An analysis of recent investigations has revealed that data center developers in Texas are actively using simplified procedures to obtain permits for building their own power plants. This practice allows them to avoid public hearings and environmental reviews that are mandatory for major sources of pollution. Instead, companies approve individual turbines and generators under an expedited scheme originally designed for small facilities.
Since 2024, at least 38 data centers have received permits for their own power generation through this procedure. More than half of them reported nitrogen oxide emissions just below the 100-ton-per-year threshold that triggers public procedures. For example, the Vantage data center near San Antonio received a permit for 99.8 tons of emissions per year. Former employees of the Texas Commission on Environmental Quality (TCEQ) describe this approach as "start small, then big" — companies break a single project into several small applications and then combine them into an industrial power plant.
Stargate: A massive project with a huge environmental footprint
The central example of this scheme is the Stargate data center in Abilene, part of the infrastructure initiative by OpenAI, SoftBank, and Oracle with announced investments of up to $500 billion over four years. The campus covers approximately 445 hectares, with a 360 MW gas-fired power plant located nearby. In 2024, developers obtained simplified permits for 10 gas turbines and 62 backup diesel generators. According to documents, this equipment could emit over 1.6 million tons of greenhouse gases and about 1,000 tons of other pollutants per year. Although a representative of developer Crusoe claims the turbines will only be used for backup power, the current permits allow for their continuous operation. A year later, an application was submitted for 41 additional turbines and 18 generators. If the expansion is approved, the power plant's capacity would be enough to supply over 1 million homes, and annual pollution would be comparable to emissions from nearly 2 million cars.
Gas capacity for data centers: 40 GW and growing load
Texas already has about 300 data centers in operation, with approximately 200 more under development. According to Global Energy Monitor, the state has 80.6 GW of new gas-fired power plants announced, of which nearly half (about 40 GW) is intended for direct power supply to data centers. In terms of gas capacity under development, Texas is second only to China. Analytics firm Cleanview identified 59 data centers in the U.S. with plans to build their own power plants totaling about 90 GW, but as of mid-2026, only about 2 GW had been brought into operation. A Floodlight investigation showed that the permitted emissions from nine data center-related gas plants in Texas could exceed 130 million tons of greenhouse gases per year.
Regulator response and conclusions
Former TCEQ employee Katherine Guerra stated that the agency has accumulated over 1,400 unresolved enforcement cases, and in the previous year, the commission completed only 39 of them. A TCEQ representative disputed this estimate, reporting over 100,000 inspections in 2025 and a high level of compliance. The regulator also stated that it only issues permits when projects meet standards but did not respond to specific questions about the investigation's findings.
My expert opinion: This situation is a classic example of regulatory arbitrage, where companies exploit gaps in legislation to minimize costs. Texas, as a major hub for mining and AI infrastructure, risks facing serious environmental and energy challenges. Investors should closely monitor developments, as stricter regulations could significantly increase the operating costs of such projects.