Greg Abbott Recommends Texas Regulate Data Centers

Texas Gov. Greg Abbott is formally recommending blanket data center regulations in a stunning heel turn from his typical pro-business stance.

Abbott’s recommendations were sent in a letter, urging the Texas Legislature to pass a series of proposals in 2027. The letter covered lots of ground, including recommendations for forcing data centers to pay for their own grid interconnection, mandating closed-loop water systems, annual reports and to spike sales tax exemptions and other “unnecessary incentives,” according to the Texas Tribune.

The state comptroller’s office estimates that Texas is set to lose $3.2 billion in sales tax revenue to data center tax exemptions. Abbott has been a supportive proponent for data center developments in Texas as recently as last year, citing the need to diversify the state’s economy. In January, the state was setting pace to become the largest data center market in the country within just three years. The Data Center Coalition claims the industry already widely follows Abbott’s demands, and was fine with the proposed regulation, according to the outlet.

The opposition to data centers and need for sharper regulation in Texas is rapidly becoming a bipartisan issue. Municipal officials with data center developments from deep red bastions such as Abilene to the “People’s Republic of Austin” have voiced opposition, citing residential concerns on water usage, noise and air pollution, as well as a lack of local tools to govern new developments.

According to the publication, early feedback from several GOP officials was that the proposal was solid, but does not go far enough. Rep. Cody Vasut of Angleton suggested expanding county-level authority to regulate certain aspects of the developments. Hood County GOP Chair Greg Harrell told the outlet that he wanted Abbott to call a special session to take the issue head-on, now, rather than wait for the 2027 regular session.

— Hunter Cooke