Texas Governor Greg Abbott said on 14 October that he wants state lawmakers to put his proposed data centre restrictions into law in 2027, the Dallas Morning News reported in a story published by the Marshall News Messenger. Abbott has already ordered regulators to halt permits while they review proposed facilities’ effects on the state’s electricity grid and water supplies. His proposed legislation would address what operators must pay for and report, and who gets a say in where facilities are built.
Key points
- Abbott wants the Legislature to enact his data centre proposals during its 2027 session.
- His proposals cover electricity infrastructure costs, water-efficient cooling, consumption reporting, local disruption and tax incentives.
- Existing water-use survey violations carry a maximum $500 fine. About 30% of 329 data centres surveyed last year responded.
- Abbott also wants cities, counties and residents to have more authority over the location and operation of facilities.
Abbott seeks a 2027 law and local powers
Abbott said data centres should pay for the electrical infrastructure they require, use water-efficient cooling, report their electricity and water consumption, and limit noise and other disruption. He has also called for an end to sales tax breaks and other incentives he considers unnecessary. These are positions he wants lawmakers to turn into law, rather than obligations created by his 14 October remarks.
In an interview at Love Field, Abbott put the legislative step before a decision on what would follow. “We have to make sure that we turn my guidelines into law, and then we can figure out what the pathway forward is going to be,” he said. His proposed shift would put the terms governing facilities before the Legislature, where requirements affecting operators could be written into state law.
Abbott also wants cities, counties and residents to have more authority over where data centres are built and how they operate. He said the facilities should not intrude on neighbourhoods in urban, suburban or rural areas. The proposal reaches beyond a facility’s demands on statewide electricity and water systems to the decisions faced by people living near one.
Abbott’s September instruction to regulators concerned permits for proposed facilities while officials reviewed their effects on the grid and water supplies. AI Affairs reported the halt to Texas data centre permits pending a grid audit. The legislative package Abbott described on 14 October would cover operating practices, infrastructure costs, incentives and local authority as well as the approvals process.
Texas water surveys carry a $500 maximum fine
Texas already requires large water users, including data centres, to complete annual water-use surveys. A facility that fails to do so can face a Class C misdemeanour charge, with a fine of up to $500, and can be barred from certain state funding and environmental permits, the Texas Tribune reported in a story published by Houston Public Media. Of 329 data centres surveyed last year, about 30% responded.
The Texas Water Development Board uses the surveys to assess demand and plan for future water needs. Abbott has directed it to notify county and district attorneys about facilities that do not comply, leaving those officials to decide whether to pursue criminal cases. The board says it cannot prosecute violations itself, and state officials do not know whether misdemeanour penalties have been issued against data centres.
Abbott’s press secretary, Andrew Mahaleris, said the water board would work with other agencies, including the Texas Commission on Environmental Quality, the Electric Reliability Council of Texas and the Public Utility Commission of Texas. He said agencies would withhold data centre approvals until the public utility commission, grid operator and water board had the information they needed to make decisions.
The existing sanctions have limits for facilities already in operation. Data centres generally are not eligible for the state funding that officials have threatened to withhold, according to Perry Fowler of the Texas Water Infrastructure Network. Ryan Vice of the Texas Commission on Environmental Quality said the state can withhold certain permits or renewals, but cannot revoke or suspend permits already issued to operating or planned data centres because they failed to submit a survey. Raising the Water Code’s Class C misdemeanour fines would require legislation.
The Data Center Coalition supports annual water reporting, according to its Texas energy policy director, Cameron Poursoltan. He said the organisation had worked with the water board to resolve contact-information and data discrepancies that contributed to the initial low response rate. That account puts part of the compliance problem in the way surveys reached operators, alongside the state’s limited powers to compel a response.
Joppa becomes an issue in the governor’s race
Democratic challenger Gina Hinojosa has urged Abbott to act before lawmakers return to Austin. At a 13 October news conference in Dallas, she criticised his response and pointed to a data centre that began operating late last year in Joppa, a historically underserved neighbourhood. She called his moratorium “just words” and argued that residents were still contending with the effects of facilities encouraged by state tax breaks.
Hinojosa voted in 2017 to continue data centre incentives. She said at the time that the measure would let contractors using American union labour benefit from tax breaks without expanding the incentives overall. Abbott, for his part, has said Texas can restrict data centres without undermining the country’s ability to compete with China in AI development, despite warnings from other Republicans against overregulation.
A University of Texas/Texas Politics Project poll released in August found that 57% of Texas voters opposed a data centre being built in their community. Among Republicans, 45% supported local construction and 43% opposed it. The survey places the proposed rules in a governor’s race in which nearby development, rather than only the industry’s statewide electricity demand, has become a campaign issue.
Texas voters will begin early voting on 19 October ahead of the 3 November election. Lawmakers are due back in Austin in January for the 2027 legislative session Abbott has chosen for turning his proposals into law.
