As communities statewide grapple with developers wanting to locate data centers in and around their towns, state officials are stepping in to help deal with regulating an industry that has exploded across Texas since lawmakers last met in Austin.
In fact, Texas Gov. Greg Abbott is making data centers a priority issue in the upcoming state legislative session in 2027.
The Texas Tribune reported recently that the governor sent letters to state policymakers on June 9 outlining several key recommendations for lawmakers to take up when they return to Austin in 2027, including: • Requiring new facilities to add power generation to the state’s power grid.
• Requiring data centers pay for their own grid interconnection and infrastructure costs.
• Mandating the use of “closed-loop” water systems, which draw a large amount of water at the start but reuse it over some period of years.
• Require annual reporting by all data centers on electricity and water use.
• Establishing best-practice standards to address community concerns like noise.
• And repealing data center sales tax exemptions and “other outdated or unnecessary incentives” for data centers.
On that final point, the governor was especially adamant. The Tribune reported recently that Texas stood to lose about $3.2 billion in sales tax revenue over the next two years because of a sales tax exemptions granted to data centers that were already going up/installed in the state.
“The rapid scale of data center development requires oversight to ensure everyday Texans are not burdened with the costs of infrastructure driven by data center expansion, and to ensure that as data centers interconnect to the Electric Reliability Council of Texas (ERCOT) grid, residential electric bills are not negatively affected,” Abbott said.
On June 11 in nearby Matagorda County, Texas Agriculture Commissioner Sid Miller took up the battle flag in a Bay City town hall meeting focused on what he dubbed were the “hidden costs of data centers.”
He spoke on many of the same topics the governor raised with something of a more farm-based slant, most specifically, how data centers were gobbling up prime farmland and farm resources, especially water.
Miller’s office has been at the forefront of water shortage talks for years now, especially as Texas’ urban population continues to grow.
“Texas agricultural producers and rural communities need a balanced solution that recognizes the importance of innovation yet still protects our precious agricultural land for generations to come,” Miller said.
