A year ago artificial intelligence and the large data center buildings they require to operate were a welcome fixture in Texas' tech industry. In the midterms, they were a driving force for some residents to get out and vote blue.
Some Texans raised concerns about the facilities' enormous electricity demands, their potential impact on already strained water resources and the disruption that large-scale construction can bring to small towns.
Now that Democrats hold every top leadership position in the state and have control over the Texas House, what can they deliver to voters who want restrictions on the industry?
How Texas got here
In November 2025, Gov. Greg Abbott was calling Texas the epicenter of artificial intelligence development.
For roughly a decade, Abbott worked to make the state an attractive destination for new business. Tax breaks, business-friendly policies and a relatively permissive regulatory environment helped make Texas a desirable, and affordable, place for companies to build the massive facilities that power AI.
But as data centers have expanded across the state, public outcry began to get louder.
In the lead-up to the midterm elections, Abbott began changing his tone.
In July, he said it was time to start "pushing back against these AI data centers that are trying to build in our neighborhoods."
Then, in September, he announced a pause on approvals for new data center permits until they participated in a new state audit. Before new facilities could connect to Texas' power grid, Abbott said developers would have to demonstrate they could manage their impact on power, water and infrastructure.
But critics were skeptical, saying Abbott's actions didn't involve a clear timeline or enforcement policies and didn't apply to most mid-size data center projects proposed in the state.
Gov. elect and then-candidate Gina Hinojosa said outright that she thought the audit was a political ploy.
"That only is an attempt to protect his election chances, not the people of Texas," Hinojosa said in September.
Data centers were also a focus of her campaign. She pledged to freeze electricity rates and make corporations, including data center developers, pay their fair share.
What Hinojosa can do — and what will require lawmakers' buy-in
Hinojosa made three major promises related to data centers while campaigning. She said she would establish a moratorium on new development, end tax breaks for the industry and ensure local communities have a say in whether facilities are built.
At least one of those should be relatively easy to accomplish.
"I think that there's an expectation that the governor-elect will extend the moratorium and potentially strengthen it," said John Hall, president and CEO of the Houston Advanced Research Center, an organization focused on environmental policy analysis.
Hall said extending the moratorium is largely within the governor's authority. In September, Abbott's pause on data center development began as part of an executive order.
The other promises will be more complicated.
Despite Democrats being in these top leadership positions and having the majority in the Texas House, Republicans will still control the state's Senate. The two chambers have struggled to find common ground in previous legislative sessions.
But data centers could be an exception.
"Data centers have brought together a bipartisan coalition of people," Hall said.
Initiatives like ending tax incentives and giving communities more influence over development will likely require bipartisan support from the Texas Legislature.
Opposition appears to extend beyond party lines. In May, a Gallup News poll found that seven in 10 Americans disapproved of data centers being built in their communities.
"I have worked on water and environmental issues since 1983, and heretofore there has never been the level of bipartisan concern like exists on data centers," Hall said.
That concern, he said, could create an opportunity for lawmakers to pursue new environmental regulations, including requiring data centers to meet the same air-quality standards as other industries, regulating carbon emissions and requiring greater transparency about their environmental impacts.
The role of state regulators
Even if lawmakers agree on new rules, the governor's ability to implement them will depend partly on the state agencies responsible for overseeing the industry; the Texas Commission on Environmental Quality (TCEQ) and the Public Utilities Commission of Texas (PUC).
Sandra Haverlah, president of the Texas Consumer Association, said Abbott was able to get state agencies to comply with the audit he announced in September in part because their leadership had been appointed by him.
Members of both commissions serve six-year terms so, Hinojosa won't be able to appoint anyone to either board for some time. She might be able to appoint someone to the TCEQ board as soon as January, or her first appointment might not happen until September 2027.
In the meantime, Haverlah said, cooperation between the governor's office, state agencies and lawmakers will be important.
"Hopefully, what happens is that all the entities work together with the Legislature because appointees are still political people too," she said.
Hinojosa has signaled she intends to facilitate that cooperation.
"We can have a strong economy, strong industry, and protections for the people of Texas. Those things are not mutually exclusive, and I'll make sure as governor I lead to ensure that that happens," she said in an interview with CNN following the election.
Data center developers are preparing for a new political landscape
Leadership within the AI industry seem to hear the drumbeats of change too.
OpenAI Chief Financial Officer Sarah Friar said the company is focused on raising more money and strengthening relationships with existing data center operators during an interview with CNBC just days after the election.
"When I think about the midterms, I need to keep thinking about how do we keep investing to meet that customer demand," Friar said. "But it also means we're gonna keep building out those relationships with communities."
The election results reflect a broader shift in how communities across the country are approaching data center development.
Of 41 data center-focused ballot measures across 10 states, all but one succeeded in reining in the industry.
In a statement emailed to KUT News, the Data Center Coalition, a key industry lobbying group in the state, said it "looks forward to working with state leadership along with local officials, stakeholders, and Texas communities to continue building trust and supporting responsible data center growth."
But energy policy experts say a change in state leadership is unlikely to stop projects that are already underway.
"Everything that's under development and construction right now will continue," said Michael Webber, the former deputy director of the Energy Institute at the University of Texas at Austin. "It's really hard and expensive to stop projects that are partway through. But the process for new data centers might be a little different."
Webber said efforts to reverse existing tax breaks and other financial incentives negotiated under Abbott could be unprecedented and potentially illegal.
The bigger question, he said, is what happens to the next wave of development.
Webber said the goal of new regulations shouldn't necessarily be to stop data center development altogether.
The facilities can bring economic benefits to communities, including jobs for skilled workers and additional funding through property taxes for public services such as libraries, parks, schools and courthouses.
"I think the goal for me … isn't to stop data centers because they offer a lot of economic upsides," Webber said. "We just need to make sure it's operating with the lowest environmental impact possible."
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