Data center issue to top 2027 legislative session

Texas Governor Greg Abbott has declared data center regulation a priority for the state's 2027 legislative session, citing the rapid expansion of the industry across the state. In a letter to policymakers on June 9, Governor Abbott outlined several key recommendations, including requiring new facilities to add power generation to the state's grid, mandating data centers cover their own grid interconnection costs, and establishing "closed-loop" water systems. He also called for annual reporting on electricity and water usage, best-practice standards for community concerns like noise, and the repeal of data center sales tax exemptions, which he noted could cost Texas $3.2 billion in revenue over two years.

Abbott emphasized the need for oversight to prevent everyday Texans from bearing infrastructure costs driven by data center expansion and to protect residential electric bills from negative impacts on the ERCOT grid. Two days later, Texas Agriculture Commissioner Sid Miller hosted a town hall in Bay City, Matagorda County, to discuss the "hidden costs of data centers." Commissioner Miller echoed the governor's concerns, specifically highlighting how data centers consume prime farmland and agricultural resources, particularly water, which is a longstanding concern for his office given Texas's growing urban population. He advocated for a balanced solution that supports innovation while safeguarding agricultural land.