Central Texas Backlash Sparks New Data Center Rules
Governor Abbott is proposing stricter regulations for data centers in Texas due to public backlash over energy and environmental concerns, particularly from Central Texans. The proposed rules, intended for the 2027 legislative session, include mandates for new energy generation, full cost coverage for grid interconnections, closed-loop water systems, and the elimination of tax breaks. Separately, the Public Utility Commission has been ordered to implement rules by July 31 forcing data centers to absorb electrical infrastructure costs.
Governor Abbott, previously a proponent of bringing big tech data centers to Texas, is now advocating for stricter industry oversight following significant public backlash from Central Texas residents. The new focus is on addressing the surge in artificial intelligence development and the substantial energy demands of data centers.
Abbott has issued regulatory guidelines intended for legislative action during the 2027 session. These proposals aim to shift the cost burden of electricity demands from Texas residents to big tech companies. Key measures include requiring new computing hubs to introduce new energy generation resources, cover all grid interconnection and hookup expenses, and implement closed-loop water recycling systems. Operators would also be mandated to submit annual data on water and electricity consumption, and the state plans to establish baseline rules for noise and light pollution, alongside eliminating sales tax breaks and corporate incentives.
Rural communities, often targeted for data center development due to land availability and fewer local regulations, have been particularly affected. Many are urging the Governor for an immediate special legislative session to address these issues before 2027. In response, Governor Abbott has ordered the Public Utility Commission (PUC) to implement rules by July 31, compelling data centers to absorb all independent electrical infrastructure costs. The PUC and ERCOT are also tasked with delivering a comprehensive safety and cost-mitigation report by mid-July to establish corporate accountability within the state's tech sector.