East Texas data center project pulled after facing community backlash
A proposed data center project by Diode Ventures in Henderson County, East Texas, has been canceled due to community backlash over water usage and a tougher stance on rural data center development by Gov. Greg Abbott. Residents and officials raised concerns about the project's impact on Cedar Creek Lake, which supplies water to the Fort Worth area, especially during low rainfall. Governor Abbott has since proposed new regulatory recommendations for data centers across the state.
Diode Ventures has withdrawn its controversial data center project in Henderson County, East Texas, citing the inability to comply with new, tougher development standards championed by Gov. Greg Abbott for rural areas. The Kansas-based company had planned a 12-year build-out near Cedar Creek Reservoir, which would have consumed 5 million gallons of lake water daily by its fifth year.
Community members and local officials, including Henderson County Commissioner Wendy Spivey, expressed strong opposition due to the project's location within a residential subdivision and concerns over water scarcity. Cedar Creek Lake, a vital water source for the Fort Worth area, has experienced low levels, intensifying fears about increased withdrawals. A volunteer coalition, Save Cedar Creek Lake, actively campaigned against the project, collecting thousands of signatures on a petition.
Governor Abbott publicly stated that data centers in Texas must prioritize communities, protect natural resources, and preserve quality of life, indicating the Diode Ventures project failed to meet these criteria. Following these statements and community pressure, Diode Ventures announced its decision not to advance the site beyond preliminary planning. While this particular project is halted, Commissioner Spivey noted that the landowners might still seek other uses for the site, potentially including another data center.
In response to the proliferation of data center proposals, especially in less regulated rural areas of East Texas, Abbott released sweeping regulatory recommendations for the 2027 legislative session. These include requirements for data centers to fund their own grid interconnection, implement closed-loop water systems, and end federal sales tax exemptions. Henderson County, which currently lacks zoning authority, has also passed a resolution urging Texas lawmakers to grant counties more power to regulate these developments.