Texas Lawmaker Pours Cold Water on County Moratorium for Data Center

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land Texas)

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Summary

When commissioners in Hood County, Texas, this week voted on placing a temporary moratorium on large industrial developments that include data centers, a Texas state senator stepped in, suggesting that such actions not legal in the state.

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Tolar, Texas & Hood County

Tolar, Texas, with a population of about 1,300, is facing the prospect of having a hyperscale data center complex with more than 40 buildings next door. But there may be little the community can do about it. This week, commissioners in Hood County, home to Tolar, voted on a proposed six-month moratorium for large industrial developments, which would include data centers as well as the power plants that accompany them. However, before the vote, a letter from a state senator to Texas' attorney general said the moratorium was not legal.

The Big One Is Coming

Already home to a Bitcoin mining operation that has made national news for the distress it has caused residents of Granbury, another Hood County town, a few data centers are currently proposed for the county, but one in particular stands out: an artificial intelligence (AI)-capable hyperscale data center with more than 40 buildings, ultimately consuming 5 gigawatts of power, near Tolar.

The Comanche Circle project is being developed by Sailfish Digital Ventures, a company that has yet to build a data center but has big plans to construct them in Tolar and elsewhere, notably in Georgia, which is proposing its own data center moratorium along with other actions such as ratepayer protection and transparency regarding energy and water consumption.

But Comanche Circle is Sailfish's biggest project. The facility is being proposed for 2,600 acres covering nine campuses. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can learn more by viewing the project reports on the Comanche Circle project and Sailfish's proposed Georgia project in metropolitan Atlanta.

Power Already in the Works

The Comanche Circle facility would be located near the Comanche Peak Nuclear Power Plant, a 2,400-megawatt (MW) operation owned and operated by Vistra Corporation. But to support the heavy power load the data center will bring, more generation will be required, and NRG Energy has already stepped up to the plate with a proposed 1,200-MW natural gas-fired plant in Hood County.

NRG's proposed Tolar Power Center would use two GE Vernova gas turbines and could break ground around 2028, pushing its 1,200 MW of power to the nearby data center and the rest of the Texas grid a few years later. NRG already has applied for permitting and named an engineering, procurement and construction (EPC) firm for the project, as Power Project Database subscribers can see in this project report.

The Law Steps In

With a 40-plus-building data center and a 1,200-MW power plant looming within their boundaries, county commissioners weren't voting to completely rid themselves of the projects, only to gain some time to evaluate these developments' effects on water, air quality, noise, traffic and other areas.

But that's not allowed. After the Hood County meeting reportedly had run eight hours, a county attorney pointed to a letter written by state Senator Paul Bettencourt, who represents a Houston-area district around 275 miles from Hood County and is the chair of the Senate Committee on Local Government, to Texas Attorney General Ken Paxton.

Bettencourt pointed to HB-2559, signed into law by Governor Greg Abbot (R) in June 2025 and taking effect that September, which outlines how municipalities can implement an industrial moratorium. Bettencourt asserts that Texas counties do not have a right to do this.

Emphasizing his point to the attorney general, Bettencourt wrote, "Counties were not included in this legislation because they lack the legal authority to directly or indirectly impose development moratoria in the first place. Counties are political subdivisions of the State of Texas, created exclusively by the Texas Constitution with statutorily prescribed, limited powers. County commissioner cannot claim any power unless it is expressly conferred by the Constitution or by statue."

Hence any moratorium issued by Hood County is not legal, claims Bettencourt.

HB-2559

HB-2559 outlines in detail the steps a municipality must take to implement a moratorium. To pause industrial development, a city or town must:

1. Give notice of an initial public hearing at least 30 days beforehand via newspapers, etc., as well as contact those who wish to receive hearing notices by certified mail.
2. Hold an initial public hearing on the issue.
3. Hold a second public hearing at least 30 days later.
4. Within 12 days of the second hearing, give a reading of the proposed ordinance imposing the moratorium.
5. At least 30 days later, give another reading of the proposed ordinance.
6. Finally, the municipality can vote on the measure, and a moratorium can be implemented with three-fourths of the governing body's votes.

That process will buy a municipality 90 days. To extend a moratorium beyond 90 days, it must hold another public hearing and provide substantial information regarding problems, timelines and the duration of the renewal. However, a moratorium is capped at 180 days total.

The Result

After the county attorney produced the warning letter, the commissioners voted down the moratorium ordinance in a 3-2 vote. As the Comanche Circle development primarily sits on unincorporated land, it's unclear whether Tolar or other towns could implement a moratorium and whether this could be achieved for a development set to break ground within a matter of months.

Another Hood County Headache & Possible Solution

Hood County already has a data center problem on its hands that comes in the form of a Bitcoin-mining operation just outside Granbury. Completed in 2022, residents since then have complained of the facility's constant, unrelenting noise. Grassroot media outlet The Texas Tribune in an October 2025 article presented residents' description of the noise as "a plane that never lands, or a lawnmower that never turns off. A county commissioner said it's like 'sleeping with a leaf blower under your pillow.'"

As might be expected, Texas counties cannot implement noise restrictions, but residents around the data center last year considered incorporating into a two-square-mile city known as Mitchell Bend that would have around 600 residents. Incorporating into a city would allow residents to implement more stringent noise ordinances.

The operation's owner, Florida-based MARA, one the leading Bitcoin miners in the U.S., launched a wave of tactics to stop this from happening, including filing a complaint in the U.S. District Court that the proposed incorporated violated the Texas Local Government Code. This was thrown out just before the vote. MARA also released internal county communications obtained by the Freedom of Information Act, stating these communications showed officials were outside "statutory requirements and constitutional rights" in voting for incorporation.

However, Mitchell Bend residents ultimately voted against incorporating.

Two more data centers are reportedly considering building near MARA's operation.

AI Leader

A study from late last year reported that Texas far surpasses other states in its amount of AI-computing capacity. The state's pro-business atmosphere and less stringent environmental and construction regulations makes it a target for power-hungry data centers. However, as the size of these facilities grows to encompass dozens of buildings, they're being proposed for sites where residents often are seeking to escape the noise and bustle of city life.

Key Takeaways

• Hood County, Texas, where a large hyperscale data center is planned to go, voted against an industrial moratorium.
• On the day of the vote, a letter from a state senator to Texas' attorney general pointed out that Hood County would be outside of the law if it mandated a moratorium, which can be implemented by municipalities in Texas/
• In addition to the 40-building data center, a 1,200-MW natural gas-fired power plant is being proposed to support it.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).