both

This provision requires advance notice to ERCOT before a power generation company, municipally owned utility, or electric cooperative implements a net-metering arrangement co-locating a new large-load customer, such as a data center, with an existing stand-alone generation resource, subject to a commission review and conditions protecting grid reliability.

A companion section requires ERCOT to develop a reliability service that competitively procures curtailment from large-load customers of at least 75 megawatts during an anticipated emergency condition, with at least 24 hours' notice to the curtailed customer.

Source: Full text of law

Tex. Util. Code § 37.0561

Effective 2025-06-20 · Applies to both

This section directs the Public Utility Commission to set standards in the ERCOT power region for interconnecting a large-load customer, defined by a commission-set demand threshold that defaults to 75 megawatts unless the commission sets a lower one.

The standards must include a flat transmission-screening study fee of at least $100,000, uniform financial-commitment options (a per-megawatt security deposit, contribution in aid of construction, or an advance-payment agreement), a site-control demonstration requirement, and disclosure by the customer of competing interconnection requests and on-site backup generation. A data center seeking a new or expanded interconnection is squarely within scope, and the section was added in 2025.

Source: Full text of law

Tex. Water Code ch. 36

Applies to both

Groundwater withdrawal in Texas is regulated locally by groundwater conservation districts created under this chapter, rather than by a single statewide permitting program. A data center's well-water use for cooling is subject to whichever district, if any, covers the site, each of which sets its own permitting rules and pumping limits under its own management plan.

The chapter has been rewritten and amended repeatedly since the 1980s recodification of the Water Code, and no single commencement date applies to the framework as a whole.

Source: Full text of law

Tex. Health & Safety Code § 382.0518

Applies to both

Before construction or modification of a facility that may emit air contaminants, including a data center's backup generator fleet, the person planning the work must obtain a preconstruction permit or permit amendment from the Texas Commission on Environmental Quality, which will grant it only on a finding that the facility will use at least the best available control technology and that the emissions will not contravene the chapter's public-health and property-protection purpose.

The preconstruction-permit requirement carries a 1971 construction-start grandfather clause in the current codified text, and no single commencement date for the requirement itself is stated.

Source: Full text of law

Tex. Tax Code § 151.359

Effective 2013-09-01 · Applies to private

Exempts qualifying tangible personal property (electricity, electrical and cooling systems, emergency generators, servers, storage, network equipment, and related fixtures) from state sales and use tax at a data center of at least 100,000 square feet, where the owner, operator, or occupant creates at least 20 qualifying jobs paying at least 120 percent of the county average weekly wage and invests at least $200 million over a five-year period.

The exemption runs for 10 years from certification at the $200 million tier, or 15 years at $250 million or more, and requires comptroller certification and a registration number that the comptroller can revoke if the requirements are not met.

Source: Full text of law

Tex. Tax Code § 151.3595

Effective 2015-06-10 · Applies to private

A larger, parallel sales and use tax exemption for a qualifying large data center project of at least 250,000 square feet, requiring at least 40 qualifying jobs, a $500 million capital investment over five years, and a contracted 20 megawatts of transmission capacity for the project's operation. It is administered the same way as the smaller data-center exemption in Section 151.359, through comptroller certification and a revocable registration number.

Source: Full text of law