Flashes of yellow were all around the Texas Capitol grounds on Wednesday as legislators gathered to consider two of the most controversial issues in Texas politics: data centers and transmission lines.
The color — displayed on bandanas, pins, shirts and dresses — has become the symbol of a grassroots movement dedicated to blocking the buildout of 765-kilovolt transmission lines across the state. A coalition of those groups gathered on the steps of the Capitol building in the morning as testimony got underway for the House Committee on State Affairs’ interim meeting dedicated to the backlash against the transmission lines and data centers.
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At the protest and nine-hour hearing that followed, lawmakers heard a variety of recommendations, including from local officials arguing for more local control of data center proposals and more time to reform the process behind approving transmission lines across Texas. Though discussed in separate hearings, landowners and protesters said the issues are connected.
“Data centers need energy … and the fact that there have been so many proposed throughout the state, I think these issues go hand in hand,” said Jada Jo Smith, founder and president of Hill Country Preservation Coalition, the grassroots organization that organized Wednesday’s protest.
The bipartisan coalition made up of Republican legislators, Democratic statewide candidates, landowners from rural Texas and environmentalists is starting to break through on both fronts.
Following a July Senate Business and Commerce Committee interim hearing on both topics, Lt. Gov. Dan Patrick and committee chair Charles Schwertner, R-Georgetown, called on the Public Utility Commission to scrap the 765 kv project entirely. Days later, Gov. Greg Abbott announced a pause on approvals for data centers to connect to the electric grid until an audit of data centers seeking to connect was completed by the Electric Reliability Council of Texas, the state grid operator.
While neither action spells an end to the debate around either issue — nor a halt to the transmission plans altogether — activists said they believe the tide has turned in their favor.
Mia Sarot, founder of the Hill Country Land and Legacy Alliance, sported a yellow button and bandana tied to her wrist as she spoke to the crowd of 40 people outside the Capitol, lamenting the need for the groups to have organized in the first place while celebrating their impact on the policy decisions made by state officials.
“Yellow means we’re paying attention,” Sarot said. “It isn’t a threat, it isn’t a political party, it doesn’t belong to any one organization and you don’t need anyone’s permission to wear it. It simply says, ‘I’m here, I’m paying attention, I’m asking questions and I’m participating.”
Inside the Capitol, lawmakers on the legislative panel spent hours deliberating the transmission lines, particularly three first-of-their-kind 765-kilovolt lines that would slice through tens of thousands of acres of private property.
For months, landowners have questioned the 180-day administrative window regulators have to approve or reject the proposal, arguing it was not enough time for residents to contest the plans. Most pleaded with lawmakers to halt the plan entirely and give lawmakers more time to reform the administrative process.
Lawmakers appeared receptive.
“When (the transmission plan) was brought to me, the 180 days was suggested, and it was suggested based on the Permian Basin Reliability Plan,” said state Rep. Drew Darby, R-San Angelo. “Not y’all deciding that we’ve got to run lines all the way across the state. So that’s where the 180 days came from, and I agree. I think we need to relook at that.”
State Rep. Ken King, R-Canadian, questioned transmission service providers, such as Oncor and AEP, about whether the proposed routes were the correct solution. He said most of the opposition stemmed from issues with the routes.
“We’re talking about really a routing issue, and I think everybody in this room is upset about the routes,” King said. “When we’re figuring out if we’re not going to do … 765s, what’s the alternative for transmission?”
Representatives from Oncor, AEP and CPS Energy, which would be tasked with deploying the build-out of the lines, said that if approved, they would work with landowners whose properties are along the proposed routes to make modifications and diminish the impact to the land.
And while they were receptive to a delay, they said that decision would come with a number of ramifications, including disrupting construction schedules already in discussion and the ability to secure necessary equipment on time. Adrian Rodriguez, chief operating officer and president of AEP Texas, said they buy themselves a slot for when equipment becomes available, adding that losing that place in line could result in higher costs.
“If we lose our place in those lines, given the 765 kV transmission line build that is occurring in other grids in this country, there is a high demand for these slots,” he said. “We have the potential to lose those slots, or that equipment could then be utilized for another part of the country … with the current demand that the country is facing for transmission build, those would likely be at a higher cost than we were able to originally procure those.”
Industry leaders rejected the notion that only data centers would benefit from the transmission lines, and that several industries could suffer if regulators decide to halt the proposal.
“We are concerned that putting a halt to these projects will not only affect oil and gas operations, but it’s going to affect new generation currently being built and threaten many planned projects,” said Walt Baum, president of Powering Texans. “We do support future changes to transmission planning to improve transparency and address specific siting and landowner concerns that y’all have heard about today.”
Katie Coleman, representing the Texas Association of Manufacturers, said transmission needs for the business community have not been met for 10 years, and further delays could hinder growth.
“This is not about data centers,” Coleman said. “It is about our planning process systematically under-planning for industrial growth for more than 10 years. We are in a catch-up phase because of extreme restrictions that were put on forecasting of industrial growth.”
The testimony on data centers, which lawmakers cut short to allow time for the transmission line discussion, lasted six hours.
Also at the meeting, ERCOT officials reported on how they intend to carry out Abbott’s ordered audit of data centers, a process CEO Pablo Vegas said he expects to go through in about December.
Abbott ordered ERCOT and the PUC to ensure data center developers provide information on tax breaks they will receive; power use and generation; water use and cooling operations; efforts to reduce impacts on local communities; and ownership of the facility. Any projects that fail should be denied connection to the grid, the governor said.
The audit has scrambled the grid operator’s efforts to organize the queue of facilities seeking energization, roughly 90% of which are data centers. Prior to Abbott’s request, ERCOT expected to complete its study by April, when the first batch of data centers would receive approval to connect to the grid.
Vegas said they hope to not delay the entire schedule for connecting projects, but they hadn’t yet determined exactly how long the overall process delay would be. Vegas acknowledged that some of the roughly 250 projects eligible for the first batch of approvals may drop out because of the new timeline.
ERCOT is also surveying all data centers with an electricity demand of 25 megawatts or greater on their impact on the community, as directed by Abbott, Vegas said. PUC Chairman Thomas Gleeson equated it to “a fact-finding mission.”
Regulators have already been working through a new way to decide how much of the cost of building new transmission lines needs to be paid for by individuals and how much needs to be paid for by companies such as data centers. Experts said they believe the new system will lower the burden on residential consumers relative to the industrial groups.
Costs for new infrastructure have long been shared because it provides an arguable public benefit, Vegas said. Economic and population growth also contribute to transmission needs.
“Well, it seems like the citizens don’t have a choice in this,” said Rep. Senfronia Thompson, D-Houston. “Data centers are being pushed upon them, and they don’t have a choice to say no. But they’ve got to pay. I think that’s unfair. It’s undemocratic.”
Representatives on the committee also mulled potential regulation for the data center industry they’d like to pass in the 2027 session.
Several county officials testified that they need additional authority to manage the buildout of data centers in unincorporated areas of counties. In Texas, counties typically don’t have the power to block development — unlike city officials who wield zoning authority — and a majority of the hundreds of data centers planned for the state are set to be built in unincorporated areas.
King expressed some trepidation that giving counties more authority over data center projects could result in overriding private citizens’ rights.
“I hear a lot about local control and giving the counties or the local elected officials more control over this, but a lot of the ideas that are proposed to me kind of erode private property rights,” King said.
“The intersection is the fundamental issue we’re talking about is it not?” Leon County Commissioner Kyle Workman responded. “I think as a public policy matter, the state of Texas and local communities should be able to work together to establish that line.”
The committee did appear committed to repeal the state sales tax exemption for data centers, which has ballooned in recent years as more data centers are built and apply for the tax break. The exemption totaled an estimated $5.4 million in value during its first year of existence in 2014. In 2026, the Comptroller’s Office estimated the state is forgoing $1.3 billion in uncollected sales taxes.
“It’s a huge number,” said Rep. Charlie Geren, R-Fort Worth. “I passed the bill to get it done. I’m going to probably carry the one to repeal it. Realistically, that’s going to go away.”
Rep. Rafael Anchía, D-Dallas, reiterated a call he made earlier this year for the governor to call a special session to address the issues surrounding data centers immediately.
Still, Abbott’s order for ERCOT to audit the data centers in the electric grid connection pipeline represents the strongest action to date that state officials have taken to slow the buildout of data centers in Texas.
Activists have also been skeptical of the audits, urging the governor instead to call a special session of the Legislature to allow their senators and representatives to quickly pass new regulations for the rapidly expanding industry. They also say a special session is needed to rework the approval process for transmission lines, which was shortened in 2023 by the Legislature.
After the protest concluded in the morning, the activists gathered for a photo.
“Special session on three,” Smith said to the other activists gathered in front of the camera. “One, two, three: special session!”
Staff reporter Emily Foxhall contributed to this report.
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