Daily Digest — July 2, 2026
Texas Governor Abbott Calls for Ban on Rural Data Center Development
Governor Greg Abbott has called for a ban on new AI data center construction in rural Texas, according to FOX 7 Austin. Speaking in Bullard, Texas, the Governor stated that data centers must be prohibited from building in rural neighborhoods, must fund their own projects, bring their own power, and reuse their own water. The announcement represents a notable shift from his previous public support for the industry, including a November 2025 event with Google CEO Sundar Pichai where he praised Google's $40 billion investment in the state, as reported by the Houston Chronicle.
The Governor's office points to a June 10 letter sent to the Public Utilities Commission of Texas (PUCT) and ERCOT outlining several requirements for data centers, including:
- Adding power generation to the state grid
- Covering their own infrastructure and connection costs
- Implementing closed-loop water systems
- Providing annual reports on electricity and water usage
- Mitigating community impacts such as noise
PUCT and ERCOT have been given until July 17 to respond. Governor Abbott has also recommended repealing data center sales tax exemptions and directed that regulating the industry will be a priority for the 2027 legislative session, according to KRGV. Press secretary Eduardo Leal has pushed back on characterizations of a policy reversal, asserting the Governor's position has been consistent. Data center opposition continues to grow across the state, as reported by WFAA.
Abbott calls for ban on data center development in rural Texas
FOX 7 Austin
Texas Governor Greg Abbott shifts stance on rural data center development
Chron
Hundreds of data centers are coming to Texas. Here’s what you need to know.
KRGV
Data center backlash grows across Texas as Abbott calls for rural building ban
WFAA
Texas Leads Nation in Proposed Gas Plants for Data Centers, Report Finds
Texas leads the nation in proposed natural gas-fired power plants specifically intended to serve data centers, according to a report by the Environmental Integrity Project (EIP) covered by the Texas Tribune. Of 74 such facilities proposed nationwide, 32 are planned for Texas, in counties including Comal, Anderson, Bexar, Pecos, Caldwell, and Hood.
The proposed Texas plants could collectively emit over 287 million tons of greenhouse gases annually, along with thousands of tons of fine particulate matter, nitrogen oxides, and volatile organic compounds. The report highlights Project Matador, a data center campus near Amarillo by Fermi America, which alone could require 11,200 megawatts of power and emit 40 million tons of greenhouse gases annually.
Environmental experts cited in the report warn of health risks particularly in lower-income communities. The Texas Tribune notes that some counties have attempted temporary moratoriums on new data center construction to assess energy and water demands, though several efforts were abandoned due to industry pressure. The City of San Marcos successfully passed a ban on data centers, testing an approach that could be emulated by other Texas municipalities.
Local Opposition Escalates Across Texas
Local resistance to data center expansion is intensifying across Texas, with communities using a range of regulatory tools to push back. According to KRGV, at least 248 data center projects are planned statewide, and local responses have varied:
- **San Marcos:** City council passed a citywide ban on data centers using zoning authority
- **College Station:** A land sale for an AI data center was unanimously voted down after a petition with over 5,000 signatures
- **Hill County:** Enacted a temporary moratorium but rescinded it after a developer filed a $100 million lawsuit, replacing it with a checklist for large-scale developments, as reported by FOX 7 Austin
- **Hays and Hood counties:** Considered moratoriums but withdrew after warnings about a lack of authority
- **Brazoria County:** Passed resolutions requesting more state-level regulation
- **Angelina County:** Commissioners Court advised residents to contact state lawmakers, citing lack of local authority to impose moratoriums
The University of Texas at Austin estimates data centers could account for 3-9% of Texas' total water use by 2040. With 476 data centers currently operating in Texas and the state projected to lead the global market by 2030, according to the Houston Chronicle, the debate over balancing economic development with infrastructure and environmental capacity remains active.
Indianapolis Advances Data Center Zoning District, Rejects Moratorium Calls
The Indianapolis Metropolitan Development Commission voted 5-3 to advance a special zoning district for data centers, rejecting calls for a moratorium on such development, according to WIBC. The new zoning classification, designated Special Use District 47 (SU-47), is modeled after regulations for medium industrial developments, as reported by the Indianapolis Business Journal.
The proposed zoning district includes the following requirements:
- Noise mitigation plans with a 55-decibel limit
- Detailed water and electricity use plans
- A decommissioning plan in case of closure
- Primary buildings at least 400 feet from property lines
- All mechanical equipment shielded from public view
- Annual reports on energy and water consumption, noise, and backup generator testing
The decision was made despite strong public opposition, with residents citing concerns about noise, energy costs, and water usage, according to WFYI. Residents from Irvington, where a DC Blox data center campus is proposed, requested a delay for further development and expert input, but Commission President John Dillon pushed the proposal forward. The ordinance now moves to the Indianapolis City-County Council, with public comment scheduled for July 13 and final approval anticipated by August, as reported by IndyStar and Inside INdiana Business.
Indy Rejects Data Center Moratorium, Moves Zoning Plan Forward
WIBC 93.1 FM
Indy advances data center zoning district, ignores calls for moratorium
Inside INdiana Business
Indianapolis advances data center zoning district, ignores calls for moratorium
Indianapolis Business Journal
Indianapolis officials approved new data center rules despite opposition.
IndyStar
Data center rules proposal clears initial vote in Indianapolis
WFYI
Linn County, Iowa Enacts 18-Month Data Center Moratorium
The Linn County Board of Supervisors voted 2-1 to enact an 18-month moratorium on new applications to rezone unincorporated county property for large-scale data centers, according to the Corridor Business Journal. The moratorium runs through January 1, 2028, and was supported by Supervisors Brandy Meisheid and Kirsten Running-Marquardt, with Supervisor Sami Scheetz dissenting.
The decision followed nearly three hours of public comment, as reported by KGAN. Key factors driving the moratorium include:
- Proposals for up to 12 data centers in Cedar Rapids (linked to QTS and Google) and six near Palo
- A Google-linked project potentially using 10 to 12 million gallons of water per day from the Cedar River
- Alliant Energy's planned 720-megawatt natural gas plant, linked to data center demand, with costs borne by ratepayers
- Without expansion, the county is already looking at approximately 3,500 acres of data centers
The moratorium was enacted despite the board having unanimously adopted a comprehensive data center ordinance in February. Supervisor Scheetz argued that the moratorium suspends the ordinance before it could be tested and warned it might push development to jurisdictions with weaker regulations. According to KGAN, union representatives and developers also voiced concerns about economic costs and job losses. The board retains the option to extend or shorten the moratorium. Additional coverage was provided by KWWL and KCRG.
Linn County data center moratorium approved: How the board got to 2-1, and what happens next
Corridor Business Journal
Public concerns drive Linn County to pause on new data center applications
KGAN
2-1 vote sets 18-month data center moratorium for unincorporated Linn County
KGAN
Linn County enacts 18-month data center moratorium
KWWL
Despite putting ordinance in place, Linn County passes data center moratorium
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