Fort Worth Moves Toward Data Center Moratorium

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Fort Worth is officially moving toward a temporary moratorium on new data center development, adding another layer of government review to an industry already facing significant regulatory uncertainty across Texas.

Following the August 11 Fort Worth City Council meeting, Mayor Mattie Parker announced that council members voted unanimously to take the first step required under state law to enact a temporary moratorium on new data center development. The Council also created the Fort Worth Data Center & Infrastructure Commission and adopted an ordinance requiring every new data center application to provide evidence of grid interconnection approval from the Public Utility Commission of Texas (PUC) and the Electric Reliability Council of Texas (ERCOT).

The moratorium is not technically in effect yet. That distinction matters legally, but it should not obscure what Fort Worth is doing or the environment in which it is doing it.

Fort Worth is formally pursuing its own moratorium while Gov. Greg Abbott's (R) statewide data center directive has already interrupted the ERCOT process. Parker herself described Abbott's action as an "audit and temporary pause on data center development across the state." ERCOT has postponed its Batch Zero transmission planning study following the Governor's directive, and Fort Worth is now requiring new data center applicants to demonstrate PUC and ERCOT interconnection approval.

Call it an audit, a pause, or a moratorium. If projects cannot move forward until government completes additional reviews, the practical result for projects caught in that process is a de facto moratorium.

That does not mean there is no legitimate role for regulation. Texas faces real questions involving extraordinarily large electrical loads, infrastructure costs, water use, neighboring property owners, and grid reliability. The question is whether policymakers address those impacts through clear, neutral rules or increasingly attempt to manage an industry through pauses, moratoriums, and discretionary government approvals.

Texas Policy Research (TPR) previously urged Fort Worth officials to reject a data center moratorium and instead pursue policies that protect property rights, ratepayers, and infrastructure without unnecessarily restricting lawful development.

Fort Worth Is Pursuing a Data Center Moratorium

There should be little ambiguity about Fort Worth's intentions. The city is not simply relying on Abbott's statewide directive in place of a local moratorium. Fort Worth is formally undertaking the process prescribed by state law to enact one.

That process is governed by Subchapter E of Chapter 212 of the Texas Local Government Code. State law establishes specific requirements and limitations for municipal development moratoriums, including public notice, hearings, and written findings supporting the action. Depending on the justification for the moratorium, a municipality must make findings concerning issues such as the availability of essential public facilities or the need for additional development regulations.

Those requirements explain why the August 11 vote did not immediately stop new data center development through a formal city moratorium. Fort Worth describes the action as initiating the legal process under state law "to enact a moratorium on new data center development applications while the City completes its regulatory framework." The city's published timeline anticipates public hearings before ultimate City Council consideration later this year.

State law also limits the duration and scope of municipal development moratoriums and establishes additional requirements for extending them. Fort Worth says an initial moratorium generally lasts no more than 90 days and can be extended for another 90 days if the statutory requirements are met. The city also acknowledges that a moratorium cannot prohibit an otherwise lawful land use and that certain vested or previously approved projects would not be subject to it.

So the precise description matters: Fort Worth does not yet have a formal data center moratorium in effect. It is pursuing one.

Meanwhile, the Council has already created its new Data Center & Infrastructure Commission and required new data center applications to demonstrate PUC and ERCOT grid interconnection approval. That latter requirement becomes particularly consequential because of what is simultaneously happening at the state level.

Abbott's Data Center Pause Compounds Fort Worth's Actions

Abbott recently directed the PUC and ERCOT to conduct a comprehensive verification and audit of data centers advancing through ERCOT's interconnection process before additional projects move forward. The directive followed the development of ERCOT's Batch Zero process for large electricity loads. Batch Zero was intended to evaluate large loads collectively, determine how much new demand different areas of the grid could reliably accommodate, allocate available capacity, and identify necessary transmission improvements.

ERCOT subsequently postponed the Batch Zero transmission planning study following Abbott's directive.

Fort Worth is now tying its local application process to PUC and ERCOT interconnection approval at precisely the time that the state process has been disrupted by the Governor's additional review. That creates a regulatory bottleneck layered on top of another regulatory bottleneck.

For a project caught within these processes, the technical distinction between an audit, a temporary pause, and a statutory moratorium may matter considerably to lawyers and government officials. To the developer unable to advance a project, however, the economic consequences can look remarkably similar. The uncertainty itself carries costs. Developers may have property, engineering work, financing, deposits, contracts, and other capital committed while waiting for regulators to determine when and under what conditions their projects can proceed.

Fort Worth's proposed moratorium would add another layer to that uncertainty rather than resolving it.

Texas Should Regulate Impacts, Not Industries

None of this requires dismissing legitimate concerns surrounding data center development. Data centers can create enormous electricity demand. Some facilities consume substantial amounts of water. Their construction can require new transmission facilities, substations, generation, pipelines, roads, and other infrastructure. Nearby property owners can also have legitimate concerns about noise, backup generators, lighting, drainage, and other impacts.

Those issues deserve policy responses. But the better approach is to regulate the impact rather than the identity of the customer.

If policymakers are concerned about extraordinarily large electrical loads, establish objective standards governing extraordinarily large loads regardless of industry. A massive load does not become more or less consequential to ERCOT depending on whether the electricity is consumed by artificial intelligence, advanced manufacturing, cryptocurrency mining, hydrogen production, or a technology that has not yet been invented. If a development creates incremental electric or other infrastructure costs, those responsible for creating the costs should bear them rather than shifting them onto existing taxpayers or ratepayers. If neighboring property owners experience genuine nuisances, clear and enforceable standards can protect their property rights. If large water users present supply or infrastructure concerns, water policy should appropriately account for the amount of water being consumed rather than singling out whichever industry happens to attract the most political attention. And if policymakers object to taxpayers subsidizing massive technology companies, they should end corporate welfare.

This is not an argument for a regulatory vacuum. It is an argument for predictable rules that address identifiable problems without unnecessarily suppressing otherwise lawful economic activity.

Data Center Rules Could Wall Off Competition

The combination of state and local restrictions also creates a less obvious concern: who is best positioned to survive the resulting regulatory environment?

The largest technology companies and established data center developers can employ teams of attorneys, engineers, consultants, lobbyists, and regulatory specialists. They can often hold property and capital for longer periods while projects await government approval. They are better positioned to absorb the cost of regulatory uncertainty. Smaller competitors and new market entrants are not necessarily afforded the same luxury.

That means increasingly complicated regulation can inadvertently protect the companies already large enough to navigate it. A policy intended to constrain Big Tech could instead raise the cost of market entry and make it more difficult for future competitors to challenge today's dominant firms.

Property rights are implicated as well. Owners of neighboring property should be protected against actual harms, but owners of developable property also have an interest in putting their land to lawful economic use. Government should be cautious about replacing clear standards with discretionary decisions about when particular industries may develop.

The cumulative effect matters more than any single rule. An ERCOT audit, delayed transmission planning, interconnection requirements, municipal permitting requirements, new development standards, and a local moratorium may each have an independent justification. Stacked together, they can become a substantial regulatory wall around the market.

Texas Should Expand Capacity, Not Suppress Growth

Underlying much of the data center debate is a more fundamental question about how Texas responds when economic growth strains existing infrastructure.

Data centers require electricity, water, land, transmission, and other resources. If the industry's projected growth materializes, Texas will need considerably more infrastructure to accommodate it. But scarcity should not automatically become justification for suppressing demand.

Texas has repeatedly confronted infrastructure challenges created by growth. More residents require additional roads, housing, schools, electricity, and water infrastructure. New manufacturing facilities require generation and transmission capacity. New industries create demands that existing systems were never designed to accommodate.

Economic growth creating demand for infrastructure is not itself evidence that the growth should be stopped.

Texas should instead make it easier to build reliable electric generation, expand transmission where economically justified, develop new water supplies, modernize infrastructure, and remove unnecessary regulatory barriers. At the same time, policymakers should ensure that major new users bear the incremental costs they create rather than socializing those costs across existing Texans.

There is an important difference between making a new development pay its own way and preventing the development because existing infrastructure is insufficient. The first uses price signals and cost responsibility to accommodate growth. The second risks managing scarcity by government allocation. That distinction will become increasingly important as artificial intelligence, advanced manufacturing, cloud computing, and other emerging technologies require enormous amounts of energy and infrastructure.

Texas should not respond to innovators seeking to invest billions of dollars by effectively telling them the state is full.

Texas Data Center Policy Needs Legislative Clarity

The growing patchwork of data center policies also raises questions about who should make these decisions and how.

Texas lawmakers enacted Senate Bill 6 (SB 6) during the 89th Legislative Session (2025) to address large-load interconnections, grid reliability, cost allocation, and related issues. Legislative committees are continuing to study electricity, water, infrastructure, economic development, and data center policy ahead of the 2027 legislative session.

Those debates should determine whether additional statewide policy changes are necessary.

If Texas needs stronger standards for enormous electrical loads, lawmakers should establish them. If existing law inadequately protects ratepayers from infrastructure costs generated by new loads, lawmakers should address cost allocation. If water policy fails to account appropriately for extraordinarily large users, that should be debated as well. The Legislature should also reconsider government policies that subsidize the very industry other policymakers are simultaneously trying to restrain. There is little consistency in offering companies taxpayer-funded incentives to develop data centers while imposing increasingly restrictive rules designed to slow their development.

Government should neither subsidize businesses to enter the market nor arbitrarily prevent them from entering it. The broader objective should be a predictable statewide framework that protects property rights, grid reliability, taxpayers, and ratepayers without replacing markets with an expanding collection of executive directives, temporary pauses, local moratoriums, and discretionary approvals.

Fort Worth Still Has Time to Change Course

Fort Worth has not yet enacted its proposed data center moratorium, which means city officials still have an opportunity to reconsider it. Mayor Parker acknowledged the competing considerations in her own statement. She recognized concerns surrounding infrastructure demands and potential environmental impacts while simultaneously describing data center development as "critical to our future economy and national security."

Those realities can coexist.

Fort Worth can protect residents from actual harms without freezing an entire category of development. Texas can protect grid reliability without targeting one industry. Policymakers can make enormous new electricity users pay the incremental costs they create, ensure water policy accounts for large users, protect neighboring property owners, and stop subsidizing favored companies.

What Texas should avoid is an increasingly complicated system in which economic development depends upon successive layers of government permission while policymakers decide what permanent rules will eventually apply.

Fort Worth's current debate is therefore about more than one temporary municipal moratorium. It is an example of the larger choice Texas faces as rapid technological development creates new demands on electricity, water, and infrastructure.

Texas can respond by expanding capacity, establishing neutral rules, assigning costs appropriately, and allowing competition and innovation to determine what comes next. Or policymakers can attempt to manage scarcity by deciding which projects may proceed and when.

We can protect property rights, grid reliability, taxpayers, and ratepayers without abandoning free enterprise.

Data centers are not the problem. Bad policy is.

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