Abbott calls for ban on data center development in rural Texas
Governor Greg Abbott has called for a ban on new AI data center development in rural Texas and the elimination of their tax breaks, emphasizing that they must fund their own projects, generate their own power, and reuse water. This marks a shift from his previous stance and follows a letter sent to state agencies mandating reduced community impacts. The move comes amidst growing local pushback, including a moratorium and subsequent lawsuit in Hill County, and discussions in Angelina County about limited local authority.
Governor Greg Abbott has publicly called for a ban on new artificial intelligence data center development in rural Texas and the repeal of sales tax exemptions and other incentives for the industry. Speaking in Bullard, Texas, the Governor stated that data centers must be prohibited from building in rural neighborhoods, fund their own projects, bring their own power, reuse their own water, and reduce electricity costs for residents. This new stance represents a notable shift for Governor Abbott, who had previously welcomed the AI industry to the state.
This announcement follows a letter Abbott sent on June 10th to the Public Utilities Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT), outlining several requirements for data centers. These mandates include adding power generation to the state grid, covering their own infrastructure and connection costs, implementing closed-loop water systems, and providing annual reports on electricity and water usage. The letter also called for data centers to mitigate community impacts, such as noise. PUCT and ERCOT have been given until July 17th to respond.
The Governor's pivot coincides with increasing local resistance to data center expansion across Texas. Hill County officials, for instance, enacted a moratorium on new data centers in May, which was subsequently rescinded after developers filed a lawsuit. They instead issued a checklist for large-scale developments. Similarly, the Angelina County Commissioners Court has advised residents to contact state lawmakers regarding a proposed data center outside Lufkin, citing a lack of local authority to impose moratoriums or halt development. Governor Abbott's press secretary, Andrew Mahaleris, reiterated that the Governor's actions are aimed at protecting Texans from higher costs and negative community impacts.