Abbott calls for new regulations on data centers
Texas Governor Greg Abbott has proposed sweeping regulations for data centers, including requirements for on-site power generation, payment for infrastructure, closed-loop water systems, and annual resource reporting, while also suggesting the repeal of sales tax exemptions. This initiative, aimed at the 2027 legislative session, seeks to mitigate the burden of data center growth on communities and the state's power grid, following local pushback and legal challenges to moratoriums in counties like Hill County.
Texas Governor Greg Abbott has urged the Public Utilities Commission of Texas (PUC) and the Electric Reliability Council of Texas (ERCOT) to implement comprehensive regulations for data centers during the 2027 legislative session. In a letter issued on June 10, 2026, Governor Abbott outlined several key proposals designed to hold data centers accountable and prevent taxpayers from bearing the costs of their expansion. These proposals include mandating new data centers to integrate additional power generation into the state's grid, pay for their own infrastructure and grid connections, and utilize closed-loop water systems. Additionally, he called for annual reporting on electricity and water usage, the repeal of sales tax exemptions and other incentives, and measures to reduce community impact, such as noise reduction.
State Representative Helen Kerwin expressed support for Governor Abbott's initiative, emphasizing the need to protect Texas ratepayers, water resources, rural communities, and state parks, while promoting greater transparency in development. Kerwin has previously advocated for full impact studies before data center construction. The Governor's push for new regulations comes amidst increasing local resistance to data center expansion across the state.
For instance, Hill County officials recently lifted a moratorium on new data centers after facing a lawsuit from developers, subsequently issuing a checklist for large-scale developments. In Angelina County, commissioners advised residents to contact state lawmakers after public comments regarding a proposed data center, with County Judge Keith Wright noting the limited authority of counties to implement moratoriums. Governor Abbott has directed PUC and ERCOT to submit a joint memorandum by July 17 detailing actions taken to mitigate risks and costs associated with data center development for Texans.