Texas is preparing to impose stricter regulations on data centers, a sector it has long sought to attract. Governor Greg Abbott has proposed new rules to ease the pressure on the state’s energy and water resources as well as local infrastructure.
In a letter sent to state regulators on Wednesday, Abbott emphasized that investments in data centers should not become a burden on the average Texan’s utility bills. The Republican governor argued that this rapidly growing sector requires a clearer regulatory framework.
The proposed measures include requiring new data centers to finance their own electrical infrastructure, adopt water-saving technologies, and eliminate sales tax exemptions. Abbott also urged regulators to ensure that data center connections are planned in a way that reduces residential electricity bills.
A Shift in Texas Policy
Texas has become a hub for data centers owned by major tech companies like Tesla, Meta, and Amazon. It ranks as the second state in the US with the most data centers, following Virginia.
This new approach marks a notable shift in Texas’s policy of attracting technology investments, as the state has long offered incentives supporting data center growth.
Growing Pressure Across the US
Opposition to data center expansion is not limited to Texas. Protests have erupted in local communities nationwide, and at least 12 states have proposed statewide bans on data centers.
Gabriel Collins, an energy and environmental regulation expert at Rice University, noted that Texas’s approach differs from other states’ attempts to halt development. He described it as a step that sets clear boundaries for companies.
According to Collins, Abbott’s message is that Texas remains open for investment but expects companies to take responsibility for their own electricity and contributions to local water infrastructure.
The expert also pointed out that even in Texas, measures on data centers have relatively bipartisan support, increasing the likelihood that reasonable protective limits could be adopted in the state legislature.
Incentive Debate Resurfaces
Since 2013, Texas has offered statewide sales tax reductions for data centers. According to the Texas Tribune, the state provides over $1 billion annually in tax incentives to data centers.
In November, Abbott described Texas as a center for artificial intelligence development during a $40 billion investment announcement with Google. New data centers were highlighted as part of this investment plan.
