The data center boom powering a lot of AI infrastructure has provoked pushback from a wide array of groups critical of how they are built and run. The backlash has been strong enough that even in Texas, which had become a hub of new data centers, Governor Greg Abbott felt the need to order an audit of those seeking connections to the state’s electricity grid and to tell the Texas Commission on Environmental Quality to stop issuing permits sought for them until the audit is complete.
But a rather large complication is making that audit seem inadequate. Thousands of diesel generators and increasingly large private power plants sit next to the data centers. Some developers are building or planning enough power generation on-site that the distinction between a data center and an industrial power facility starts getting fuzzy.
It's a problem raised in an open letter sent to Abbott by the NAACP Texas State Conference and the NAACP Center for Environmental and Climate Justice. The groups argue that Texas’s new measures remain too focused on data centers seeking connections to the Texas grid, potentially leaving a giant loophole for those that generate or source their own electricity. The letter also argues that the audit does not sufficiently address cumulative effects, including pollution, water consumption, and noise.
As the letter points out, a Floodlight and The Texas Tribune investigation found that at least 38 Texas data centers have obtained minor-source permits for on-site power since 2024, covering more than 2,100 diesel generators. The permitting category is also associated with considerably smaller sources of pollution, including dry cleaners, auto body shops, concrete batch plants, and rock crushers. Texas’s new regulatory response may not actually address the issues brought by the data centers and their support infrastructure.
Minor permit, major story
The "dry cleaner permit" involves categories of minor-source air permits made to streamline approval for small businesses and avoid more intensive environmental review. The idea is that regulators don't need an elaborate approval process every time someone installs a set of dry cleaning machines or pumps at a gas station.
AI data centers test the logic through sheer scale. Floodlight found that OpenAI’s Stargate campus in Abilene had already built 10 gas-powered turbines and 62 backup diesel generators and was seeking approval for another 41 turbines and 18 generators. The existing turbines and generators were initially authorized through minor permits that did not require the environmental studies, public notice, and public comment associated with major permits.
The investigation also found several projects with estimated emissions just shy of triggering more scrutiny. A CyrusOne data center in Whitney estimated 249.1 tons of nitrogen oxide emissions annually, where 250 tons would have triggered more stringent permitting, while a Vantage facility outside San Antonio received permission for 99.8 tons annually in an area with a 100-ton threshold.
More than half of the data centers Floodlight identified submitted annual nitrogen oxide estimates just below thresholds requiring public input and more detailed environmental review. It raises questions of whether the regulatory thresholds make sense if they can be evaded so easily. The NAACP letter argues that minor-source permits can effectively remove communities from the process when they shouldn't be. It has already issued a notice of intent to sue Vantage Data Centers and VoltaGrid. While the allegations are still pending litigation, they show why the definition of a "minor" source has become so fraught.
Crackdown with loopholes
Abbott's recent responses acknowledge that Texas has a problem worth addressing. His audit directive states that projects that fail can be denied connection to the Texas grid. And the pause on more data centers until the audit is done will certainly slow things down for a time.
But while encouraging data centers to avoid burdening the grid might seem like a way to rein them in, letting them have their own power plants requires a different regulatory response. There are still emissions, water demands, and neighborhood effects regardless of whether it's linked to the grid. Abbot did tell regulators to make permitting decisions with the state's broader data-center directives. The loophole may be smaller than it first seems.
Still, this is becoming a recurring theme of the AI infrastructure boom. Technology is moving at a scale and speed that regulations written for a very different industrial landscape struggle to accommodate. A rule that seems perfectly sensible for a shop with a boiler or a building with a couple of emergency generators looks rather different when applied dozens of times across facilities consuming enormous amounts of power.
Texas has recognized that the AI data-center rush needs guardrails. The next test is whether those guardrails follow the actual environmental impact of the projects rather than simply the route their power cable takes.
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