Daily Digest — July 29, 2026
Texas Data Centers Face Mounting Pressure on Tax Breaks, Water, and Power
The Texas Senate Finance Committee held a five-hour hearing scrutinizing the state's data center sales tax exemption program, which has ballooned from $14.6 million in 2014-15 to a projected $3.3 billion for the 2028-29 biennium, according to Houston Press. Committee Chair Joan Huffman indicated she intends to file legislation next session to re-evaluate the exemptions' return on investment. The Senate Business and Commerce Committee is scheduled to hear additional testimony.
Protestors gathered at the Texas Capitol as part of a "Data Center Week of Action" organized by the Alliance for a Clean Texas, as reported by KCWX 2 Television and Austin American-Statesman. Environmental advocates urged Governor Greg Abbott to convene a special legislative session or implement a temporary moratorium on new data center developments, citing strain on the state's water supply, electric grid, and natural resources.
Representative Gina Hinojosa (D-Austin) called for an immediate moratorium, while Agriculture Commissioner Sid Miller voiced support for protecting agricultural communities. Both noted that only the governor can call a special session. Governor Abbott's office responded by asserting that data centers must not negatively impact Texas families, pointing to existing directives requiring data centers to fund their own infrastructure, generate their own power, and reuse water.
The Data Center Coalition's Dan Diorio defended the industry, citing economic benefits and a 2026 PricewaterhouseCoopers report projecting the industry's impact on Texas GDP at $65.8 billion in 2024, per Houston Press.
Texas Energy Agencies Seek Expanded Authority Over Data Centers
The Public Utility Commission of Texas (PUCT) and ERCOT are responding to Governor Abbott's directive to regulate data centers' impact on the state's energy grid, according to Houston Public Media. PUCT Chairman Thomas Gleeson outlined steps already taken, including:
- New requirements for data centers connecting to the grid
- Programs ensuring data centers cover new electric infrastructure costs
- Measures encouraging energy reduction during emergencies
Gleeson is requesting expanded legislative authority, including:
- Direct communication with data centers during energy emergencies, bypassing utility intermediaries
- State registration requirements for data centers and large energy consumers
- Extending the Lone Star Infrastructure Protection Act to cover data centers, preventing foreign-linked companies from accessing critical infrastructure
University of Texas energy researcher Joshua Rhodes noted that data centers are likely to be a central focus of the next legislative session due to unfavorable public opinion.
Montgomery County, Maryland Enacts 18-Month Data Center Moratorium
The Montgomery County Council unanimously approved an 18-month moratorium on new data center development, as reported by The Baltimore Banner, Montgomery Community Media, WUSA9, and NBC4 Washington. The legislative moratorium supersedes a prior six-month executive order from County Executive Marc Elrich, which had been legally challenged by Atmosphere Data Centers.
The council also passed zoning bill ZTA 26-01, which establishes a legal definition for data centers — specifying facilities with an aggregate monthly electricity demand of at least 25 megawatts. The bill serves as an interim measure preventing new construction until planners designate locations within the county.
Key details of the moratorium:
- Effective upon County Executive Marc Elrich's signature
- Set to expire in early 2028
- Does not affect existing data centers
- Puts the proposed Atmosphere Data Centers project at the former Dickerson coal plant site on hold
Atmosphere Data Centers CEO Chuck McBride expressed disappointment, noting the company had collaborated with the council and had projected approximately $758 million in tax contributions over 15 years. Council President Natali Fani-González stated the council-approved moratorium, having undergone a full legislative process, would be immune to the legal appeals filed against the executive order. Councilmember Dawn Luedtke clarified the goal is not to block all data centers but to establish regulatory guardrails.
Separately, a guest commentary in the Baltimore Sun by Tara Sonenshine, a senior fellow at Tufts University's Fletcher School, called for a national discussion on data center policy rather than localized disputes, citing rising electricity costs and strain on the PJM Interconnection power grid.
Imperial County Data Center Moratorium Challenged in Court
A Superior Court judge questioned Imperial County, California's justification for its data center moratorium during a hearing on a legal challenge by Imperial Valley Computer Manufacturing (IVCM), according to Courthouse News. Judge Jeffrey Jones expressed skepticism about whether the county identified a sufficient emergency, pressing the county to identify specific irreparable harm beyond public concern.
IVCM's attorney and developer Sebastian Rucci argued the moratorium — initially 45 days, later extended to 10 months and 15 days through June 2027 — is unlawful without an immediate threat to public health or safety. The county's attorney defended the action, arguing the development itself constitutes an immediate threat requiring study.
Separately, IVCM has sued the Imperial Irrigation District for access to 287 million gallons of Colorado River water annually after its application was denied on May 1, 2026, as reported by Status Coup News. The company's strategy involves purchasing 160 acres of irrigated farmland to claim existing water entitlements — a "buy and dry" approach that has drawn criticism given the Colorado River's stressed condition.
An opinion piece in The Iola Register argued that water consumption concerns are overstated, noting IVCM's projected 856 acre-feet of annual usage against the Imperial Irrigation District's 3.1 million acre-feet allocation.
Desert data center developer challenges county moratorium in court
Courthouse News
California AI data center sues for Colorado River water access
Status Coup News
Imperial Valley AI Data Center Raises Concerns Over Water Use from Colorado River
Status Coup News
California’s data center hysteria is more hype than fact
The Iola Register
National Landscape: Moratoriums Multiply, Political Dynamics Shift
Approximately 300 municipalities nationwide have enacted moratoriums on data center development, according to reporting by International Press Agency citing consumer advocate Erin Brockovich's investigation. A Gallup poll indicates 71% of Americans oppose local AI data centers, per National Memo.
The political dynamics of data center opposition are drawing attention. The National Memo reports that right-wing media outlets have begun questioning the motivations and funding of data center opponents, with Fox Business anchor Maria Bartiromo suggesting foreign interests may be involved. This stands in contrast to earlier Fox coverage acknowledging community concerns about electricity costs and water consumption.
A Bloomberg Opinion column syndicated in the Jacksonville Journal-Courier characterized moratoriums as economic "friction" and predicted development will relocate to less restrictive states. The Free Press explored the tension between the economic imperative of data centers and the political realities of their development, noting that only 14% of surveyed individuals are comfortable with a data center being built nearby.
Senator Bernie Sanders plans to introduce the American AI Sovereign Wealth Fund Act, proposing a 50% tax on major AI companies' stock to give the public an ownership stake, according to the International Press Agency report.
AI Wants Your Land, Water, Power - Pressenza
International Press Agency
Data Center Battles Forcing Right-Wing Media To Cover Environmental Justice
National Memo
Commentary: Expect more data center moratoriums — and slower growth — Allison Schrager
Jacksonville Journal-Courier
U.S. Data Center Development Meets Widespread Opposition, Moratoriums
The Free Press
Sources
Montgomery County Council passes 18-month data center moratorium
The Baltimore Banner
The Montgomery County Council unanimously passed an 18-month moratorium on data center development, replacing a prior six-month executive order that was challenged by Atmosphere Data Centers. Concurrently, a zoning bill was approved to define data centers and establish future regulations, temporarily preventing new construction until specific locations are determined. This action was supported by residents concerned about noise, water usage, energy bills, and pollution.
Montgomery County passes 18-month pause on data center development | NBC4 Washington
NBC4 Washington
The Montgomery County Council has voted to implement an 18-month ban on new data center development. This decision will pause all new data center construction in the county for the next year and a half.